1998 (4) TMI 181 - AT - Central Excise

Issues Involved:
1. Assessable value of goods cleared from the appellants' factory.
2. Alleged suppression of facts and misdeclaration of prices.
3. Penalty and redemption fine imposed by the Collector.
4. Limitation and suppression of facts with intent to evade duty.

Issue-Wise Detailed Analysis:

1. Assessable Value of Goods Cleared from the Appellants' Factory:
The appellants, M/s. Super Steel Corporation, challenged the order of the Collector of Central Excise, Bombay-II, regarding the assessable value of goods. The Collector confirmed a demand of duty amounting to Rs. 12,46,951.85, imposed a penalty of Rs. 2,50,000/-, and a redemption fine of Rs. 1 lac. The appellants were engaged in manufacturing activities, including job work for customers, fabrication on contract, and original manufacturing of LPG tankers. The dispute involved 218 LPG tankers fabricated between May 1983 and March 1986. The appellants argued that the price lists submitted, which included a 10% notional profit margin, were approved by the Assistant Collector, and duty was paid accordingly. They contended that they were not concerned with the prices at which M/s. Kwality Fabricators sold the tankers to their customers.

2. Alleged Suppression of Facts and Misdeclaration of Prices:
The appellants were accused of misdeclaring prices by showing a 10% notional profit margin instead of the actual profit, and not including excess amounts charged by M/s. Kwality Fabricators as "service charges" in the assessable value. The appellants argued that they returned the cost of raw materials to customers after retaining labor charges, and submitted price lists certified by buyers' Chartered Accountants, which were approved by the Assistant Collector. They denied any knowledge of M/s. Kwality Fabricators charging higher prices or additional service charges. The Department alleged that the appellants misdeclared the price of 219 tankers to evade duty and suppressed material facts.

3. Penalty and Redemption Fine Imposed by the Collector:
The Collector imposed a penalty of Rs. 2,50,000/- and a redemption fine of Rs. 1 lac. The appellants contended that the penalty was unjustified as they had complied with the approved price lists and paid duty accordingly. The Tribunal, after considering the submissions, set aside the impugned order except for the part relating to the penalty. The penalty was confirmed in relation to the misdeclaration about the fabrication of four items shown in the name of M/s. Accurate Engineers, but the quantum was reduced to Rs. 50,000/-.

4. Limitation and Suppression of Facts with Intent to Evade Duty:
The appellants raised the issue of limitation and denied any suppression of facts with intent to evade duty. They argued that they had submitted all necessary documents and evidence to the authorities, and any discrepancy in the number of tankers was minor. The Tribunal found that the appellants had documentary evidence showing the return of raw material costs to customers and that they operated as independent manufacturers. The Tribunal concluded that the Department's case was based on the incorrect assumption that the appellants and M/s. Kwality Fabricators were the same entity and that the appellants were merely hired labor.

Conclusion:
The Tribunal set aside the impugned order, barring the part relating to the penalty for misdeclaration about the fabrication of four items. The penalty was reduced to Rs. 50,000/-. The appeal was allowed with consequential reliefs to the appellants.

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