1993 (2) TMI 179 - AT - Central Excise

Issues Involved:
1. Determination of assessable value of goods.
2. Allegation of short levy and demand for duty.
3. Applicability of the extended period of limitation under Section 11A of the Central Excise Act.
4. Allegation of wilful suppression, misrepresentation, or fraud.

Analysis of the Judgment:

1. Determination of Assessable Value of Goods:
The appellants were involved in manufacturing electrical stampings and laminations, which were transferred to ancillary units for the production of rotors and stators of electric fans. The assessable value of these goods was determined based on manufacturing cost and profit under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975. The appellants declared an assessable value of Rs. 15.50 per kg effective from 24-7-1980, which was later revised to Rs. 19.50 per kg from 1-5-1982. Both price lists were approved by the Department.

2. Allegation of Short Levy and Demand for Duty:
The Department, upon scrutinizing the appellants' records, found that transportation costs for the raw materials were not included in the assessable value. Consequently, the revised assessable values were calculated as Rs. 17.53 per kg for 1981-82 and Rs. 27.24 per kg for 1982-83. A show cause notice dated 7-5-1984 alleged a short levy of Rs. 6,11,700.99, which was later revised to Rs. 11,06,962.00 by a corrigendum dated 1-10-1985. The appellants argued that there was no revenue loss due to the availability of proforma credit under Rule 56A and claimed the demand was time-barred.

3. Applicability of the Extended Period of Limitation under Section 11A:
The appellants contended that the demand was time-barred as there was no allegation of wilful suppression, misrepresentation, or fraud in the show cause notice. They cited case laws, including Tata Engg. & Locomotive Co. Ltd. v. U.O.I. and CCE v. Chemphar Drugs & Liniments, to support their argument that the extended period of five years could not be invoked without such allegations. The Department argued that suppression could be inferred from the contents of the show cause notice without explicit mention.

4. Allegation of Wilful Suppression, Misrepresentation, or Fraud:
The Tribunal found that the show cause notice and corrigendum did not contain specific allegations of suppression, misrepresentation, or fraud. The Tribunal referenced the Tata Engg. and Locomotive Company Ltd. v. Union of India case, where the Bombay High Court held that the extended period could not be invoked without explicit allegations. The Tribunal distinguished this case from British India Corporation v. Collector of Central Excise, Chandigarh, where suppression was inferred from the failure to file necessary declarations and maintain records. In the present case, the appellants had filed the required classification lists and invoices, and the Department had approved them.

Conclusion:
The Tribunal concluded that the omission to include transportation costs was unintentional and not a deliberate act of suppression. The absence of explicit allegations in the show cause notice meant that the extended period of limitation could not be invoked. Consequently, the demand beyond the six-month limitation was time-barred. The impugned order was set aside, and the appeal was allowed.

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