2000 (11) TMI 724 - AT - Central Excise

Issues Involved:
1. Whether the sale price at which goods are ordinarily sold in the course of wholesale trade for immediate delivery and immediate payment can be disregarded as the basis of assessment.
2. Whether a manufacturer can be charged with the allegation of attempting to evade payment of duty when the entire exercise is revenue neutral.
3. Determination of the correct assessable value for goods transferred between factories of the same manufacturer.
4. Applicability of the extended period of limitation under Section 11A of the Central Excise Act.

Issue-wise Detailed Analysis:

1. Basis of Assessment for Sale Price:
The appeals questioned if the sale price used in wholesale trade for immediate delivery and payment could be disregarded when a part of the production is sold in the market and the remaining part is cleared to another factory of the same manufacturer. The appellant argued that the sale price of Rs. 45,000/- per engine was adopted based on sales to independent dealers, and duty was paid accordingly. The Department contended that the sale price of E-2 Type engines, which fetched higher prices, should have been used for assessment. The Tribunal held that the factory gate price, when available, should be taken for fixing the value under Section 4(1)(a) of the Act, and the Department's approach to using Section 4(1)(b) was incorrect.

2. Allegation of Duty Evasion and Revenue Neutrality:
The appellant argued that the entire exercise was revenue neutral since duty paid at Pune was claimed as credit at Pithampur. The Department alleged that the appellant paid lesser excise duty by taking a lower assessable value, resulting in financial accommodation. The Tribunal found that the interest saved was minuscule and that the appellant, who paid substantial duty amounts, would not risk evading a small sum, indicating no intent to evade duty.

3. Determination of Assessable Value:
The Department argued that the appellant should have adopted the higher sale price of E-2 Type engines for duty assessment. The appellant maintained that different engines had different market values due to their specifications and uses. The Tribunal observed that the Department did not properly allege that the engines were identical and that the prices declared did not reflect the true price. It concluded that when the factory gate price is available, it should be used for valuation, and the Department's approach was incorrect.

4. Extended Period of Limitation:
The Tribunal considered whether the extended period of limitation under Section 11A could be invoked. The appellant argued that all declarations and RT 12 Returns were filed, and the Department was aware of the mode of clearance. The Tribunal noted that the extended period could only be invoked when there is contumacious conduct, which was not present in this case. It concluded that the larger period of limitation could not be invoked, especially given the revenue-neutral nature of the transactions.

Conclusion:
The Tribunal set aside the order of the Adjudicating Authority, finding that the Department's approach to valuation and the invocation of the extended period of limitation were incorrect. The appeals were allowed with consequential reliefs, emphasizing that the factory gate price should be used for valuation and that the transactions were revenue-neutral.

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