1995 (2) TMI 239 - AT - Central Excise

Summary

Issues Involved:

1. Collection of a part of the assessable value of PSC Pipes in the guise of post-manufacturing activities.
2. Allowance of Rs. 1.20 per PSC Pole as a discount in terms of Section 4 of the CESA, 1944.
3. Limitation period for the demand.

Issue-wise Detailed Analysis:

Issue 1: Collection of a part of the assessable value of PSC Pipes in the guise of post-manufacturing activities

The appellants argued that their contracts were composite, including not only the cost of PSC pipes and poles but also expenses for post-clearance activities such as commissioning and erection. They claimed that the assessable value should be determined based on Chartered/Cost Accountant's certificates showing the cost of raw materials, manufacturing costs, and notional profit. The Department contended that the actual expenses for post-manufacturing activities were ascertainable and should be deducted from the composite price to determine the assessable value under Section 4(1)(a) of the Central Excises and Salt Act.

The Tribunal noted that the Department had calculated expenses on an average basis rather than actuals, while the appellants provided statements of actual expenses contract-wise. The Tribunal found that the Collector did not properly examine the actual expenses submitted by the appellants and emphasized the need for a thorough examination of these expenses to determine the correct assessable value.

Issue 2: Allowance of Rs. 1.20 per PSC Pole as a discount in terms of Section 4 of the CESA, 1944

The appellants argued that the reduction in price of Rs. 1.20 per pole was a discount agreed upon if cement was supplied to them, and thus should be considered a legitimate reduction in sale price. The Department, however, considered this a conditional discount, which under Section 4 of the CESA, 1944, is not deductible in arriving at the assessable value.

The Tribunal agreed with the Department, noting that the reduction was conditional upon the supply of cement and thus constituted a conditional discount. As per established legal principles, conditional discounts are not allowed as abatements from the price for determining the assessable value.

Issue 3: Limitation period for the demand

The appellants argued that the demand was time-barred, as the Department had previously accepted Chartered/Cost Accountant's certificates and approved prices without filing any appeals against those orders. They contended that there was no mis-statement or suppression of facts to justify extending the demand period beyond six months.

The Department argued that the detailed investigation revealed that the certificates were issued without verifying the books of accounts, indicating suppression and wilful mis-statement with the intent to evade duty. The Tribunal found that the evidence on record supported the Department's position, indicating that the certificates' veracity was doubtful and came to light only after detailed investigations. Therefore, the Proviso to Section 11A was rightly invoked, and the demand was not hit by limitation.

Conclusion:

The Tribunal concluded that the case required a remand for de novo adjudication by the Collector of Central Excise, Pune. The Collector was instructed to make a definitive finding on the actual expenses incurred for freight, lowering, laying, jointing, and the cost of bought-out items, ensuring adherence to the principles of natural justice. The appeal was thus allowed by remand.