9911796707
TMI Blog1994 (2) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... the dutiable compressors, with an intent to evade payment of Central Excise duty, and at the same time were overvaluing the non-dutiable parts which were essential for the working of the compressors, and which were compulsorily supplied to the customers. In this process, while they were recovering their differential cost of the compressors, from the sale price of the parts, Central Excise duty otherwise leviable on the value of the compressors to the extent undervalued, was evaded. They were issuing two invoices - one for dutiable compressors and the other for the non-dutiable parts of compressors. Some of the essential parts of the compressors were taken out from the compressors and were packed and billed separately. It was alleged in the show cause notice dated 17-11-1987, issued by the Collector of Central Excise, Ahmedabad that the appellants had contravened the provisions of the Rule 173C of the Central Excise Rules, 1944 (hereinafter referred to as the `Rules'), and Rule 173F, read with Rule 9(1) of the Rules, and were liable for action under clauses (a) and (b) of sub-rule (1) of Rule 173Q of the Rules. It was further alleged that as they intentionally suppressed the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as part of the paper book. 7.2 The main thrust of the arguments of the learned Sr. Advocate was that the show cause notice was hit by time bar. According to him, there was no suppression of any fact on the part of the assessee and that all the facts were within the knowledge of the department. 7.3 The learned Senior Advocate submitted that the price of their compressors, which were dutiable, was comparable to the price charged by the other manufacturers. He added that they could not have sold their goods at a price higher than the price at which their competitors were selling. The goods had to be sold in competition. As regards the accessories, which were non-dutiable, he stated that everybody was charging more and making profit thereon. A number of their customers were Government departments. 7.4 Contending that the demand was hit by limitation, the learned Sr. Advocate stated that all the facts were within the knowledge of the department. Their price lists had been approved. He referred to the earlier audit objections, show cause notices and the adjudication orders, and submitted that the substratum of the charge in the earlier notices was the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, and the excise authorities were not estopped from taking a view different than in the approved classification list; (3) The costing was based on the information supplied by the appellants. The calculations were made on the basis of the figures supplied by their own people. The cost of production was not the normal price but taken as assessable value and hence no deductions were permissible; (4) Proceedings under Section 11A could be initiated without challenging the price lists. Section 11A was independent of the assessments; (5) Value have to be determined under Section 4. If the competitors evade duty it does not mean that the assessee should also evade; (6) As the facts had been suppressed, the penalty was rightly imposed. Material facts were not disclosed. The accessories whose value was not included were not optional. She referred to the Tribunal's decision in the case of Ice and Diesel Engineering Works v. Collector, Central Excise, 1991 (53) E.L.T. 70 (Tribunal), wherein it has been held that extended period was applicable if assessee makes a mis-declaration or suppresses facts in the price list. (7) Flow-back in this case was in the form of inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade on behalf of the appellants for adjournment on the ground that their advocate was tied up with some wedding in his family. The case was adjourned to 4-3-1992. On 4-3-1992, the case was adjourned to 18-5-1992 for nonavailability of time. On 18-5-1992, a request was made on behalf of the appellants that their advocate was having some personal difficulty and was not in a position to appear before the Bench. On 1-9-1992, the advocate for the appellants argued the matter, but the arguments were not concluded. The matter was adjourned to 15-10-1992 as part heard matter. On 15-10-1992, the matter was adjourned to 22-1-1993 on the request of the appellants on the ground that their advocate was held up before the Gujarat High Court. In the meanwhile, Ms. S.V. Maruthi, Member (Judicial) who had heard the case earlier left the Tribunal on her being elevated as a Judge of the Andhra Pradesh High Court, and the matter was released from the list of part heard matters. On 22-1-1993, again an adjournment was sought by the appellants on the ground that their advocate was not in a position to reach Delhi due to disturbed situation and dislocation of flights. On 14-4-1993, a request was received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts were supplied to the same parties, and two bills were being issued simultaneously - one for the compressors, and the other for the parts. The prices of compressors were got approved from the Central Excise department. 16. In the case of Frick India Limited v. Union of India, 1990 (48) E.L.T. 627 (SC), the Hon'ble Supreme Court had occasion to discuss the scope of Item No. 29A(3) of the old tariff, and that of Notification No. 80/62-C.E., dated 24-4-1962 (as amended), and that of the trade advice dated 30-9-1969 given by the Central Board of Excise and Customs, in respect of the classification of refrigerating machinery and ice making plant which are not sold or offered for sale as ready assembled unit for purposes of countervailing duty under the Customs Act. The Hon'ble Supreme Court held that sub-entries (1) and (2) of Entry 29A could not control or restrict the meaning of sub-entry (3). They observed in para 5 of their judgment as under :- "The legislative history and the notifications of the Government shows that sub-item (3) of Item 29A is a comprehensive provision encompassing within it parts of all sorts of air conditioning and refrigerating appliances and machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sale service and marketing and selling organisation expenses including advertisement expenses cannot be deducted." (Para 49). It is in the light of these inclusions that the observations in para 40 of their judgment that the value of an article for the purpose of the excise levy must not be confined to the manufacturing cost and the manufacturing profit in respect of the article, have to be seen. 20. The matter has also been dealt with by the Allahabad High Court in the case of Geep Industrial Syndicate Limited v. Union of India, 1982 (10) E.L.T. 857 (All.) wherein it has been observed in para 18 as under :- "We are of the view that all costs which the manufacturer incurs for putting an article in a marketable condition so that it can be delivered at the factory gate to wholesale purchasers have to be included in the manufacturing costs. This would include charges for transporting the excisable goods from the factory to the factory gate, the cost of packing so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of particular goods in wholesale the manufacturer enters into an agreement with the producer splitting up the consideration for which the property in goods are transferred with a view to reduce the amount of duty payable, he will be doing so for extra commercial consideration, and the price indicated in such agreement may not indicate the wholesale price, and the excise authority may not feel itself bound by such splitting." 