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TMI Blog2011 (2) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... o which the packaging materials and the and flavor mix are cleared is their holding company M/s. Parle Biscuits Ltd. The period of dispute in this case is from 1-1-99 to 31-3-2003 and throughout this period, clearances of packaging materials and flavour mix to other contract manufacturing units and to their holding company/sister concerns were being made on payment of duty on 115% of the cost of production. On 5-9-2003, the jurisdictional Central Excise officers visited the appellant's factory and checked the records and it was found that while in respect of clearances of the packaging materials and flavour mix for captive consumption within the unit and to sister concerns and the contract manufacturing units, duty was being paid on 115% of the cost of production, the cost of production being taken was the cost of production for the preceding financial year and not the current financial year, while according to the Department, the assessable value should have been determined on the basis of the cost of production for the current financial year. Inquiry was made with Shri Rajender Monga, Assistant Manager (Excise) and Authorised Signatory of the appellant company and his statement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11AC of the Central Excise Act, 1944 and besides this, penalty of Rs. 2 Lakh was imposed on Shri Rajender Monga under Rule 209A of the Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2001/2002. It is against this order of the Commissioner (Appeals) that these two appeals have been filed by the appellant company and its Asstt. Manager (Excise), Shri Rajender Monga. 2. Heard both sides. 2.1 Shri A.R. Madhav Rao, Advocate, the ld Counsel for the appellant, pleaded that the assessable value in respect of clearances for captive consumption within the unit and to contract manufacturing units and other sister concerns for their captive consumption is the same as the assessable value in respect of clearances to M/s. Parle Products Limited, the holding company, that M/s. Parle Products Limited, even though the holding company of the appellant company, cannot be treated as related person, as there is no evidence of mutuality of interest between them, as there is nothing on record to show that their relationship has influenced the price, that in this regard reliance is placed on the judgment of the Hon'ble Bombay High Court in the case of Ralliwolf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 and normal price during the period prior to 1-7-2000 is the price at the time of place and removal and when this price is not available, by applying the Central Excise Valuation Rules, the nearest ascertainable equivalent of normal price/transaction value is required to be determined and for this purpose, it would not be correct if the assessable value is determined on the basis of the cost of production for the previous financial year; (b) the appellant company has deliberately determined the assessable value on the basis of the previous year's cost of production, which has resulted in huge short payment of payment of duty while it was possible for the Appellant company to go in for provisional assessment while paying duty on the assessable value determined on the basis of previous year's cost of production and get the assessments finalised when the current year's cost of production was available. 3. We have carefully considered the submissions from both the sides and perused the records. 3.1 The period of dispute in this case is from 1-1-1999 to 31-3-2003. During the period 1-1-99 to 31-6-2000, old Section 4 read with Central Excise (Valuation) Rules, 1975 was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the comparable goods. If the price of the comparable goods was not available, the assessable value was to be determined under Rule 6(b)(ii) on the basis of the cost of production or manufacture including the profit, which the assessee would have earned on the sale of such goods. 3.3 During the period w.e.f. 1-7-2000, as per the provisions of Section 4(l)(a) the assessable value of the goods was to be the transaction value, as defined in Section 4(3)(d), for delivery at the time and place of the removal, the assessee and the buyer being not related and the price being the sole consideration for sale. In any other case, including the case where the goods are not sold, the transaction value was to be determined under Central Excise Valuation Rules, 2000. Rule 8 of the Central Excise Valuation Rules, 2000 provided that when the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods. 3.4 From perusal of the provisions of Section 4 as it existed during the period prior to 1-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... captive consumption within the unit or to sister concern/contract manufacturing units, there is no short payment of duty. We do not agree with this plea of the appellant, as in terms of provisions of Section 4(3)(b) of Central Excise Act, 1944, as it stood during the period w.e.f. 1-7-2000 read with Rule 10 and 9 of the Central Excise Valuation Rules, 2000, if the buyer is a holding company or subsidiary company of the assessee, the assessee and the buyer would be deemed to be related persons and if the related buyer uses the goods for manufacture of these articles, the assessable value would have to be determined under Rule 8 of the Valuation Rules. The judgments of Hon'ble Bombay High Court in the case of Ralliwolf Ltd. v. Union of India reported in 1992 (59) E.L.T. 220 (Bombay) and Hon'ble Supreme Court in the case of Commissioner of Central Excise-II, Chennai v. Beacon Neyrpic Ltd. reported in 2006 (193) E.L.T. 16 (S.C.) are in respect of the provisions of Section 4 of the Central Excise Act, 1944, as it stood during the period prior to 1-7-2000 when the definition of related person was worded in a different manner. For the period prior to 1-7-2000, even if the criteria for tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." The same view has been taken by the Supreme Court in the case of Commissioner of Central Excise v. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T. 276 (S.C.) wherein the Hon'ble Supreme Court has held that something positive other than mere inaction or failure on the part of manufacturer, conscious or deliberate withholding of information by manufacturer is necessary to invoke larger limitation of five years. 6.1 Coming to the facts of the case in hand, we find that on 23-11-2001, the appellant's factory was visited by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty in the show cause notice has been raised where the duty has been short paid by the party. In case, if any excess duty has been paid by them, refund claim can also be filed by them under Section 11B of the Act." In view of the fact that on account of determining assessable value on the basis of preceding years, cost of production, in some cases, there have been higher duty payment, it cannot be alleged this was done with the intention to evade the duty. Moreover, in respect of clearances within the unit for captive consumption or to sister concerns, the Cenvat credit of duty was immediately available and hence, there could not be any intention to evade the duty. The Larger Bench of the Tribunal in the case of Jay Yushin Ltd. reported in 2000 (119) E.L.T. 718 (Tribunal-LB) has held that in such a situation, the longer limitation period cannot be invoked. 6.2 In view of the above, we are of the view that the criterion prescribed by the Hon'ble Supreme Court for invoking the limitation period under proviso to Section 11A(1) of Central Excise Act is not satisfied and hence, the longer limitation period would not be available to the Department for recovery of short paid duty ..... 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