Customs, Excise and Gold Tribunal - Mumbai
Arviva Industries (I) Ltd. And Shri Raju ... vs Commissioner Of Cen. Excise on 9 July, 2004
Equivalent citations: 2005(179)ELT506(TRI-MUMBAI)
ORDER Jyoti Balasundaram, Member (J)
1. The appellants herein are engaged in the manufacture of grey fabrics sent for processing to various processing units viz. Oceana Textile Mills Pvt. Ltd., M/s. Mazda Fabrics Processors Pvt. Ltd. and M/s. Shiva Suitings Ltd. In the case of M/s. Shiva Suitings Ltd. it was found that the appellants had entered into the agreement with them in March, 1993 by which M/s. Shiva Suitings Ltd. unit at Dombivili was leased to the appellants who were to carry out processing of fabrics during the lease period. Hence for all purpose, the unit of Shiva Suitings Ltd. was an extended manufacturing unit of the appellants It was noticed that the appellants processed in addition to others, their own grey fabrics. The department was of the view that the assessable value of processed fabrics cleared from M/s. Shiva Suitings Ltd. was to be determined as per Section 4 of the Central Excise Act, 1944 ie. by adopting the sale price at which the appellants sold their goods to their customers dealers and not as per the formula laid down by Supreme Court in the case of Ujagar Prints ( cost of grey fabrics + job work charges + job workers profit). On this basis show cause notice proposing recovery of additional Central Excise Duty leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 of Rs. 1,11,05,247/- and proposing imposition of penalty upon the manufacturer as well as its Managing Director was issued, invoking the extended period of limitation. The demand was confirmed by the Commissioner who also imposed penalty of Rs. 75 lakhs under Rule 173Q(1) read with Rule 9(2) of the Central Excise Rules 1944 and Rs. 50 lakhs under Rule 209A of the Rules on the appellants' Mills and Rs. 25 lakhs on its Managing Director. Hence, these appeals.
2. We have heard both sides. The appellants do not contest the method of determination of assessable value of the goods in question, but only challenge the demand on the ground that it is barred by limitation.
3. We note that when-ever grey fabrics were received for processing from their Kandivli unit (Shiva Suitings), the price lists filed during the period in dispute indicated the appellants' name and when-ever the grey fabrics were received from 3rd parties, the names of the 3rd parties were shown. In those price lists, the appellants have adopted the Ujagar Prints formula for valuation. All the price lists were finally approved. If the department was of the view that valuation could not be done on the basis of Ujagar Prints formula in respect of their own grey fabrics, then the department ought to have directed the appellants to file revised price lists based on Section 4 of the Central Excise Act instead of approving of the price lists and then asking for sales invoices which only would show the difference between the ex-factory price and the market price. The appellants were called upon to furnish purchase bills of grey fabrics and sales invoices for verification and they had replied that the question of filing purchase bills did not arise in cases where they were processing their own grey fabrics. By a letter dated 27.10.93, the Range Supdt. called upon the appellants to submit weaving charges whenever the grey fabrics were woven by them and Only asked for copies of invoices and sales bills of merchant manufacturer in respect of goods processed for others. This, to our minds, indicates that even the Excise authorities were of the view that the costing method (Ujagar Prints formula) was to be followed for valuation of the appellants' own fabrics. Further, all the records of the appellants were audited and no objection has been recorded by the Audit Team as regards the method of valuation in the case of appellants' own fabrics. The only objection raised by the Audit Team was with regard to the alleged non-addition of another 2% to 10% notional amount in the assessable value. For the period in dispute, show cause notices were issued on 2 issues viz. the value of shrinkages allegedly not included in the assessable value and the alleged non addition of another 2% to 10% notional amount in the assessable value and no notice was issued to the appellants on the issue of adoption of sale price formula (as per Section 4), although, the appellants had been disclosing in their price lists that they were adopting the costing method formula in respect of their own goods. In these circumstances, it cannot be held that the appellants suppressed the fact that they were valuing their own goods on the basis of formula laid down by the Apex Court in Ujagar Prints case. We, hence, agree with the appellants that the extended period of limitation is not available to the department, and accept the plea that the demand is barred by limitation.
4. We, therefore, set aside the duty demand and the penalties and allow the appeals.