Customs, Excise and Gold Tribunal - Delhi
Khaitan Electricals Ltd. vs Cce on 9 January, 1998
Equivalent citations: 1998(75)ECR573(TRI.-DELHI)
ORDER
U.L. Bhat, J. (President)
1. Order-in-original No. 18/90 dated 30.4.1990 passed by the Collector of Central Excise, New Delhi, is under challenge in this appeal.
2. Appellant, engaged in the manufacture of electric ceiling fans, was filing classification lists and price lists from time to time and on approval thereof, was clearing the goods on payment of appropriate duty. The dispute in this appeal relates to the period 1.1.1985 to 20.9.1986 and 1.3.1986 to 20.9.1986. During these periods, the goods fell under erstwhile TI 68 and Chapter 84 of the new Tariff respectively. During the disputed period, appellant did not include the value of the regulators in the assessable value of the fans. Taking the view that value was so includible and the assessable value on which duty was payable should be higher than the assessable value on which the appellant actually paid duty, show cause notice dated 7.9.1984 was issued invoking the proviso to Section 11A(1) of the Central Excises Act, 1944 and proposing demand of differential duty arrived at by including the value of the regulators in the assessable value of the fans. Appellant resisted the notice on merits and on the ground of limitation. The Collector, overruling these contentions, confirmed the demand of Rs. 7,41,055.24 and imposed penalty of Rs. 75,000.00. This order is under challenge.
3. In view of the decision of the Delhi High Court in Jay Engineering Works, and of the Supreme Court in Jay Engineering Works, , learned Counsel for the appellant submitted that the appeal is not being pressed in regard to the merits of the case. In other words, the appellant accepted that during the period in question the value of regulators should have been included in the assessable value of the fans.
4. Learned Counsel for the appellant contended that none of the ingredients required under the proviso to Section 11A(1) of the Act has been proved in the instant case. There was no suppression of any relevant facts. On the other hand, the Department was all along aware that the appellant was purchasing regulators and supplying the same to the buyers of fans. Reference is made in this connection to copies of three classification lists, copy of price list and letter dated 18.12.1984 by the appellant to the Assistant Collector and the reply dated 28.12.1984 of the Assistant Collector. These submissions are rebutted by Shri K. Srivastava, SDR. At page 36 is a copy of the classification list effective from 1.3.1986. Item 2 in column 2 relates to electric fans. The classification list did not indicate whether regulators were or were not to be supplied with the fans. Similar is the position with regard to classification list effective from 17.3.1985. At page 39 is a copy of the classification list effective from 14.5.1984. The list is seen typed. Column 2 refers to ceiling fans. The words "without regulator" are seen written in ink. In column 10 the appellant claimed entitlement to Rule 56A facility under Notification No. 95/83 in regard to Rotor and Stators. This endorsement is in handwritten and stated "permission under Rule 56A granted as under:
(1) Rotor and stator C. No. iv (16) 125/81 /PL. 1/10643 dated 17.9.1981. (2) Regulator C. No. iv(16)106/81/PL. 2/10945 dated 30.9.1982 (3) Notification No. 201/79-CE 201/CEL/81/PL/248 dated 10.3.1983
5. The copy of the classification list with effect from 14.5.1984 appears to be a curious document. Words "without regulator" written in ink in column 2 appear to be inconsistent with the indication of remarks column that Rule 56A permission had been granted in respect of Rotor and Stator from 17.9.1981 and 30.9.1982.
6. The only price list produced is one with effect from 1.12.1985. The price list in force from January, 1985 to November, 1985 has not been produced. The price list does not make it clear whether the prices declared include the price of regulator.
7. Letter dated 18.12.1984 of the appellant was in reply to Assistant Collector's letter dated 18.11.1984, a copy of which is not before us. In the letter dated 18.12.1984 it was indicated the appellant was not trading in regulators but merely purchasing regulators from other units who are discharging duty liability before removal from their factory and that there is no danger to revenue if the appellant is permitted to bring regulators manufactured by other manufacturers after discharging duty liability, into the appellant's unit. By letter dated 28.12.1984, the Assistant Collector permitted the appellant to bring regulators into the factory after discharging duty liability provided accounts are maintained and regulators are stored separately.
8. There is no dispute that till 1.1.1985, appellant was including the value of bought out regulators in the assessable value of fans and paying duty thereon and also availing proforma credit under Rule 56A of the Rules in respect of the duty paid on regulators. This averment is specifically seen in the show cause notice and not denied by the appellant. The show cause notice alleged that with effect from 1.1.1985, there was discontinuance of proforma credit on the regulators as appellant was purchasing regulators from small scale units enjoying the benefit of small scale exemption. The notice also alleged that the electric fans were shown as cleared from the factory without regulators and the value of ceiling fans and regulators was being shown in separate invoices.
9. The above circumstances clearly show that the appellant was all along including the value of the regulators in the assessable value of fans and paying duty thereon and availing proforma credit in respect of the duty paid on regulators. This continued till 31.12.1984. This was in view of the circumstance that regulators purchased by the appellant during the relevant period were duty paid and the appellant could avail proforma credit to the duty element. Evidently, with effect from 1.1.1985 the appellant was purchasing regulators from SSI units enjoying the benefit of exemption. That being so, the question of availing proforma credit of duty paid on the regulators did not arise. With this change in situation, the appellant discontinued inclusion of the value of fans and paid duty only on the lesser value. The circumstance that the appellant was, in fact, paying duty on the higher value till 31.12.1984 clearly showed that the appellant was aware that the assessable value of fans should include the value of regulators. Nevertheless, this practice was discontinued with effect from 1.1.1985, only because regulators were purchased from units exempted from payment of duty and the appellant would not derive advantage of proforma credit. This will clearly indicate that the action of the appellant with effect from 1.1.1985 was deliberate and with a view to try to make up for the absence of benefit of proforma credit by reducing the duty on the fans. Appellant has no case that during the disputed period in 1985 any fresh price list was filed. During the disputed period appellant appears to have submitted price list with effect from 13.1986 and that did not indicate that the fans were without regulators. All these circumstances clearly indicate deliberate attempt on the part of the appellant to keep the changed practice from the knowledge of the Department. We are not in a position to agree with the submission made by the learned Counsel for the appellant that the Department was all along aware of the correct facts. Their knowledge was derived from the various records produced by the appellant before them. During the relevant period, there were no records produced by the appellant before the Department to show that even though duty was not being paid on the assessable value exclusive of the value of regulators, fans were being cleared with the regulators. It is brought to our notice that RT12 returns were being filed during the period and were finally assessed. RT 12 returns would only reflect that duty had been paid on the assessable value of the fans. The monthly returns themselves would not indicate whether the assessable value was inclusive or was not inclusive of the value of the regulators. The fact that the value of regulators was not included in the assessable value for the purpose of determining the quantum of duty came to the knowledge of the Department only subsequently as indicated in the show cause notice.
10. In view of what we have indicated above, the adjudicating authority was justified in holding that there was suppression of facts with intent to evade duty. There is no justification to interfere with the confirmation of demand. In the circumstances, we reduce the quantum of penalty from Rs. 75,000.00 to Rs. 50,000.00. The appeal is accordingly disposed of.
Pronounced and dictated in the open court.