9911796707
TMI Blog1999 (9) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ntents of the affidavit and the counter affidavit together with all other relevant material documents available on record in the form of typed set of papers. I have also taken into consideration the various points raised by the learned counsel appearing for the respective parties during the course of their arguments. 4.In the above facts and circumstances, the only point that arises for consideration in this case is, as to whether there are any valid grounds to allow this writ petition or not. 5.The brief facts of the case of the petitioner as seen from the affidavit are as follows. : The petitioner is a limited company having its Registered office at Dharangadhara, Gujarat State and having a manufacturing unit at Arumuganeri, in Chidambaranar District in the State of Tamil Nadu. The petitioner is carrying on the business inter alia of the manufacture and sale of various basic heavy chemicals. One of the main products of the petitioner is caustic soda which is manufactured by electrolising Sodium Chloride solution and thereafter treating the released sodium with water to produce Caustic Soda Lye. In the process of electrolising Sodium Chloride solution, wet Chlorine gas is rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% basis. As a total after thought, after a period of over four years, the respondent herein sought to reopen the entire matter by issuing a show cause notice by invoking proviso to Section 11(A) of the Act on the allegation that the petitioner has suppressed information of having maintained records on 100% basis with an intention to evade duty. The show cause notice dated 12-5-1983 covered the period from 1-3-1979 to 30-11-1983. Subsequently the above period was restricted from 1-3-1979 to 31-5-1981 for a total quantity of 51,100 MT and alleged evasion of Excise duty to the tune of Rs. 20.4 lakhs approximately. Aggrieved by the allegation of suppression, the petitioner filed writ petition No. 9566/84 challenging the above show cause notice on the grounds inter alia of jurisdiction and limitation. The above writ petition was admitted and original proceedings were stayed. Thereafter by an order dated 29-7-1986 of this court the proceedings were allowed to continue and the Collector was directed in WMP. No. 6665 of 1985 to give a finding on jurisdiction and limitation as a preliminary issue. The Collector by his order No. 40/87, dated 24-4-1987 upheld his jurisdiction and rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erior officer and the only difference is that the show cause notice was for the period between 1-6-1981 to 21-6-1983 i.e., for an additional period of 61/2 months beyond 30-11-1982. The petitioner gave a detailed written representation to the show cause notice and also appeared for a personal hearing where the petitioner had inter alia raised the issue that when the adjudication for the earlier period was already sub judice in writ proceedings and stay orders have been obtained, it would not be proper for the second respondent to proceed with the adjudication. However, the second respondent by his order dated 31-5-1991 rejected the contentions of the petitioner and passed an order with effect from 1-6-1981, revaluing the petitioner's price list No. 7/82-83 at a value of Rs. 220/- per MT of 30 to 33% concentration. The main contentions raised by the petitioner were that there was an approved classification list and since there could be no dispute regarding the classification or quantification and that the maintenance of the records on 100% basis had been a procedure followed right from the beginning even before the initiation of excise proceedings. These were not discussed in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smuch as the second respondent ought not to have proceeded with the adjudication when on identical facts an order has been passed by the superior officer in respect of the immediately preceding period, which order has of his superior officer has been stayed by this court in writ proceedings, and that having no exercised his jurisdiction to continue with the adjudication, the second respondent erred in not discussing the various objections raised by the petitioner and instead, refused to do so on the grounds that those matters were sub judice leading thereby to a situation by which on one hand the matter would not be deferred till the court's verdict is known; but on the other, the contentions raised by the petitioner could not be discussed because of pending proceedings in the court and thus has done grave injustice and hardship to the petitioner. Further it is their case that in the instant case, it is not a factual dispute that the maintenance of records on 100% basis had been a practice since starting of the industrial undertaking in 1965 when the product, i.e., HCl was not even excisable and that therefore consequently any allegation that the maintenance of records on 100% basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 as per Notification No. 25/64, dated 1-3-1964. However this exemption was withdrawn and from 1-3-1979 HCl acid was subjected to Central Excise duty as per Notification No. 48/79, dated 1-3-1979. The company filed a classification list in respect of HCl acid manufactured on 16-4-1979. The product was described in their declaration as 'Hydrochloric Acid (on 100% Basis)". The classification list was approved on 2-6-1979, by the Assistant Collector under Tariff item 14G with a basic excise duty of 10% adv. As the HCl acid manufactured by the petitioner was consumed captively, they also filed a