Customs, Excise and Gold Tribunal - Tamil Nadu
Calcutta Chemical Co. Ltd. And Anr. vs Cce on 2 September, 1999
Equivalent citations: 2000(91)ECR210(TRI.-CHENNAI), 2000(126)ELT704(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. Since the Order-in-Original No. 1/98 dated 27.4.1998 passed by Commissioner (Adjn.) is common to both these appeals, therefore the two appeals are being considered together.
2. The said Order-in-Original has confirmed duty of Rs. 1,17,94,162/- and imposed a penalty of Rs. 10,00,000/- and Redemption Fine of Rs. 5,00,000/- on the appellants M/s. Calcutta Chemicals Co. Ltd. In addition, it has also imposed a personal penalty of Rs. 1,00,000/- on the other appellant Shri Simon George who was the Production Incharge of the appellant company. The main issue covering the period from July, 1991 to March, 1995 which has been raised by the Show Cause Notice dated 8.8.1996 pertains to the determination of the correct assessable value of the clearances made by M/s. Calcutta Chemicals Co. Ltd. The impugned order has upheld that the extended period under Proviso to Section 11A is invokable.
3. Heard Shri A.P. Datar Ld. Advocate and Shri C. Saravanan, Ld. Advocate for appellants and Shri Section Kannan, Ld. D.R.
4. Ld. Advocate submits that the order impugned has held that the assessable value would be the price at which M/s. Shaw Wallace & Co. Ltd. was selling the goods as they were the holding company of the appellants M/s. Calcutta Chemical Co. Ltd. w.e.f. 1.6.1988. It also holds that the two being related persons and therefore having mutuality of interest in the business, therefore the assessable value would be under Section 4(4)C of the Central Excise Act. The penalty on Shri Simon George has been imposed under Rule 173Q on the ground that he was aware of this mutuality of interest and had therefore not taken care to declare the correct assessable value to the department. Ld. Advocate submits that the order impugned suffers from many erroneous findings on various counts. Firstly, it is now well settled and laid down law that merely because the appellants were a subsidiary Company held by M/s. Shaw Wallace & Co. Ltd. that by itself did not make them related persons and the prices would not be affected by this business arrangement as is laid down in the decisions of Ralliwolf Limited v. Union of India as , CCE v. Ralliwolf Ltd. as in and Escort Tractor Limited v. CCE as . Ld. Advocate submits that while this issue was agitated before the original authority, there is no clear findings in the order impugned that there was mutuality of interest between the two parties created by any financial flow back from M/s. Shaw Wallace & Co. to Calcutta Chemicals Co. Ltd. Merely because one employee was performing certain functions for both the companies and merely because under orders of BIFR M/s. Shaw Wallace & Co. had given some financial support for the unit of appellants located in West Bengal, it cannot be said that there was any mutuality of interest as the demand has been confirmed with respect to the appellants' unit at Madras and not in West Bengal. Furthermore, he submits that some of the findings of the Ld. Commissioner regarding facilities like telephones are not factually correct in as much as that the amounts pertaining to the appellants had been debited back to M/s. Shaw Wallace & Co. Therefore, the finding that the facts of the case satisfied the three tests enumerated by the Hon'ble Bombay High Court in the case of Ralliwolf v. UOI supra is not a correctly arrived finding supported by facts.
5. Secondly, Ld. Advocate submits that their contention before the original authority that since all along about 20% of their production was sold to other than Shaw Wallace & Co. which was a channel of market to independent buyers at the same All India prices has not at all been considered by him in the Order-in-Original. In support of this submission, he cites the following case laws:
(1) Nagpal Petro-Chem Ltd. Madras v. The ACCE as in 1974 (4) ELT J117 (Md) : 1979 Cen-Cus 97 (Mad) (2) Indo-National Ltd. v. Union of India as in 1979 ELT J 334 : 1981 (33) ECR 651D (AP) & (3) Kirloskar Cummins Ltd. v. U.O.I. as in .
