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TMI Blog2011 (2) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the department and as such the entire duty demand is time barred - In view of this the impugned order confirming the duty demand and imposing penalty under Section 11AC is not sustainable and the same is set aside. The appeal is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... that during April 1998 to June 2000 period, the assessable value of Caustic Soda in respect of clearances to the factories at Harihar, Kosamba and Alibagh was not based on the average value of the clearances to independent buyers during the previous month and that the duty had been paid on much lower value, which appeared to have been determined arbitrarily. On inquiry with the appellants it was learnt that for determining the assessable value of the clearances of Caustic Soda lye for captive consumption, the average price to independent buyers for the previous month had been adopted only in respect of clearances to the Fibre Division of the appellant company at Nagda and in respect of clearances of Caustic Soda lye to the factories at Harihar, Kosamba and Alibagh, the price adopted was the average price during the respective month at those places, which did not appear to be correct. The department was of the view when in respect of clearances of Caustic Soda lye for captive consumption, to the Fibre division at Nagda, the assessable value, with the approval of the Assistant Commissioner, was being determined on the basis of the average price of sale to independent buyers during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellant unit was discharging duty liability on the basis of price at which such Caustic Soda lye was being purchased by receiving units from other unrelated buyers, that is the average price of Caustic Soda lye at those places and not the average selling price of Caustic Soda lye to independent buyers by the appellant unit during the preceding month, that this practice was being followed by the appellant company since beginning and from time to time the necessary price declarations under Rule 173Q of the Central Excise Rules, 1944 had also been made, that in respect of clearances by the appellant unit of the Caustic Soda lye to the units at Harihar, Kosamba and Alibagh, the determination of value on the basis of purchase price of same goods by those units was the correct method as the value under Rule 6(b)(i) can be based on the selling price of the comparable goods of other manufacturers also, that when the recipient units at Harihar, Kosamba and Alibagh were purchasing comparable goods from unrelated manufacturers, it would be appropriate to adopt the average purchase price of the comparable goods at Harihar, Kosamba and Alibagh, rather than the Appellant unit's selling p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rule 6(b)(i) of the Valuation Rules, in respect of clearances for captive consumption the assessable value of the goods was to be determined on the basis of the price of the comparable goods manufactured by the assessee and only if the comparable goods are not manufactured by the assessee, the price of comparable goods manufactured by other units could be adopted, that in this case the chemical division of the appellant company had a number of sales of Caustic Soda lye to unconnected buyers and, therefore, in respect of the clearances of Caustic Soda lye to their fibre division at Nagda, the practice of determining assessable value on the basis of average sale price to independent buyers during the previous month had been rightly adopted, that having adopted this valuation practice for determining the assessable value of the clearances for captive consumption of Caustic Soda lye to fibre division at Nagda, there was absolutely no justification for the appellant company to adopt a different and lower assessable value in respect of clearances of the same goods - Caustic Soda lye to the unit at Harihar, Alibagh and Kosamba, based on the purchase price at which the receiving units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im Industries Ltd., Harihar and M/s. Vikram Ispat, Alibagh duty was being paid on a much lower value determined on the basis of purchase price of Caustic Soda lye by these units from other buyers. According to the department in respect of clearances of Caustic Soda lye to M/s. Birla Cellulosic, Kosamba, M/s. Grasim Industries Ltd., Harihar and M/s. Vikram Ispat, Alibagh, the duty should have been paid on the average price of clearances of Caustic Soda lye to independent buyers during the previous month i.e. on the value on which duty was being paid in respect of clearances to Fibre division, Nagda. It is on this basis only that this duty demand has been confirmed against the appellant and penalty has been imposed under Section 11AC. Thus, the first point of dispute is as to whether payment of duty by the appellant in respect of clearances of Caustic Soda lye to M/s. Grasim Industries Ltd., Harihar, M/s. Birla Cellulosic, Kosamba and M/s. Vikram Ispat, Alibagh on the value determined on the basis of the average purchase price of Caustic Soda lye by these units from other buyers was correct and permitted under the provisions of Section 4 of the Central Excise Act, 1944 readwith Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive consumption or for distribution as free trade samples, their price is not known for the reason that there are no sales to independent buyers at that time and in such cases, the price of the goods was to be determined on the basis of price at which such goods have been sold at any other time nearest to the time of removal of the goods under assessment after making the necessary adjustments, if any, required. This rule would also be applicable when the clearances were for depot from where the goods were to be sold and at the time of removal of the goods from the factory, there were no sales at the depot for some reason and the depot sale price of the goods at the time of removal was not known and in such a situation this rule permitted determination of assessable value on the basis of the depot price of such goods at any other time nearest to the time of removal of the goods under assessment after making adjustments, if any, required. 5.1 Rule 5 provided for determination of assessable value in a situation where the price is not the sole consideration for the sale. 5.2 Rule 6 was applicable if the value of the excisable goods under assessment could not be determined u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice had been issued on 23rd April 2003 and since there is no ground for alleging wilful misstatement or suppression of facts on the part of the appellant with intent to evade the payment of duty, the normal limitation period is not applicable and the entire duty demand is time barred. In support of this plea, the appellant has furnished the following evidence. (i) Letter No. P.DECL/M Cell/05/220/ dated 20th December 1995 of Superintendent, Central Excise, Range I, Nagda addressed to M/s. Grasim Industries Ltd. Caustic Soda lye division, Nagda (ii) RT-12 returns for the months of April 1998, April 1999 and April 2000 alongwith list of invoices regarding clearances of Caustic Soda lye which give the details of the clearances to their fibre division at Nagda and also to the factories of M/s. Birla Cellulosic, Kosamba, M/s. Grasim Industries, Harihar and M/s. Vikram Ispat, Alibagh. 6.1 Coming to the letter dated 20th December 1995 of Superintendent, Central Excise, Range I, Nagda to the appellant company, the same is reproduced below :- "Office of the Superintendent, Central Excise, Range I, Nagda letter No. P.DECL/M Cell/05/220/dated 20th December 1995 To, M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igarh-I reported in 2007 (216) E.L.T. 177 (S.C.) with regard to scope of the term "suppression" used in proviso to Section 11A(1) of the Central Excise Act, 1944 has held thus :- "10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts, unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." 6.3.1 In para 12 of the above judgment, the Hon'ble Supreme Court has observed as under :- "12. As far as fraud and collusion are concerned, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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