ORDER
U.L. Bhat, J. (President)
1. The Order-in-Original No. 3/89/SPS, dated 25-1-1989 of the Additional Collector of Central Excise, New Delhi is under challenge in this appeal.
2. The dispute in this appeal relates to the period 1983 to 1986 . During this period appellant was manufacturing package air conditioners covered under T.I. 29 A of the erstwhile Tariff and clearing the same on payment of duty on the basis of the approved price lists . During the period in question 7 units were supplied to private purchasers and 23 to Public Sector Undertakings on contracts. The factory of the appellant was visited by Preventive Staff in December 1985 and January 1986. It was found that the package air conditioners cleared from the factory were complete and fully manufactured, relevant invoices and packing lists referred only to the package air conditioners and not to any accessories, that accessories were purported to have been sold to the same customers under separate Bills, the sale of accessories was not disclosed to the department and the contracts did not indicate the names or details of the accessories. It was found that the cost of accessories shown in the Bills was 2l/2 times more than the value of the air conditioners cleared to the buyers. Accordingly notice dated 16-8-1988 was issued to the appellant referring to the above facts and stating that practically no accessories were supplied and a substantial part of the value of the clearances was suppressed in the excise records and such portion of the value was sought to be collected by way of Bills for accessories and there was suppression of facts and of “true value of clearances. It was proposed to demand differential duty on the value so suppressed and to impose penalty. Appellant resisted the notice. However the Additional Collector overruled the appellant’s contention and confirmed the demand and imposed penalty of Rs. 75,0007-. This order is now challenged.
3. It is contended for the appellant that the prices at which the air conditioners were supplied to private parties (7 units) were the same as the prices at which 23 units were supplied to Public Sector Undertakings on contracts and both these prices matched the approved prices, that accessories were in fact supplied to improve the efficiency of the air conditioners and were optional accessories, value whereof which was not required to be included in the assessable value of the air conditioners. It is further contended that since accessories were in fact supplied, the entire value covered by the Bills relating to accessories cannot be regarded as part of the price of the air conditioners and it was for the department to adduce evidence to show which part of the value represented part of the consideration for the air conditioners. These contentions were rebutted on behalf of the department.
4. The show cause notice proceeded on the basis that in fact no accessory was supplied by the appellant. It was clarified during the enquiry that the accessories were bought out items. Though the appellant was required to produce the documents relating to bought out items, no such documents were produced. These facts were referred to in the show cause notice and there was no denial of these averments in the reply to the show cause notice. If as a matter of fact these accessories had been purchased for the purpose of supply to customers, appellant must be in possession of documents showing proof of the purchase. The fact that the appellant could not produce such evidence would clearly show that in fact no such items had been purchased by the appellant which would necessarily lead to the conclusion that no such items were supplied to buyers. The fact that some of the buyers are Public Sector Undertakings makes no difference as long as the total amount to be paid to the appellant did not undergo any change.
5. We have been taken through some of the Bills relating to the accessories and the air conditioners. The accessories are 5 in number, namely, flexible connection, hose pipe, discharge air dust, air grill and filter. According to the appellant all the se are optional accessories. In the very nature of things it is ex facie clear that the total value of these accessories must be very small in comparison to the value of 5 tonnes or 7 tonnes air conditioner unit. Necessarily one would expect the value charged for the alleged accessories to be small in comparison to the value charged for air conditioners, but the bills would show that the appellant charged price for accessories much more than the price charged for the air conditioners. To illustrate, in one case the gross price of the air conditioner was Rs. 10.400/- as against the price of Rs. 22,943.00 for accessories. The corresponding figures given in relation to 7.5 tonnes air conditioners were Rs. 17,000/- and Rs. 27,200/- respectively and Rs. 23,500/- and Rs. 34,000/- respectively. These figures themselves support the case set out in the show cause notice that a substantial part of the price of the air conditioners was shifted to accessories. We have already referred to the failure of the appellant to produce documents relating to bought out items from which the necessary inference would be that there were no such bought out items. In these circumstances, the conclusion arrived at by the Additional Collector that the entire price shown for the alleged accessories was really a part of the price of the air conditioner, has to be sustained.
6. The confirmation of the demand of duty calls for no interference. The Additional Collector has been lenient in the matter of quantification of penalty and the same does not call for interference.
7. For the reasons indicated above, the appeal is dismissed.