9911796707
TMI Blog2002 (6) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... factory at Mandideep, District Raisen, M.P. The petitioner-company is engaged in manufacture of Detergent Powder under the brand name of Ariel, falling under Chapter 3402.90 of the Central Excise Tariff Act, 1985. As the petitioner company is required to pay Central Excise duty on ad valorem basis, it has submitted price declaration under Rule 173 of the Central Excise Rules before the Central Excise Department. Petitioner alleges that the petitioner company was incurring losses, and it has not added any notional profit for arriving the assessable value in the above price list. However, as desired by the Central Excise Department, the petitioner submitted a letter dated 9-5-1995 to the Central Excise Department, informing the schedule (14) forming part of account of annual report for the year 1993-94. Five years balance-sheet was also filed as per letter dated 30-8-1995 Annexure-P/5. On 14-2-1997 the petitioner was asked to submit written agreement between the petitioner and PGHP. In this letter it was also mentioned that on perusal of profit and loss account for the year 1993-94 an amount of Rs. 12.80 crores reflect as other income. The balance-sheet was to the knowledge of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period 96-97 sales was Rs. 307.6 crores, profit before tax was Rs. 39.8 crores and percentage of profit was 11.44. Therefore, it appears that the noticee have undervalued their product to the extent of profit margin which shall form the part of assessable value for the purpose of payment of Central Excise duty in terms of section 4(l)(b) of the Central Excise Act, 1944 read with rule 6(ii) of Valuation of Rules 1975 which resulted in short payment of duty amounting to Rs. 1,85,51,206/-. The same is recoverable from the noticee in terms of Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A(1) of the Central Excise Act, 1944. 3.It was alleged in the show cause notice P/7 that the petitioner noticee have wilfully mis-stated the fact and has never disclosed the profit margin earned by them on the sale of goods, while filing the price declaration as required under rule 173C of Central Excise Rules, 1944 with the department. The price declared in the price declaration does not include the element of profit margin for determining the unit value of the product. This fact has come to the notice of the department on scrutiny of their private records viz. balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department verified/scrutinized their balance-sheets, it came to the knowledge of the Department that they had made certain profits during the period in question but had not included the same in the assessable value declared by them. Thus, the suppression or wilful misstatement on their part is clearly proved and, therefore, the proviso to Section 11A(1) is rightly applicable in this case and so the demand raised vide notice dated 3-7-1998 is not hit by time limitation. The second notice dated 3-7-1998 is for the period April and May 1998, the returns for which were filed in May and June, 1998 respectively and so it is also not hit by time limitation as the demand has been raised within six months time period. Thus, no demand is time barred. 4.On merits, the Commissioner of Central Excise and Customs concluded in the order Annexure-P/2 that the assessable value is required to be determined in terms of the provisions of Section 4(1)(b) of the Act read with Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 as it existed at the relevant time. As per Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975, the assessable value shall be determined on the basis of cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue determined in the notice is incorrect and improper as the same is not based on actual cost of production is not acceptable. If their price had gone down at some time, they were at liberty to file revised price list claiming lower assessable value. Their failure does not give them a right to change or amend the rule and not to add profit element in the production cost for arriving at the assessable value. Rules nowhere provide such a concession. 5.It was further held, as regards to provisions of Sections 11AB and 11AC are concerned, the same are also applicable in this case because it is proved that the assessee had suppressed or wilfully misstated the facts. As it is proved from the foregoing that the assessee had suppressed certain information from the department by not disclosing profit element in the price declaration filed from time to time, their intention to evade duty is established and so they are liable for penalty under Section 11AC of the Act and so also the interest under Section 11AB of the Act is chargeable from them on the amount of duty confirmed. Their submission that for the period prior to 28-9-1996 (the date when Sections 11AB and 11AC were introduced) Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidiary