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TMI Blog2004 (3) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost accountant certificates. Even if we admit that the accountants certificate are erroneous such errors will not constitute mens rea for the assessees unless it is establish that the errors were made use of by the assessee to evade payment of duty. No evidence of this sort has been brought by the department. In this case the demand for duty was raised on the basis of statutory records filed by the assessee. It has been consistently held by this Tribunal that in such situation the extended period of limitation cannot be invoked by the department vide DCM Engg. Products v. CCE[ 2002 (3) TMI 148 - CEGAT, COURT NO. I, NEW DELHI] , Pranav Vikas (India) Ltd. v. CCE [ 2002 (6) TMI 99 - CEGAT, NEW DELHI] . Price declarations, RT 12 returns, Accountant Certificates and allied statutory documents submitted by the assessee from time to time explicitly or implicitly disclosed the relevant facts to the department at the appropriate stages. There was no suppression of facts on the appellants part. The larger period of limitation therefore cannot be invoked. We are unable to agree with the Commissioner s observations in the para cited supra giving out reasons as to why he alleges suppression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 to 24-7-95. During this period the appellant was known as M/s. Asoka Mills Ltd. having a separate entity of its own. It was registered under Central Excise Act in that name. During this period the raw materials were supplied by M/s. Arvind Mills Ltd. for manufacturing yarn on job work basis. The appellant was collecting job charges for the yarn manufactured by him. The assessable value of cotton yarn which was based on cost of raw material and the job charges. This is in accordance with the Supreme Court decision in the case of Ujagar Prints Ltd. [1988 (38) E.L.T. 535] which has been further clarified by the Apex Court as reported [1989 (39) E.L.T. 493]. This method of valuation was communicated to the department under a declaration dt. 27-4-1994. The declaration is in prescribed form. The heading of column 3 of the form shows the cost of raw material i.e. cotton supplied by M/s. Arvind Mills Ltd. for 1 kg. of yarn. To this cost conversion charges were added to arrive at the assessable value. Along with this declaration a letter from M/s. Arvind Mills Ltd. dt. 27-4-94 was enclosed which clarified that the cotton cost was taken on the basis of average of February and March 1994. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, it was always understood that both the factories belonged to the same group. The proposal for amalgamation was under consideration for several years and the deeming provisions giving retrospective effect of amalgamation were inserted as per the request of M/s. Arvind Mills Ltd. He further observed that M/s. Arvind Mills Ltd. have agreed to take upon them various responsibilities belonging to the appellant and this was approved by the BIFR Committee. His conclusion therefore is that the transaction between M/s. Arvind Mills and the appellants have seized to be independent and they have become related persons, a fact which was not disclosed to the department. The department became aware of this situation only when a copy of the minutes was submitted but the appellant vide their letter dt. 22-12-2000. The Commissioner also considered the facts that M/s. AML leased out open end spinning machines to the appellant and the appellant was doing job work for M/s. AML only. He held that the conversion cost and the raw material cost indicated by the appellants were not independent once there was a proposal for amalgamation. He argued that the assessable value even during this period when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded as they were certified by Cost Accountant who is the most competent authority in this field. It was only, when the elements within the conversation cost were investigated into, by the dept. Cost Accountant that this misdeclaration came to notice. This plea, also, therefore, does not help the assessee and I therefore hold that the above elements were not included with intent to evade duty and therefore the extended period under Section 11A has been rightly invoked. Yet another plea that the officers of the dept. were in the full know of the process and their unit was audited by different audit parties, they could have pointed out the above suppression, is also of no support as firstly the Audit Officers have also not questioned the certificate of a Competent Authority like Cost Accountant, and therefore if the Cost Accountant, has misstated the cost of production then the assessee cannot be absolved from the charge of misdeclaration/suppression of facts.". 5.On merits the Commissioner argues that according to the costing principles bonus and gratuity paid to the workers engaged in the production of cotton yarn are parts of wages and therefore that cost should go into the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heard both sides. 8.We shall deal with the limitation aspect as that happens to be the core issue. 9.The demand for duty in this case is beyond the normal period of limitation under Section 11A(1) of the Central Excise Act, 1944. The allegation raised in the show cause notice for invoking the extended period of limitation against the assessee is that he suppressed/misdeclared facts with intent to evade payment of duty. The appellant submitted that they had filed price declarations under Rule 173C for the relevant period giving details of the assessable value on the basis of which duty was paid. The price was declared on the basis of their cost accountant's certificate. The price declarations were approved by the Central Excise authorities and no objection was raised as to the costing of the goods captively consumed. The RT 12 returns filed by the appellant from time to time were also duly assessed by the authorities. It has been argued that proforma C, F & M under the Cost Accounting Records (Cotton Textile) Rules, 1997 clearly indicated that bonus, gratuity and interest were not elements of cost of production. Annexures IV, VI, VII and IX to the said rules also excluded these it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declarations, RT 12 returns, Accountant Certificates and allied statutory documents submitted by the assessee from time to time explicitly or implicitly disclosed the relevant facts to the department at the appropriate stages. There was no suppression of facts on the appellants part. The larger period of limitation therefore cannot be invoked. 12.We are unable to agree with the Commissioner's observations in the para cited supra giving out reasons as to why he alleges suppression on the part of the appellant. Nothing prevented the department from making an inquiry as to what elements were specifically included in the cost of production of yarn when the appellant disclosed that administrative overheads and salaries paid to the workers were taken into consideration while computing the cost of production. It is not open to the department at a later stage to say that the assessee did not indicate whether he included bonus, gratuity, interest and profit while computing the cost. 13.Once we observe that suppression cannot be attributed to the appellant, penalties under Rule 173Q or confiscation of plant and machinery or penalties under Rule 209A can be sustained. 14.The department see ..... X X X X Extracts X X X X X X X X Extracts X X X X
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