Customs, Excise and Gold Tribunal - Mumbai
Ajay Chem Industries vs Commissioner Of Central Excise on 20 September, 1999
Equivalent citations: 1999(114)ELT937(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. The appellants in this case were a small sector industry operating under the benefit of Notification No. 175/86. Prior to 1-4-1986, they were availing of Notification No. 120/75 which permitted assessment on invoice value. From 1-4-1986, they were operating under the procedure prescribed under Rule 173C(11) as it then existed, where the price of the goods was declared on individual gate pass and duty determined accordingly. In December, 1987, the officers on scrutiny of the invoices found that the prices were not uniform. In certain cases, on the same date, the same goods were sold to the same parties under different rates. On the lack of uniformity on the discount and price the show cause notice dated 28-2-1991 was issued. The methodology was that the invoices issued in one day were grouped together and the highest price charged was selected as the ruling price for that day and differential duty was calculated against the invoices showing lesser price than the standard price. In this manner, it was alleged that during the date 1-4-1986 to 31-12-1987, short levy amounting to Rs. 15,53,526.98 had occurred. Extended period was invoked alleging suppression on part of the assessees. The Commissioner confirmed the demand and imposed penalty of Rs. 5 lakhs. Hence, this appeal.
2. We have heard Shri J.C. Patel, Advocate appearing with Shri S.N. Kantawala, Advocate for the appellants. Shri K.L. Ramteke, JDR appeared for the revenue.
3. The wordings of Rule 173C(11) was as follows :-
"Notwithstanding the provisions of Sub-rules (1) to (6), the Collector may, having regard to the nature of goods manufactured or the frequent fluctuations of market price of such goods, allow an assessee or a class of assessee to declare the price of goods transacted by the said assessee or assessees for the particular wholesale consignment on the gate pass or accompanying challan or advice note and to determine the duty payable on such goods intended to be removed on the basis of the said declared price : Provided that where the price thus declared on the gate pass or accompanying challan or advice note does not represent the value as determined under Section 4 of the Act, the proper officer may, after such further inquiry, as he may consider necessary, reassess the duty due and thereupon the assessee shall pay the deficiency, if any, by a debit in his account-current or in case of excess payment take credit for the amount paid in excess in the manner prescribed in Sub-rule (2) of Rule 173-1."
4. The said rule admits of frequent fluctuations of market price resulting in the requirement to adjust the prices of the goods sold accordingly. The variation of the price would be equal to the fluctuation in the market prices. The prices being dependent upon the market forces is the key on which Section 4 is established. Even then the proviso to Rule 173C(11) permits the department to critically examine the price claimed under the Sub-rule and where it is not consistent with the provisions of Section 4, to take corrective action; This is a difficult task for the department to perform. Section 4 itself admits of various prices being available to different classes of buyers. From the contents of the show cause notice, it becomes clear that no attempt had been made by the department to disprove the facility of this Sub-rule even though they were permitted to do so by the proviso. They had not investigated the relationship between the buyers who got favourable concessions and the assessees to establish that the dealings were not on principal to principal basis. In the absence of any positive evidence, the show cause notice itself is defective. On limitation, we find that the assessees have made out a case. During the entire period, the fact of variations was apparent on the face of the invoices which were annexed to the RT 12 returns. After nearly 3 years, the department could not allege suppression of facts. On merits and on the point of limitation, the appeal succeeds and is allowed with consequential relief.