company, a relative and distributor of the assessee, and any sub-distributor of such distributor. In November 1993 an agreement was entered into by Procter and Gamble India Ltd. with M/s. Procter Gamble Home Products Ltd. The main conditions of the agreement are : (i) Procter Gamble India (i.e. the noticee) shall sell and Procter Gamble Home Products shall purchase from Procter Gamble India on a principal-to-principal basis products viz. (Ariel micro system and Ariel Detergent powder manufactured by Procter Gamble India). (ii) Procter Gamble Home Products shall furnish to Procter Gamble India products and packaging specifications including labelling and trademark legend (hereinafter referred to as F.P. specifications). (iii) All F.P. specifications shall remain in the sole and exclusive property of Procter Gamble Home Products. (iv) Procter Gamble India shall not use any of the F.P. specifications in the manufacture of packing of any product either for itself or for third parties. (v) Procter Gamble India shall give all reasonable facilities to Procter Gamble Home Product's representatives to inspect, tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears that the noticee had received Rs.12.80 crores from Procter Gamble Home Product, i.e. sole buyer on the condition that Ariel and Ariel microsystem detergent powder is sold/marketed by Procter Gamble Home Product only. Thus, it is very much clear that price declared by the noticee from time to time cannot be termed to as normal price under section 4(1)(a) of Central Excise Act, 1944. It was also noticed that prior to 1-4-1994 excisable goods manufactured by the noticee were cleared to various sales depots on payment of duty at the ex-factory prices declared in the price lists filed under Rule 173C of the rules. From 1-4-1994 i.e. from the date the new "invoice based assessment system" was introduced, assessable value for payment of excise duty was reduced by the noticee arbitrarily. There was however, no change in the Maximum Retail Price (MRP) of these goods and MRP prevailing as on 1-1-1994 had continued from 1-4-1994 also. This reduction in assessable value resulted short payment of duty amounting to Rs. 4,11,77,059/- for the period April, 94 to June, 96 (As per Chart-I). The same is liable to be recovered from the noticee in terms of Rule 9(2) of the rules read with prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of marketing and selling the said goods to M/s. PGHP and they were concerned with the manufacture and sale of the goods to M/s. PGHP and the marketing and distribution thereof was the sole responsibility of M/s. PGHP. As they were no longer concerned with the marketing of the said goods, all such marketing and distribution expenses were no longer incurred by them. The assessable value of the goods were revised in accordance with rules. During the relevant period the excise duty was chargeable on the said goods on ad valorem basis. MRP had nothing to do with the levy of excise duty. The department was aware of the agreement as well as the agreement for transfer of the business of marketing and distribution of the said goods by them to M/s. PGHP. 13.The Commissioner of Excise held in Para 22 an amount of Rs. 5,66,99,389/- along with penalty to the same extent has been imposed and penalty of Rs. 1,00,00,000/- under Rule 173A on Proctor Gamble India Ltd. and interest on the demand confirmed and penalty of Rs. 10,00,00,000/- was imposed on petitioner No. 2. Thus, show cause notice date 3-7-1998 was disposed of accordingly. 14.Shri A.M. Mathur, learned Senior Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available, which is efficacious and disputed questions of facts cannot be decided in the present writ petitions. Remedy of appeal cannot be said to be onerous. Reliance has been placed on Todi Industries Ltd. v. U.O.I, 1999 (111) E.L.T. 8 (S.C.); U.O.I. v. Bajaj Tempo Ltd., 1997 (94) E.L.T. 285 (S.C.). 17.First I take up for consideration the Writ Petition No. 856/2001. It has been argued on behalf of petitioner that the Commissioner had no jurisdiction to issue notice to show cause and to pass consequent final order. The time limit for issuing show cause notice is six months u/s 11A of the Act. If the excise duty is evaded with collusion or suppression of fact, time limit is five years, thus extended period of limitation was not available to the Commissioner. Department had knowledge from the balance-sheets. Thus, petitioner submit the findings recorded in the final order are perverse. Thus, interference should be made in the writ petitions. 