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TMI Blog2005 (1) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent. JUDGEMENT Per : Kapadia, J : This is an appeal under section 35L(b) of Central Excise Act, 1944, preferred by the assessee, against the judgment and order dated 16.2.1999 passed by the Customs, Excise & Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai, confirming the demand made by the department for short-levy amounting to Rs. 18,34,464/- together with a penalty of Rs. 2 lacs. 2. The short question which arises for determination in this appeal is - whether the department was justified, on facts and circumstances of the case, in invoking the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act, 1944 (hereinafter referred to for the sake of brevity as 'the 1944 Act'). 3. The appellant, M.K. Kotecha, proprietor of M/s. Tapi R.C.C. Pipe Product and M/s Sakri Cement Pipe Product, is a manufacturer of R.C.C. pipes and collars falling under Chapter Heading 6807.00. During the period April, 1990 to June, 1992, he cleared RCC pipes and collars to various Societies under the Lift Irrigation Scheme, by declaring that the RCC pipes and collars were not sold but were captively consumed in the projects undertaken by him under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 ,, ,, 258 147 29 20 29 16 499 50 549 - 11 350 ,, ,, 200 140 21 9 26 10 406 41 447 - 12 300 ,, ,, 182 119 18 8 22 9 358 38 394 - 13 750 ,, P2 575 326 50 35 70 45 1101 110 1211 121 14 700 ,, ,, 556 307 47 30 66 42 1048 105 1153 115 15 600 ,, ,, 432 229 33 23 66 42 825 83 908 91 16 500 ,, ,, 307 162 23 21 38 26 577 58 635 64 17 450 ,, ,, 250 133 18 16 33 20 470 47 517 52 18 400 ,, ,, 244 102 17 11 27 16 417 42 459 46 19 350 ,, ,, 183 82 14 8 23 16 326 33 359 36 20 300 ,, ,, 127 72 11 7 22 14 253 25 278 28 RCC Pipe of Class NP3 does not require collar in our L.T. Scheme. Cost of each collar = 10% of Pipe Cost i.e. one pipe mouse of length 2.5 mm = 12 collars length. This is to certify that the above cost of each pipe & collar is correctly calculated and the particulars herein furnished are true & fully stated to the best of my knowledge & brief. Sd/- Signature of Assessee 4. On 19.8.1994, the Collector of Central Excise, Aurangabad issued show-cause notice to the appellant under section 11A(1) of the 1944 Act alleging clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further submitted that the RCC pipes and collars were not sold but were used in the project and, therefore, the valuation of such pipes and collars was done on the cost basis. 6. By order dated 22.5.1995, the Collector came to the conclusion that the appellant was supplying pipes and collars to various Lift Irrigation Schemes; that in the project reports, the valuation data of such pipes and collars was available which was made known to the appellant at the time of negotiations and that there was substantial difference between the rates quoted by the appellant and the rates quoted in the project reports. It was held, that the appellant had misled the department by declaring that RCC pipes and collars were captively consumed when he knew that part VI(b) speaks of consumption in the production of other articles. According to the Collector, the said pipes and collars were manufactured by the appellant in his factory and cleared therefrom. It was further held that the appellant had filed a consolidated tender giving costs estimates which included costs of material, labour, supervision etc; that these estimates were based on the pricing of collars and pipes in the project reports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in [1995 Suppl. (3) SCC 462], it has been held, that, in order to constitute suppression under the proviso to section 11A(1), there should be facts showing that correct information was not deliberately disclosed in order to escape from liability to pay duty. Mere omission is not a deliberate act. 12. In the case of Cosmic Dye Chemical vs. Collector of Central Excise, Bombay reported in [1995 (75) ELT 721], it has been held by this Court that the word "wilful" qualifies the words "misstatement or suppression of facts" in the proviso. That the word "wilful" precedes the word "misstatement". The word "wilful" means intention to evade. In the circumstances, it was held that the department has to establish the intention to evade duty in order to come within the expression "wilful misstatement or suppression of facts" as mentioned in the proviso to section 11A(1). 13. On facts, the basic question which arises for determination is - whether the appellant knew of the comparability of his goods with those of other manufacturers and whether the appellant had misled the department by declaring that the RCC pipes and collars were captively consumed, particularly, when the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) where such goods are sold by the assessee in retail, the value shall be based on the retail price of such goods reduced by such amount as is necessary and reasonable in the opinion of the proper officer to arrive at the price at which the assessee would have sold such goods in the course of wholesale trade to a person other than a related person: Provided that in determining the amount of reduction, due regard shall be had to the nature of the excisable goods, the trade practice, in that commodity and other relevant factors; 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, if any, in the material characteristics of the goods to be assessed and of the comparable goods; (ii) if the value cannot be determined under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a valuation, the assessable value had to be done under rule 6(b)(ii) on the basis of cost of production, including the profits which the assessee would normally earn on the sale of such goods [See: Gwalior Rayon Manufacturing (Weaving) Company vs. Union of India & Others reported in [1982 ELT 844 (MP)]. 18. On enquiry, learned counsel appearing on behalf of the appellant produced before us the Price List proforma alongwith the annexure. We have reproduced the relevant portion of the Price List proforma submitted by the appellant to the department in this case. Although, the appellant contended before the department that the prices of comparable goods in the present case was not known to him, the appellant filed the price list under part VI(a) of the price list proforma. However, the annexure to the price list indicated that the appellant had mischievously priced the said RCC pipes/collars on cost basis without estimating the profits. The Price List proforma in part VI(b) refers to cases where comparable prices are not available and consequently, the determination of assessable value was required to be done on the basis of the total cost. The particulars required to be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rers. Hence, the Collector was right in coming to the conclusion that the appellant had wilfully misstated and suppressed the facts in order to mislead the department. Consequently, the department was right in invoking the larger period for demand of duty under the proviso to section 11A(1). 21. Lastly, on facts, we find that rules 1 to 6 of the Valuation Rules, 1975 had no application. As stated above, rule 6(b) was applicable to captive consumption. In this case, rule 6(b) was not attracted. Therefore, the department was right in making best judgment assessment under the aforestated rule 7 of the Valuation Rules, 1975. 22. In the case of United Glass vs. Collector of Central Excise reported in [1995 (75) ELT 209', this Court held that rule 7 of the Valuation Rules, 1975 was in the nature of a residuary rule, applicable only when valuation cannot be decided under other rules. In the present case, the department was, therefore, right in invoking rule 7. 23. Mr. C.N. Sree Kumar, learned counsel for the appellant submitted that since the classification lists and the price list were earlier approved, subsequently found to be erroneous or defective, reclassification and liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aud, collusion, wilful misstatement or suppression of fact on the part of the assessee and that such a positive act must be in contradistinction to mere inaction. The present case is not a case of simple omission. It is a case of wilful misstatement leading to under-estimation of value of goods cleared by the appellant. In the circumstances, we do not find any merit in this appeal. 26. Before concluding, we may point out that under the show-cause notice, the department had alleged that the appellant had collected extra amount to the tune 0f Rs.21,74,963/- in the guise of central excise duty over and above the duty actually paid to the department. The Collector found that the appellant had collected the said amount under the guise of central excise duty from his clients, who were billed for full quantum of duty paid whereas under the relevant notification, the appellant had paid duty at nil rate or at lower rate. Despite this finding, the Collector came to the conclusion that the said finding was based on presumptions and not on evidence and consequently, the Collector dropped the demand for Rs.21,74,963/- made under section 11-D as not capable of being substantiated. Surprisingl ..... 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