1999 (11) TMI 172 - AT - Central Excise

Summary

Issues:
Challenge to Order-in-Original confirming demand of differential duty and penalty - Bar of limitation - Consideration of subsidy in price valuation - Exported goods not excisable.

Analysis:
The Appellant, a Public Sector Undertaking, challenged Order-in-Original confirming demand of differential duty and penalty. The dispute arose from the manufacture of a jack-up rig cleared to ONGC, Bombay. The Appellant contended that the contract with ONGC reflected the actual price of the rigs and that the subsidy received should not increase the price. The main argument was the bar of limitation. The Appellant argued that the rigs were exported and not excisable, hence no duty was payable. The adjudicating authority negatived these contentions and passed the impugned order.

Regarding the valuation of goods, the contract between the Appellant and ONGC fixed the price of the rigs, with no indication of additional consideration. The pricing policy for shipyards showed the subsidy was to maintain shipyards, not as consideration from ONGC. The Committee report confirmed the contract price did not include the subsidy. The excise department's show cause notice after two years of approval of the price list was deemed unjustified based on the Supreme Court's decision in Collector of Central Excise v. Cotspun Ltd.

The Departmental Representative argued that ONGC's payment, as directed by the Central Govt., constituted consideration. However, the Tribunal held that the payment did not augment the rig's price and was not a consideration for the rigs. The payment was made independently of the purchase contract between the Appellant and ONGC. The Tribunal emphasized that the payment could not be considered as a reason for the show cause notice issued by the department.

The Appellant's contention that the exported rigs were not excisable was raised belatedly, after two years of paying duty, without seeking a refund within that time. The Tribunal noted that the delayed claim was only a shield and did not warrant further investigation. Consequently, the appeal was allowed, setting aside the impugned order against the Appellant with consequential reliefs.