Out of these, the decisions in the case of Nagpal Petro-Chem Ltd. and Indo-Na-tional Ltd. were cited also before the original authority. In this connection, Ld. Advocate also cites a later Judgment of Escort Tractors Ltd. as in . which has followed the law laid down by Indo-National Ltd. Thirdly, Ld. Advocate submits that the order impugned invokes the extended period basically on a charge that the appellants had suppressed the information they had received from a Consultant on their own that they should have filed their price list under Part - IV. Ld. Advocate submits that an opinion of a Consultant sought for by the appellants on their own does not have to be disclosed to the department as it was not accepted after due consideration by the appellants. As against this, he submits that the department was aware that M/s. Shaw Wallace & Co. had become holding company of the appellants from as far back as May, 1991 and in this respect he draws our attention to page 30 of the types set of documents wherein vide their letter dated 21.5.1991 the jurisdictional Range Superintendent had asked the appellants to file price list in Part IV as M/s. Shaw Wallace & Co. had become a related person. In their reply dated 27 June, 1991 to the said Superintendent, the appellants had clearly informed that M/s. Shaw Wallace & Co. was holding Company of the appellants but had argued that since the prices charged to them was the same as the price charged to other independent customers, therefore the said relationship did not involve any extra commercial advantage on M/s. Shaw Wallace & Co. and hence the same price would continue to be the correct normal assessable value and therefore no revised price list in Part-IV need to be filed (Page 31 of the typed set). Ld. Advocate further refers to another subsequent query dated 11.11.1991 from the said Range Superintendent on the same issue (page 32 ibid). In reply dated 21.12.1991 the said Range Superintendent had been informed that M/s. Shaw Wallace & Co. became the holding company of/the appellants only on 1.6.1988 and reiterated that a number of other wholesale purchasers continued to purchase goods on an independent basis some of which have been named in the said letter. Therefore, since independent price to independent buyers was available it was correctly declared as the assessable value. It was also informed that prices to M/s. Shaw Wallace & Co. was also the same as that which was applicable to other independent buyers. Ld. Advocate submits that on the strength of these as well as the balance sheets submitted from time to time to the department as evidenced that the entire relationship as well as the pricing structure had all along been disclosed to the department right from May, 1991, he submits that there is no question of the appellants having suppressed any relevant information. Hence, the order impugned erroneously invokes the extended period.
6. Ld. D.R. reiterates the Order-in-Original and particularly points out to paras 6.4 onwards of the Order-in-Original wherein the Ld. Commissioner has detailed the evidences by virtue of which he has concluded that the three conditions in the case Ralliwolf Ltd. supra are satisfied. He submits that particular relevance is para No. 9.1 with respect to Depot Impressed Expenses which were incurred by Shaw Wallace & Co. in respect of Depot which belonged to the appellants. Another significant fact relied upon was the pooling of managerial personnel including Shri Simon George for carrying out duties of the appellants as well as M/s. Shaw Wallace & Co., therefore neither is the Order-in-Original a non speaking one nor are the conclusions not based on proper evidence.
7. We have carefully considered the rival submissions and records of the case. We find that the Order-in-Original impugned is a non speaking order because of the following reasons:
(a) Whereas it is on record that the appellants had pleaded before the Ld. Commissioner that since there was evidence of longstanding sales to independent wholesale dealers upto 20% of their total sales at the same price at which the goods were sold to M/s. Shaw Wallace & Co. and therefore that this represented the correct assessable value, there is no detailed consideration of this submission in the said order. The Ld. Commissioner should have gone into this submission in details, particularly in view of the fact that the said submissions were backed by the decisions of Indo-National Ltd. and Nagpal Petro-Chem supra.
(b) The show cause notice issued on 8.8.1996 seeks to cover a period July, 1991 to March, 1995. Therefore, most the period covered is beyond 6 months from the date of issue of show cause notice. We are unable to accept the findings in the order impugned that because of the opinion of the Consultant obtained by the appellants on their own initiative was not disclosed to the department, therefore the appellants are guilty of suppression. We find considerable force in the argument of Ld. Advocate that since the appellants did not rely on the said opinion, it was immaterial to the present issue. We further note that as against this, in view of the repeated communications exchanged between the appellants and the Range Superintendent as noted above in the year 1991 itself, it is clearly on record that the jurisdictional Range Superintendent was aware that M/s. Shaw Wallance and Co. were holding their subsidiary, i.e. the present appellants' w.e.f. those specified date and despite this, the appellants had all along been explaining their stand that the correct assessable value was declared in view of the reasons cited in those communications. One of the reasons included therein was that 20% of the sales were to independent wholesale dealers at the same prices. These evidences had been placed before the original authority also as per the submissions of Ld. Advocate. Since one of the main appellant's submission before the original authority pertained to the claim of 20% sales to independent wholesale dealers, therefore we clearly find that the original authority should have considered these evidences before coming to a conclusion regarding suppression. In our view, in view of the department having knowledge of these facts even as far back as May 1991, there is no case for invoking extended period on the grounds of suppression. Since the order impugned has not considered this, it is a non speaking order.
8. In view of the aforesaid findings, we find that these issues need to be reconsidered by the original authority after taking into consideration these evidences as well as the case laws cited and hence we set aside the Order-in-Original and remand the matter to the. Ld. Commissioner for a de novo consideration of the issue. He shall give an opportunity to the appellants of being heard and shall consider all the submissions including the case laws cited before him and then pass a speaking order. The appeals succeed accordingly by way of remand.
(Pronounced and dictated in open Court).