Customs, Excise and Gold Tribunal - Delhi
Dcm Shri Ram Consolidated Ltd. vs Cce on 9 September, 1998
Equivalent citations: 1999(81)ECR497(TRI.-DELHI), 1998(98)ELT380(TRI-DEL)
ORDER
U.L. Bhat, J. (President)
1. This appeal is directed against Order-in-Original No. 19/92 dated 31.3.1992 passed by the Collector of Central Excise, New Delhi confirming the demand of Rs. 6,74,385.91 under the proviso to Section 11A(1) of the Central Excise Act, 1944 and imposing penalty of Rs. 1,00,000 under Rules 173Q and 226 of the Central Excise Rules, 1944.
2. Appellant, engaged in the manufacture and clearance of Blended Cotton fabrics and man-made fabrics, was availing the benefit of Notification No. 254/87 which provided for exemption from additional duty based on the value of the fabrics per square meter. There was exemption in force regarding payment of excise duty. Appellant was filing price lists from time to time and paying duty on the basis of approved prices on the clearances made during the period January 1988 to December 1988. Sales were being effected by the appellant on linear meter basis. Table to the notification referred to various items and headings. The fabrics of the appellant fell under Item I in the Table. The goods described in Item I were specific goods whose value per square meter did not exceed Rs. 25, exceeded Rs. 25 but did not exceed Rs. 40 and exceeded Rs. 40 (i.e., three slabs) and the effective rates of duty were Rs. 2 per square meter, Rs. 3.50 per square meter and Rs. 5 per square meter. Thus the effective rates of duty depended entirely on the value per square meter of the goods since such value determined the slab. The fabrics manufactured by the appellant fell in various price ranges, some of the ranges being around Rs. 25 and Rs. 40 per square meter which may be regarded as border line value, so far as slabs were concerned.
3. Investigation showed that in some of the cases the appellant had collected some amount in excess of the actual excise duty payable and paid and if the excess amount so collected was to be treated as part of the wholesale price on the basis of which assessable value would be determined, such value would jump the slab with consequential higher excise duty liability. According to the appellant, total excess amount collected by the appellant during the entire period was only Rs. 741.98 but the differential duty payable on the basis of inclusion of the excess value in the wholesale price would be over Rs. 6 lacs. It was on this basis that the demand was proposed alleging suppression of material facts with intent to evade duty. Though the appellant resisted the notice, the adjudicating authority confirmed the demand.
4. Earned Counsel for the appellant stated at the outset that he proposed to address arguments only on the submission that the show cause notice was barred by limitation inasmuch as the proviso to Section 11A(1) of the Central Excise Act, 1944 could not have been validly invoked in this case.
5. A copy of the show cause notice is seen at pages 15 to 18 of the appeal paper book. The notice alleged that the appellant was charging excess excise duty in the invoices, that such excess should be treated as part and parcel of assessable value, that in majority of the clearances there was no differential duty involvement as if the excess duty collected was added to the assessable value as it did not lead to slab being jumped, that jump in the slab would occur in cases where assessable value was either Rs. 25 or Rs. 40 per square meter or slightly below these figures. The notice referred to those instances where the inclusion of excess duty collected in the assessable value would lead to liability for higher rate of duty and proposed demand of the differential duty on that basis. The notice further alleged that the appellant intentionally and wilfully suppressed the actual value of the goods by charging excess duty from the dealers and it was a case of wilful suppression of material facts inasmuch as the collection of excess excise duty was never disclosed to the department in the G.P. 1 or price list or any document submitted along with the monthly R.T. 12 Returns. Correctness of these allegations was denied in the reply to the show cause notice. However, the lower authority accepted that it was a case of wilful suppression of collection of excess duty.
6. According to the Learned Counsel, the appellant had pointed out to the adjudicating authority the particulars given in the price lists which will clearly disclose that the price collected from the buyers was slightly in excess of the sum total of the price declared and the excise duty element but the authority did not appreciate the same. Earned Counsel illustrated his contention by referring to the particulars given for one of the items in the copy of the price list produced before us, namely, item 5 which relates to 'Quality 26/0067'. Column (3) relating to wholesale price shows Rs. 43.53 per square meter. Columns (11) and (12) which relate to value claimed by approval shows Rs. 40 per square meter. Column (I3g) relating to total excise duty refers to Rs. 4.84 per linear meter. Column (13h) relates to wholesale price as Rs. 59.64 per linear meter. Column (13n) relating to rate of additional excise duty refers to Rs. 3.50 per square meter. It is pointed out that at that time handloom cess was Rs. 0.025 per square meter which was disclosed in the relevant gate pass. The above figures will show that assessable value of Rs. 40 was arrived at after deducting Rs. 3.50 (as also 0.025) from the declared price of Rs. 43.53. These figures would clearly indicate the discrepancy to the extent of 0.075.
7. According to the earned Counsel for the appellant the above discrepancy arose on account of the procedure of rounding off adopted by the appellant. The stun total of the value (Rs. 40), additional duty (Rs. 3,50) and cess (Rs. 0.025) would be Rs. 43,525. The appellant rounded off this figure and collected at the rate of Rs. 43.53 from the buyers and this was disclosed in the invoice and gate pass. He also indicated similar rounding off in terms of linear meter, namely, Rs. 4.836 being rounded off to Rs. 4.84 and price collected from the buyer at the rate of Rs. 4.84. At the same time it is pointed out that column (9) relating to other deductions was left blank. Going by the price given in the price list in respect of item 5 all the relevant data in terms of figures were before the proper officer who, if only he had cared to examine the figures, would definitely have noticed that the amount actually collected would be slightly in excess of the sum total of the assessable value, the duty and the cess element. If similar was the position regarding the price of other items which led to the demand, in our opinion, the charge of suppression of material facts cannot be brought home to the appellant and the proviso to Section 11A(1) of the Act cannot be invoked. However, copies of necessary invoices and gate passes are not before us. Detailed verification of all items other than item 5 in the price list before us would be necessary. We are not in a position to verify in the absence of relevant documents. The Adjudicating Authority who was alerted regarding this particular contention ought to have verified the same instead of brushing aside the same.
8. In these circumstances the case requires to be remanded to decide whether there was material suppression of relevant facts regarding all items shown in the price lists and whether the notice or any part of it can be regarded as barred by time. It is made clear that no contention has been urged before us on merits.
9. The demand relates to additional duty under the provisions of Additional Duties of Excise (Goods of Special Importance) Act, 1957. Penalty has been imposed in relation to evasion of such duty. It has been held in Pioneer Silk Mills Private Ltd. 1995 (80) ELT (Delhi HC) : 1998 (79) ECR 553 (Del) that since the subject legislation did not contain any provision relating to imposition of penalty, penalty cannot be imposed on account of demand of additional excise duty under a particular law. We therefore set aside the penalty imposed on the appellant.
10. For the reasons indicated above, we set aside the order and remand the case to the jurisdictional adjudicating authority who shall, after giving the appellant an opportunity of personal hearing, and after verifying the various entries in the price list or price lists, as the case may be, pass a fresh order recording a finding on the aspect of limitation.
11. The appeal is allowed.