price list in part-VI on 17-4-1979 with a description of "Hydrochloric Acid (on 100% basis)". The price claimed for approval was Rs. 25.27 per MT. However, the Asstt. Collector approved the above price list on 2-6-1979 after ravising the assessable value to Rs. 175/- per MT as the company had sold HCl acid to industrial consumers at the rate of Rs. 175/- per MT prior to 1-3-1979. After their appeal was rejected in this regard, the revised assessable value of the product was accepted by the company and duty was paid accordingly. They also contended that since the HCl acid produced by the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for captive consumption, there is no factory gate sale and subsequently no factory gate price. Hence, the correct procedure for determination of value is by comparison with other manufacturers. According to the respondents M/s. Mettur Chemicals is the only comparable unit for M/s. D.C.W. Ltd., Sahuouram for the following reasons : (1) both are Public Ltd., companies; (2) both are situated in Tamil Nadu; (3) both the labour charges incurred are more or less same and hence, the action taken by the department to use the price of these two units as the basis for valuation is fair and sustainable under Rule 6(b)(i) of the valuation Rules. Further it is also contended by the respondents that though the petitioners industrial licence, refers to 100% HCl acid, this is not of relevance to Central Excise Law. As a licensee under CESA 1944 the petitioner is excepted to make a true and correct declaration of the excisable goods manufactured by them in the classification list/price list and statutory records. They have failed to discharge this obligation. By declaring the concentration of HCl acid manufactured by them as 100% the petitioner was able to manufacture and captively consume three t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of HCl acid produced by them valuation of this product has to be made by resorting to the provision of Rule 6(b)(i) or 6 (b)(ii) of the Central Excise (Valuation) Rules, 1975. Since the HCl acid produced by the petitioner is comparable with that produced by M/s. Mettur Chemicals and Industrial Corporation Ltd., Mettur, determination of assessable value of HCl acid produced by the M/s. Mettur Chemicals and Industrial Corporation Ltd., Mettur is legally in order according to Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, as rightly contended by the respondents. Further show cause notice was issued on 25-8-1981 to the petitioner demanding differential duty to the tune of Rs. 1,62,689.83 on the quantity of HCl acid manufactured and consumed by the petitioner captively during the period from 1-3-1979 to 31-5-1981. The petitioner paid the amount voluntarily. However while making the payment, the petitioner wanted a declaration from the Department that the above payment settles the dues relating to the HCl Acid Manufactured and cleared by them during the period 1-3-1979 to 31-5-1981 fully and finally. To this the Assistant Collector gave a reply vide his letter dated 3-2-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdiction to decide cases of recovery of duties short levied due to fraud, collusion, mis-statement of facts etc., was transferred to Collector. Thereafter the petitioner moved this Court in W.P. No. 9566/84 and obtained an injunction. On the vacation of the injunction the petitioner appeared for a personal hearing on 19-9-1986 and after granting a proper hearing to the representatives of the petitioner, a speaking order was passed by the Collector of Central Excise, Madurai. The operative part of the order, in effect, can be summed up as follows : "For the demand pertaining to the period 1-3-1979 to 31-5-1981, the show cause notice dated 12-5-1983 issued to the petitioner answerable to the collector does not suffer from the point of lack of jurisdiction and is not hit by limitation. The company may therefore give their reply and argue their case on merits." The demand for the second period 1-6-1981 to 30-11-1982 is to be decided in the light of the decision to be taken by the price list dated 9-3-1982 filed by the company wherein they had indicated that it is effective from 1-6-1981. Against this order, the petitioner filed an appeal before the CEGAT, Madras and the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of HCL of 100% concentration. Coming to the issue of jurisdiction and limitation, a preliminary order on these two aspects was passed by the Collector of Central Excise on 24-4-1987 which was subsequently confirmed by the South Regional Bench of the CEGAT in its order 55/87 on 31-12-1987. Against this order the petitioner approached this court and according to the respondents, this court on 8-9-1988 passed an order as follows : The learned counsel for the petitioner has today, made the following endorsement : "Writ petition has become infructuous and therefore may be dismissed as withdrawn." Inview of the above endorsement, the writ petition is dimissed as withdrawn." Thus from all the above it is made very clear that there was a clear failure on their part to declare the full quantity of acid manufactured and consumed by them. Further the respondents have also made clear that in the case of captive consumption assessable value in the product for payment of Central Excise duty is determined in terms of the provisions of Section 4 of the CESA 1944 read with Valuation Rules of 1975. Under Rule 6(b) (i) of the valuation of the Rules, the value of a product captively co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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