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TMI Blog2001 (4) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... ion compared the valuation of the Bulk Drugs as disclosed to the Central Excise Authorities and to the Drug Control Authorities. Where the later declarations were based on the details of various items of costing, the valuation for the Central Excise was merely described as Selling Price fixed by the company. The prima facie view of the officers was that the value of the goods was undeclared to the Excise Department. The officers recorded the statements of certain officers of M/s. GRL. Shri D.K. Arsiwalla, Finance Director of M/s. GRL stated that Bulk Drugs viz., Hydroxy Progesterone caproats, Mesterolone, Bisacodyl, Xantinol, Nicotinate Elophylline, were non-scheduled bulk drugs and were not subject to price control by Drug Control Authorities. He admitted that the price declared to the Excise authorities were less than the actual cost of production plus profit. He described it as corporate policy. Shri M.V. Gazinkar, the Costing and Budgetting Controller of M/s. GRL in his statement accepted that the price declared to the Excise Authorities was lower than the cost of production and also that the cost statements submitted to the Drug Control Authorities were not disclosed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the case of J.K. Cotton Spg. Wvg. Mills Co. Ltd. [1998 (99) E.L.T. 8]. We have examined this judgment. The Court in this judgment were examining the issue whether in view of the facts before them, the extended period could be invoked or not. On careful perusal we do not find any ratio appearing from the said judgment to support the claim made by Shri Setalwad. In para 21 of the said Judgment the various situations in the presence of which the extended period could be invoked are listed. Reference to the judgment was made in the cited judgment of the Tribunal C-II/2789/98-WZD, dated 30-11-1998 of M/s. Enron Oil Gas India Ltd. v. Commissioner of Central Excise. Although before the Tribunal the same point as is now raised, was raised, there is no definite finding of the Tribunal on this argument. 5. Section 11B of the Central Excise Act, 1944 permits refund to be claimed of any duty paid by the assessee on valid grounds within the period prescribed. If in view of the voluntary payment, the show cause notice did not allege that the duty was initially short-paid, then the Department would be hard put to contest or rebut the claim made by the assessee for refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the goods so sold, be deemed to be the normal price thereof; (b) Where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed. CENTRAL EXCISE (VALUATION) RULES, 1975 xx xx xx xx xx xx Rule 6 xx xx xx xx xx xx (b) Where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based - (i) on the value of the comparable goods produced or manufactured by the assessee or by any other assessee : Provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and, in particular, the difference, in any, in the material characteristics of the goods to be assessed and of the comparable goods; (ii) if the value cannot be determined under sub-clause (1), on the cost of production or manufacture including profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment fixes the maximum price, the retail price and the selling price of the scheduled bulk drugs. The deviation from the prices so fixed attracts penalty. Para 5 of the said order requires costing details of non-scheduled drugs also to be furnished to the Government and the Government has the power to fix the prices of the non-scheduled drugs also. Para 15 of the said order requires that prices of non-scheduled formulations should be printed on the cartons and also in the price lists. There is however, no such requirement of display, etc., in the case of bulk drugs . 13. The reading of the said order shows that while the Government fixes the prices of all the scheduled drugs , the prices of non-scheduled drugs are not so fixed by the Government. Where the prices of both the scheduled drugs formulations are fixed, price lists have to be issued specifying the prices so fixed and the details of the prices have to be displayed. Para 14 of the said order makes this mandatory for bulk drugs as well as for formulations. But similar provisions as made in terms of para 15 are only for non-scheduled formulations and not for non-scheduled bulk drugs . 14. In other words, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply there has to be a sale in the course of wholesale trade. We have reproduced hereinabove the relevant provisions of the section and we find the claim to be correct. The main section as well as the proviso proceeded on the assumption that there is a sale. Where there is no sale this proviso would not apply and even if there is a price determined under any other law that price would not become the normal price in the absence of a sale. Clause (b) of Section 4(1) refers to the situation where the goods are not sold. It has been claimed and accepted that none of the bulk drugs including Etofylline was ever sold. Therefore, the determination of price of this substance would not be governed by the provision of Section 4(1)(a) but would have to be made in terms of Section 4(1)(b) and the Central Excise (Valuation) Rules, 1975. 19. The next issue for determination is whether the demand made for the extended period would survive. M/s. GRL have claimed that during the period April, 1995 to August, 1996 the cost construction statements were supplied to the authorities. The Department thus was aware of the facts and at this stage it cannot claim suppression. It was claimed that the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result in Revenue neutral. In such circumstances, we are clear in our mind that job worker cannot be attributed with any intention to evade payment of duty. In the absence of such an intention to evade payment of duty, Department will not be justified in invoking the provision contained in proviso to Section 11A to the Act. The facts in the present case being akin the ratio of the above judgment would apply. We, therefore, hold that the demand for the extended period would not sustain. 20. On the basis of our earlier discussions, the demand within the normal period would however sustain. 21. We have earlier held that for such determination the Valuation Rules have to be followed. The show cause notice alleges that the applicable Rule would be Rule 6(b)(ii). In the arguments before the Commissioner and also before us it was claimed that the comparable price was available for all the similar goods manufactured by other manufacturers. Only in one case, the argument was made, comparable price was not available. But it is likely that the assessee can show evidence of such price in regard to other bulk drugs also. Therefore, for determination of the quantum of duty short-paid dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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