1998 (2) TMI 265 - AT - Central Excise

Summary

Issues Involved:
1. Clubbing of clearances.
2. Determination of assessable value.
3. Alleged clandestine clearances.
4. Limitation period for show cause notice.

Detailed Analysis:

1. Clubbing of Clearances:
The Tribunal addressed whether the clearances in the names of UC, SD, and LD during the years 1978-79, 1979-80, and 1980-81 could be treated as made by "a manufacturer" and clubbed for the purpose of Notification No. 71/78. The Tribunal found that the three concerns were closely related and operated under the control of J.P. Goenka. The premises, management, and production of these concerns were interconnected, and the transactions between them were contrived to evade duty. The Tribunal concluded that the clearances of the three units should be clubbed as they were effectively clearances by "a manufacturer."

2. Determination of Assessable Value:
The Tribunal examined whether the Collector was justified in adopting the sale price in the last sale by the manufacturer as the basis for determining the assessable value, rather than the sale price in the first sale. The Tribunal found that the transactions between the manufacturer and trading concerns were manipulated to create a facade of market operations and suppress the real price realized by the manufacturer. The trading concerns were paper concerns with no physical movement of goods. The Tribunal upheld the Collector's decision to base the assessable value on the last sale price to independent wholesalers.

3. Alleged Clandestine Clearances:
The Tribunal considered whether UC had made any clandestine clearances as alleged. Diaries seized from the residence of J.P. Goenka indicated quantities of SOD manufactured and cleared by UC. The Tribunal found that the entries in the diaries tallied with the export figures of UC, supporting the Revenue's case that the diaries related to UC's production and disposal of SOD. However, the Tribunal noted that the Collector should have compared the figures in the diaries with the excise records to confirm if the balance quantities were cleared on payment of duty. The Tribunal set aside the part of the demand based on alleged clandestine clearances and remanded the case for further verification.

4. Limitation Period for Show Cause Notice:
The Tribunal addressed whether the show cause notice for the year 1981-82 was barred by time under the proviso to Section 11A(1) of the Central Excise Act, 1944. The Tribunal found that there was a clear case of willful misdeclaration of value and suppression of facts with intent to evade duty. The larger period of limitation was rightly invoked, and the Tribunal upheld the demand for the period 1981-82.

Conclusion:
The Tribunal partially allowed the appeals Nos. 876/85-A, 1109/85-A, and 1110/85-A, setting aside the demand based on alleged illicitly manufactured goods and remanding the case for quantification of duty demand. The Tribunal dismissed appeal No. 468/90-A, confirming the findings on clubbing of clearances, determination of assessable value, and the invocation of the larger period of limitation.