Customs, Excise and Gold Tribunal - Delhi
Ece Industries Limited vs Cce on 1 January, 1800
Equivalent citations: 2003(89)ECC890
JUDGMENT C.N.B. Nair, Member (T)
1. Duty demand is being resisted on the ground of limitation. It is pointed out that differential duty demand has been made invoking the extended period allowed under proviso to Section 11A of Central Excise Act, 1944 on the basis that appellants were guilty of wilful suppression of facts with intent to evade central excise duty.
2. It is the submission of the appellants that they had discharged the whole duty as payable in accordance with the assessable values under price list approved by jurisdictional authorities and that there was no suppression of facts or that there was any intention to evade payment of duty. During the course of hearing, the learned Counsel for the appellants has pointed out that the appellants had claimed that assessable value has to be worked out based on manufacturing cost and manufacturing profit. The method adopted for working out assessable value was to claim deductions from the sale price towards selling distribution expenses and selling profits. Deduction at 16% towards those costs and profits had also been allowed by the jurisdictional authorities. The finding in the impugned order regarding suppression of facts is that the appellant had been realizing certain amounts under debit notes when sales were carried out from their depots. These realizations were in regard to freight and forwarding expenses, financial/credit charges, insurance-cum-breakage charges. It is the contention of the learned Counsel that these collections being for activities far removed from manufacture, they had no relevance for the fixation of assessable value based on manufacturing cost and manufacturing profit. It is also being pointed out that the assessee had intimated in January 1978, April 1981 and March 1983 the Central Excise Authorities about the private records kept by them. The records mentioned therein included inter alia, "Realizable/reimbursable service charges debit notes kept by marketing division". It is, therefore, being submitted that there is no substance in the finding that relevant facts were suppressed with intent to evade payment of duty.
3. Learned Counsel has also referred to the judgment of Delhi High Court in appellant's own case [1980 ELT 669] on the question of valuation of the goods and submitted that full details about the method of working out of assessable value came to be disclosed and considered in that proceedings and the Hon'ble High Court had also approved the assessment of the goods based on manufacturing cost and manufacturing profit as worked out by the appellants.
4. We have perused the records and have heard the learned SDR also. We find merit in the appellant's submission regarding limitation. Assessment in question had taken place in accordance with the assessable values approved from time to time by the jurisdictional Assistant Collector. The measure approved for assessable value was manufacturing cost and manufacturing profit. The method of working out such costs and profits were also fully disclosed to the authorities. The appellant is right in their submission that, to a case of assessment based on manufacturing cost and manufacturing profit, freight and other expenses which are entirely in the nature of post-manufacturing costs could not be relevant. The non-disclosure of particulars of such costs and recovered by the appellants, could not, in the circumstances, be treated as suppression of facts with intent of evade duty, firstly because these incomes and expenses in the course of sale would have been considered immaterial for the assessment and secondly, because the non-disclosure of facts could not be considered the result of intent to evade duty. Further, the appellants had also disclosed in their letters that their marketing division was realizing/reimbursing service charges through debit notes. Once the Revenue authorities were informed of the raising of such debit notes, it was for them to make enquiries on the subject and to decide whether any of the expenses covered by the debit notes was required to form part of assessable value. Having not done so, it was not open to them to allege that duty evasion, if any, was the result of suppression of facts. In these facts and circumstances, the appellant's contention on limitation has to be accepted and the duty demand set aside as hit by limitation. The appeal is accordingly allowed with consequential relief, if any, to the appellants.