27. The lower prices for the dutiable compressors were not for any commercial considerations, but for evading Central Excise duty leviable on such compressors, while at the same time, recouping their own loss by charging higher prices for the non-dutiable parts. They got whatever ex-duty price they wanted to get. The customer was benefited as he got his requirements of compressors and parts, taken together, at reduced price, to the extent of duty evaded on the compressors. Such a device could not be considered as in the normal course of business, and is obviously for extra commercial considerations, and the price charged for such sales would not be the wholesale cash price for levying Central Excise duty under Section 4 of the Act. 28. There is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Frick India Limited v. Union of India, 1990 (48) E.L.T. 627 (SC), sub-item (3) of Item 29A is a comprehensive provision encompassing within it, parts of all sorts of air conditioning and refrigerating appliances and machinery. The language used therein is wide and comprehensive in its application and could not be given a restricted meaning. It was also added that the scope of sub-item (3) was neither restricted nor controlled by the provisions of sub-items (1) and (2). 31. Under sub-item (3) of Item No. 29A, read with Notification No. 80/62-C.E., dated 24-4-1962, among others, compressors, strating relay, controls (including expansion valve and solenoid valves) and pressure switches and overload protection/thermal relay were dutiable. As compressor as such was a dutiable part, no part of the value of any of its part, was excludible from the value of the compressor, for the purposes of arriving at its assessable value. Compressor is an identifiable, specific and a vital part in any refrigerating system, including low temperature refrigeration. In mechanical refrigeration, a compressor brings about the refrigeration cycle of refrigerating by changing a refrig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Supreme Court in the case of Binod Bihari Singh v. Union of India, AIR 1993 SCW 475, Limitation Act is a statute of repose and bar of a cause of action because of undesirable lapse of time. In the case before us, there has been no undesirable lapse of time. Show cause notice could not have been issued without mustering and examining all the relevant facts and materials, and without establishing a prima facie case. 33. In the matter before us there has been no undesirable delay in issuing the show cause notice. Further, show cause notice has been issued with proper investigation/enquiry, and the appellants were associated with such enquiry/investigation. As per show cause notice the fresh facts had come to light, and they had been brought on record. The Tribunal in the case of Bramec Surie Pvt. Ltd. v. C.C.E., 1986 (25) E.L.T. 79 (Tribunal) had held that issues already concluded in earlier proceedings could be reopened in subsequent proceedings for another period of time if emerging fresh materials give a new dimension to the matter. It was added that limitation in such cases was to be computed from the date of issue of the last show cause notice. 34. Delhi Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simultaneously, were recovering differential cost of the compressors from the sale price of accessories which were being compulsorily supplied and which were much overpriced." (Para 8 of the show cause notice). According to Shri Manohar Lal Rattan Lal Gandhi, Section Incharge of compressor assembly "after completing the assembly, they were testing the compressors on test load; that after completing the said operation, they were undertaking a final look test during the said operation, that they were fitting stop valve for maintaining the air pressure during final look test; that they sent it for printing; that thereafter on receiving the packing list from their planning department, they packed their compressors after removing two valves; that in the packing list, they showed the accessories separately and packed it separately; that they were showing the two stop valves, safety valves, oil stainers, electric heater, different types of gauges and cut-off switches as accessories in their despatch advises so the same were not available to their department; that the production programme was also destroyed after completing the job so the same was also not available with them" (Para 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame final and it was not open for the department to reopen the issue and that no show cause notice could have been issued. The approval of assessable values was granted on the basis of the statements made in the price lists by the assessee. The Hon'ble Gujarat High Court have held in the case of Alembic Glass Industries v. Union of India, 1992 (59) E.L.T. 207 (Guj.) in para 24, 25 and 26 that the price list approved can be reopened under Section 11A of the Act, in case of short levy, non-levy or erroneous refund, and that it was neither necessary nor practical to have the price list approval set aside in appeal or revision first. 42. With regard to the scope and ambit to provision of Section 11A of the Act, the Calcutta High Court in the case of I.T.C. Ltd. v. Union of India, 1988 (34) E.L.T. 473 (Calcutta), did not accept the proposition that unless the price list is set aside on appeal, the question of refund will not arise. They observed that under the scheme of the Act, Section 11A of the said Act was provided as a substantive provision and a complete code for realisation of excise duty in case of short levy or short payment. 43.1 In the case of Neyveli Lignite Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Electric Lamp Manufacturers India Ltd. v. C.C.E., 1991 (51) E.L.T. 619 (Tribunal), the Collector had found that there was no ground to allege suppression of facts by the appellants, and in those circumstances the Tribunal observed that the ground of suppression of facts not being established, personal penalty on assessee was not justified. In the case before us, the adjudicating Collector of Central Excise had not found tenable the party's arguments for limitation and the demand being time barred. 44. As observed by the Hon'ble Supreme Court in the case of Jaishri Engineering Company Pvt. Ltd. v. C.C.E., 1989 (40) E.L.T. 214 (SC), the question whether there was any fraud, collusion, wilful misstatement or suppression of facts for the department to be justified to claim duty beyond a period of 6 months, is a question of fact. The Hon'ble Supreme Court held in that case that having come to the conclusion that there was deliberate suppression or wrong statement it follows automatically that the Tribunal was justified in upholding the imposition of penalty. It was added that the quantum of penalty was a matter which the Tribunal was free to fix as they thought fit as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