18.Learned Counsel for the petitioner has relied upon the decision of the Apex Court in Collector of Central Excise v. Chemphar Drugs and Liniments, 1989 (40) E.L.T. 276 Para 8 it was held that intent to evade payment of duty is a must, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icates that it is in nature of an exception to the principal clause. Therefore, its exercise, is hedged one hand with existence of such situation as have been visualized by the proviso by using such strong expression as fraud, collusion etc. and on the other hand it should have been with intention to evade payment of duty. Both must concern to enable the Excise Officer to proceed under this proviso and invoke the exceptional power, since the proviso extends the period of limitation from six months to five years, it has to be construed strictly." In CCE v. HMM Ltd. - 1995 (76) E.L.T. 497 in Para 2 the Apex Court held that fact must be clearly stated in show cause notice : "if the Department proposes to invoke the proviso to Section 11-A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to five years. Unless the assessee is put to notice the assessee would have no opportunity to meet the case of the department. The default enumerated in the first proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction of this Court under Article 226 of the Constitution" — (Paras 19 20)." 19.Learned Counsel for the petitioners submits that in view of the aforesaid decisions this Court should make interference in the writ petitions directly and the petitioners should not be asked to avail the statutory remedy of appeal available under the Act as the remedy of appeal is onerous. 20.It has become necessary to examine prima facie whether order is palpably without jurisdiction. I venture to consider various findings recorded by the Commissioner of the Central Excise and Customs. This course is adopted to do justice to the various submissions raised by learned Senior Counsel for the petitioners though in my considered opinion facts are such the orders cannot be said to be without jurisdiction and remedy of appeal is the appropriate remedy. I do so without meaning to record a finding on merit of the case with limited purpose whether writ jurisdiction of this Court should be exercised. 21.In the instant case, it is clear that the price declaration/list filed by the assessee, was accepted by the department on the basis of information supplied/provided by them. If all the information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have saved a substantial amount of money by paying less duty. The assessee's submission has not been accepted by the Commissioner. But, there is further finding recorded that the assessee had suppressed certain information from the Department by not disclosing profit element in the price declaration filed from time to time, their intention to evade duty is established, hence, they have been held liable to make payment of duty and penalty along with interest. 22.In view of the findings recorded, it is apparent there is disputed factual aspects. It cannot be said at the outset that the order passed by the Commissioner of Central Excise and Customs is palpably erroneous. The price declaration was not filed for the several years. Admittedly in the declaration the profit element was not mentioned, declaration was not as per rules. Non filing of correct price declaration has been held to be wilful misrepresentation or the case of suppression. Thus there are two categories enumerated; proviso to Section 11A makes it clear that if the excise duty has not been paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited. Petitioner will have to comply with the condition. Section 35F of the Central Excise and Customs Act requires deposit of duty and penalty. Section 35F is quoted below : "35F.Deposit, pending appeal, of duty demanded or penalty levied. - Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied : Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of revenue". 26.In my opinion when the legislature has thought in its wisdom that duty and penalty should be deposited before the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal properly which cannot be said to be an onerous remedy and what has been stated in the context in W.P. 856/2001, need not be reiterated with respect to W.P. No. 1519/2001, challenge is not to the show cause notice, but, to the final order, against which appeal lies. Apex Court in Seraikella Glass Works (P) Ltd. v. Commissioner of Central Excise, 1997 (91) E.L.T. 497 (S.C.) has held that : "This case is a good illustration of why the High Court should not intervene in revenue matters in exercise of writ jurisdiction where adequate alternative statutory remedies are available. In the instant case, complications have arisen because of the directions given by the Patna High Court on 15-9-1982 after quashing the various notices and orders in courses of proceedings under the Central Excise and Salt Act." 29.In State of U.P. and Another v. Labh Chand, AIR 1994 S.C. 754 the Supreme Court has laid down that : "When a Statutory Forum of Tribunal is specially created by a statute for redress of specified grievances of persons on certain matters, the High Court should not normally permit such persons to ventilate their specified grievances before it by entertaining petitions und ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
