ORDER
U.L. Bhat, J. (President)
Appeal No. E/4207/92-A – Rewa Fan Industries (Factory)
Appeal No. E/4217/92-A – Shri R.K. Jaipuria [General
Manager in RMPL]
Appeal No. E/4218/92-A – Shri S.K. Singh [Commercial
Manager of appellant]
Appeal No. E/4218/92-A – Shri M.K. Jaipuria [Managing
Director of Ravi
Aircools Ltd.]
Appeal No. E/4220/92-A – Ravi Marketing Pvt. Ltd. (RMPL)
1. Rewa Fan Industries is the name of the factory belonging to M/s. Ravi Aircools Ltd.
2. Subject matter of the dispute are fans named Ravi Fans manufactured in the Rewa Fans factory. Appellant, the owner of the factory, was from time to time filing price lists in Part I and II, the latter relating to sales to be made to M/s. P.D. Vyas & Co. (for short, PDV), the sole distributor for Madhya Pradesh and stationed at Indore and the former relating to a few dealers. During the period from January, 1986 to August, 1987,95% of production was sold to PDV and the rest to a few dealers. After August, 1987, according to the records, 95% of the production was being sold to M/s. Shree Bajrang Enterprises who sold the same to RMPL who in turn sold it to PDV. During both the periods PDV was selling the goods to wholesalers. Supplies to wholesalers at Rewa (where the factory is situated) and Jabalpur were being made directly to the dealers, though at the instance of PDV. Appellant was paying duty during the first period on the price charged to PDV and the during the later period on the price ostensibly charged to M/s. Shree Bajrang Enterprises. Show cause notice dated 8-9-1980 was issued alleging that PDV was only a commission agent during both the periods, that Shree Bajrang Enterprises was a dummy and RMPL was related to the manufacturer within the meaning of Section 4(4)(c) of Central Excise Act, 1944 and therefore, the transactions in favour of Shree Bajrang Enterprises and RMPL should be ignored and since PDV was a commission agent, for both the periods, assessable value should be based on the prices charged by PDV. Notices were issued to all the effected persons (other than PDV) and also to the Managing Director of the manufacturer and an employee of the manufacturer and General Manager of RMPL. None of them filed any reply on the ground that the show cause notice relied on 155 documents including agreements, letters, files, minutes of meeting, cash books, bills, credit notes, circulars, inter office memos, balance sheets, budgets, price lists and RG. 1 Registers and other registers. These persons were required by the Commissioner to inspect and take copies. But the persons who received the notices insisted on copies being furnished. Copies were furnished on 4-1-1991. Even thereafter they did not file reply to show cause notice. Personal hearing was fixed on 23-3-1992. On that day a member of the staff of the manufacturer appeared before the Commissioner and application for adjournment was filed on the ground that the advocate had some personal difficulty and could not attend. No adjournment was granted and the order was passed on 22-4-1992.
3. By the order impugned in these appeals, the Commissioner held that Shree Bajrang Enterprises was a dummy and RMPL and PDV were related persons of the manufacturer, that PDV was a commission agent and therefore, the assessable value would be based on the prices charged by PDV to wholesalers. On this basis demand was confirmed. Penalties for varying amounts have been imposed on all the appellants.
4. Learned Counsel for the appellants made submissions on the merits and also ignored alleged violation of principles of natural justice.
5. Though show cause notice was issued on 8-9-1989, copies of documents relied upon in the show cause were furnished only on 4-1-1991. The investigation which led to the present case was carried out by the Commissioner of Central Excise, Indore within whose jurisdiction the factory is situated. The manufacturer has factories in Allahabad and Varanasi in U.P. Some investigations on the part of the Commissioner of Central Excise, Allahabad and Officers under him were also in progress. It appears that Allahabad staff searched the premises of the appellant in Varanasi and took a large number of documents, which according to the learned Counsel included the copies of relevant documents furnished by the Commissioner of Central Excise, Indore. It does not appear that the assessee brought this to the notice of the Commissioner of Indore but this explains according to the appellants, the failure to file reply to the show cause notice or be ready for personal hearing. At page 8 of the main Paper Book is a copy of the letter dated 2-4-1992 by the manufacturer to the Commissioner of Raipur (by that time this Commis-sionerate had been established) stating that records had been taken by the officers of the Allahabad Commissionerate and therefore, they could not file any reply. The manufacturer sought fresh copies of these documents. This letter has not been referred to in the impugned order. Shri M. Ali, JDR stated that it is possible that the letter was not received by the Commissioner before he signed the order in the file.
6. The above circumstances will clearly show that the Commissioner himself furnished copies about one year and five months after the issue of the show cause notice and the copies issued on 4-1-1991 in all probability were taken away by the Allahabad Commissionerate officers. If in these circumstances the manufacturer and the other persons connected could not file reply to the show cause notice, it will effect the sustainability of the order. There could not any effective personal hearing also without the necessary materials being available to the counsel. In the circumstances referred to above, the Commissioner could have done well to grant some time to enable the Advocate to appear before him on a day subsequent to 23-3-1992. In the circumstances, we are inclined to remand the case, particularly in the light of the undertaking given to us by the learned counsel of the appellants that the appellants or such of them who desire to contest will file reply to the show cause notice before the jurisdictional Commissioner within two months from today. We make it clear that no further opportunity will be given to any of the appellants to file reply, beyond two months from today.
7. In the above view, we do not propose to go into the merits except to point out that there is an apparent inconsistency in the show cause notice and the order in asserting at one stage that 95% of the goods were sold to PDV and at another stage that PDV was commission agent also. We also record the submission made by the learned Counsel for the appellants that the manufacturer in this case is agreeable to the assessable value being based on the prices charged by RMPL to PDV in respect of the period after August 1987. Therefore, in this view the question whether PDV was a distributor or a commission agent assumes more importance.
8. For the reasons indicated above, we set aside the impugned order and remand the case to the jurisdictional adjudicating authority who shall wait for two months from today to receive the reply to the show cause notice and thereafter grant the appellant reasonable opportunity of personal hearing. The appeals are allowed, as indicated above.