1997 (12) TMI 355 - AT - Central Excise

Summary

Issues Involved:
1. Validity of the first show cause notice.
2. Timeliness of the second show cause notice.
3. Determination of cum-duty price and assessable value.
4. Deduction of central excise duty and sales tax in assessable value.
5. Availability of Modvat credit.
6. Quantum of penalty imposed.

Summary:

1. Validity of the First Show Cause Notice:
The appellant contended that the first show cause notice issued on 21-10-1986 was a nullity as it included allegations of mis-statement and suppression of facts, which should be treated as invoking the proviso to Section 11A(1) of the Central Excise Act, 1944. The Tribunal held that the Deputy Collector was competent to issue the notice within the six-month period prescribed u/s 11A(1) and that the unnecessary averments did not affect the jurisdiction. The notice was not a nullity and was valid under the main provision of Section 11A(1).

2. Timeliness of the Second Show Cause Notice:
The appellant argued that the second show cause notice issued on 28-7-1988 was barred by time. The Tribunal found that the second notice was in continuation of the first notice and addressed the allegations of suppression of material facts with intent to evade duty. The appellant's defense of being misguided by a Chartered Accountant was not substantiated with evidence. Therefore, the allegations in the second notice were accepted as correct.

3. Determination of Cum-Duty Price and Assessable Value:
The Tribunal examined conflicting decisions regarding whether the price collected by the appellant should be treated as cum-duty price. It concluded that the entire price collected should be treated as cum-duty price, and the assessable value should be determined by deducting the duty element, in line with Section 4(4)(d)(ii) of the Act. The matter was remanded for re-determination of the assessable value on this basis.

4. Deduction of Central Excise Duty and Sales Tax in Assessable Value:
The appellant's claim for deduction of sales tax was initially rejected due to non-uniform collection from buyers. The Tribunal noted the eligibility certificates for sales tax deferment and stated that the principle of "payable" rather than "actually paid" should apply to both excise duty and sales tax. This aspect was also remanded for fresh consideration.

5. Availability of Modvat Credit:
The Tribunal held that Modvat credit could not be denied due to non-adherence to prescribed procedures if the appellant was otherwise eligible. The matter was remanded for re-examination of eligibility for Modvat credit.

6. Quantum of Penalty Imposed:
The appellant argued that the penalty was excessive. The Tribunal noted that quantification of penalty should consider the quantum of demand and other relevant circumstances. Since the case was remanded for re-determination of assessable value, the quantum of penalty was also to be re-determined.

Conclusion:
The impugned order was set aside, and the case was remanded to the jurisdictional adjudicating authority for fresh decision in accordance with the law, considering the Tribunal's findings and observations, and after providing the appellant an opportunity for a personal hearing.