1993 (8) TMI 182 - AT - Central Excise

Issues Involved:
1. Alleged under-declaration of prices and evasion of Central Excise duty.
2. Validity of the extended period of limitation for demand.
3. Accuracy and fairness of the Cost Accountant's report.
4. Applicability of the doctrine of promissory estoppel.
5. Requirement for de novo adjudication.

Issue-Wise Detailed Analysis:

1. Alleged Under-Declaration of Prices and Evasion of Central Excise Duty:
The appellants were accused of under-declaring the prices of dutiable parts and evading Central Excise duty by inflating the prices of non-dutiable parts. The differential duty demanded was based on the actual value of accessories determined from purchase bills/market rates. The adjudicating authority observed that the sale of compressors and accessories was a single integrated transaction and relied on a Cost Accountant's report, which indicated that the declared prices were below the cost price. Consequently, a duty of Rs. 22,71,697/- was demanded, and a penalty of Rs. 10 lakhs was imposed for suppression of facts and willful mis-statement.

2. Validity of the Extended Period of Limitation for Demand:
The appellants argued that the demand was time-barred, citing the Tribunal's decision in Ice and Diesel Engg. Works v. CCE. The respondents contended that the extended period of limitation was applicable due to mis-declaration and suppression of facts, supported by multiple citations. The Tribunal noted that the extended period could be invoked in cases of suppression of facts, deliberate mis-statement, or contravention of the Act or Rules.

3. Accuracy and Fairness of the Cost Accountant's Report:
The appellants challenged the Cost Accountant's report, alleging bias and defects. The Tribunal emphasized that any evidence, including expert reports, should be made known to the assessee, and their objections should be duly considered. The Tribunal cited previous decisions, stating that expert opinions are treated as evidence and must be scrutinized by adjudicating authorities. The absence of the Cost Accountant's report and other relevant documents hindered the Tribunal's ability to reach a conclusion.

4. Applicability of the Doctrine of Promissory Estoppel:
The appellants invoked the doctrine of promissory estoppel, arguing that the department could not load the sale prices of accessories onto the assessable value of compressors based on a Tariff Advice. The Tribunal noted that promissory estoppel requires honesty, good faith, and reliance on a promise. The appellants had not altered their position based on the Tariff Advice, and the advice did not constitute a promise. The Tribunal concluded that the doctrine of promissory estoppel did not apply in this case.

5. Requirement for De Novo Adjudication:
The Tribunal found that the appellants had not supplied the necessary documents, and the respondents had not filed the Cost Accountant's report. In the interest of justice, the Tribunal decided to remand the case for de novo adjudication. The adjudicating authority was directed to provide an opportunity for the appellants to explain their case and follow the principles of natural justice.

Conclusion:
The appeal was allowed by way of remand for de novo adjudication, considering the need for a thorough examination of the facts, documents, and expert reports. The adjudicating authority was instructed to ensure fairness and adherence to the principles of natural justice in the re-adjudication process.

← Previous Next →