Customs, Excise and Gold Tribunal - Tamil Nadu
Dcw Limited vs Commissioner Of Central Excise on 6 August, 1997
Equivalent citations: 1997(96)ELT68(TRI-CHENNAI)
ORDER T.P. Nambiar, Member (J)
1. The present appeal is filed by the appellant against the orders passed by the Collector wherein duty demand of Rs. 60,113.15 is demanded and a penalty of Rs. 25,000/- is imposed on the appellant. The demand of duty is on account of the fact that the 2092 drums were supplied by the appellants wherein Trichloroethylene was packed and no drum was returned to them and the exclusion of the cost of the packing for the returnable drums is not correct and their value is to be added in assessable value.
2. The learned Advocate Shri P.S. Raman appearing for the appellants at the outset contended that the whole demand is barred by limitation. In this connection, he pointed out that the allegation in the show cause notice with respect to the suppression is as follows :-
"The fact of collection of the amount of Rs. 239.40 appears to have been suppressed with the intent to evade payment of duty in relation to that amount. It is seen that they collected a total amount of Rs. 5,00,942.98 towards the containers and failed to pay the duty of Rs. 60,113.15 with reference to the abovesaid collection."
He therefore pointed out that the only ground mentioned in the show cause notice is that the appellants suppressed the fact of collection of the above said amount. In this connection he pointed out that the appellants had enclosed the agreement between themselves and the buyers while the price list was duly approved. He, therefore, pointed out that this agreement clearly shows that the packings are returnable. He also pointed out that returnable only means that they are to be returned and no actual return is necessary. In this connection, he relied on the decision of the Hon'ble Supreme Court reported in 1987 (27) E.L.T. 598 in the case of K. Radhakrishnaiah v. Inspector of Central Excise. This decision was followed by the Tribunal in the case of Maharashtra Vegetable Products Ltd. v. Collector of C. Ex. reported in 1992 (57) E.L.T. 173 (Tribunal).
3. The learned JDR on the other hand contended that at the time of submitting the price list along with the contract the appellants was aware of the fact that this clause relating to the return of the containers is not workable in view of the fact that the cost on returning these containers will exceed the cost of the containers themselves, which was deposited by the buyers with the appellant. He pointed out that this amounts to a suppression with an intention to evade the payment of duty. He, therefore, justified the impugned order.
4. We have considered the submissions of both the sides. It is now seen that it is an established principle as has been held by the Hon'ble Supreme Court that in order to invoke the extended period of limitation it is necessary for the department to mention as to what are the facts which are suppressed by the assessee from the knowledge of the department with intent to evade the payment of duty. The principles of natural justice therefore requires all the facts of such suppression may be made known to the assessee by making such allegations in the show cause notice so that the assessee will get an opportunity to rebut these allegations mentioned in the show cause notice. The ground which is mentioned in the impugned order is that at the time of submitting the price list along with contract, the appellants knew or has reason to believe that this clause relating to return of drums will not be a part of the approval of the price list and it was obtained by such suppression facts. This ground which is mentioned in the impugned order was not at all in the show cause notice. It is further seen that in all such cases as held by the Supreme Court what is necessary is whether there is an agreement to return and that actual return is not relevant. What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount. This principle enunciated by the Supreme Court in the decision reported in 1987 (27) E.L.T. 598 in the case of Radhakrishnaiah v. Inspector was considered by the Tribunal in their decision reported in 1992 (57) E.L.T. 173 (Tribunal) in the case of Maharashtra Vegetable Products Ltd. v. CCE wherein at para 8 it has held as follows :-
"8. The Tribunal in C.C.E. v. E.I.D. Parry (India) Ltd. [1989 (40) E.L.T. 139 (Tribunal)] laid down the following tests after considering the judgments of the Supreme Court in K. Radhnakrishaiya v. Inspector of Central Excise:
"It would be worthwhile summarising the norms relevant to retur-nability of durable containers. We list the norms as under :-
(1) Though the word 'returnable' used in Section 4(4)(d)(i) is distinguishable from 'returned', mere capability of being returned is not enough. Returnability should be a term of sale either by contract between the buyer and the seller or by statute. It cannot be said that the packing is returnable by the buyer to the assessee unless there is an arrangement between them that shall be returned.
(2) Actual return is not relevant. What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
(3) Extent of return is also not relevant.
(4) The mode of return is a matter of mutual convenience. Whether the packing is returned direct to the seller or through his collection agent, makes no difference."
From the above, it follows that there should be an arrangement or a contract between the seller and the buyer for the return of the durable container. The actual return is also not relevant. What is necessary is if the buyer chooses to return the durable container, the seller should be obliged to accept it and refund the stipulated amount."
These principles were enunciated by the Tribunal based on the decision of the Supreme Court and the decision of the Tribunal is reported in 1989 (40) E.L.T. 139. It is therefore seen that what is necessary is that there should be an arrangement or contract between the buyer and the seller for returning of the durable containers. The actual return is not relevant. What is necessary is if the buyer chooses to return the durable container, the seller should be obliged to accept it and refund the stipulated amount. The appellants had enclosed the contract with the price list. This is also admitted in the impugned order itself, wherein the Collector at para 17 held as follows :-
"The important question to be examined in this connection is whether the proviso to Section 11A can be applied in this case. As contended by the party, they had submitted price lists wherein they claimed deduction for the cost of the metal containers-and in support of this, they had also enclosed an agreement between them and the buyers and this price lists were duly approved. There is no suppression per se up to this stage."
It is clear that in the impugned order itself, it is clearly held that the appellants submitted price lists wherein they claimed the demand for cost of the metal containers and in respect of all these they had also enclosed the agreement between them and the buyers and these price lists were duly approved by the department after looking into the agreement. The agreement clearly contemplates that these containers are returnable. Therefore, it cannot be said that the appellants have suppressed any material fact from the knowledge of the department. They were expected to file the agreement in this regard and the agreement contains all the facts. In these circumstances, we are of the view that no suppression as was mentioned in the show cause notice is substantiated by the department. On the other hand, the order itself goes to show that by producing the agreement, the department was made aware of the collection of the amount in question for the containers and the department was also made aware of that these containers are returnable by the buyers by reason of this agreement. In view of this, the suppression of fact as alleged in the show cause notice is not established by the department. But on the contrary, the very finding itself goes to show that this fact was made known to the department. In any case, in view of the principles laid down by the Hon'ble Supreme Court the actual return is not necessary and What is necessary is an agreement or an arrangement to this effect. Such agreement, admittedly, is existing in the present case in view of the agreement between the appellant and the buyers.
5. In this view of the matter, we are of the view that the extended period of limitation is not invokable in the facts and circumstances of the case and more particularly, in view of allegations made in the show cause notice and therefore the whole demand is barred by limitation. In the premises, the penalty is also not imposable on the appellant. Accordingly, we allow the appeal on the ground of limitation and as we are allowing the appeal on this ground, we are not adverting to the merits of the case.