ORDER
C. Satapathy, Member (T).
1. Shri Raj Darak, learned Advocate for the appellants makes the following submissions :-
“1. The issue in the present appeal is no longer res Integra and is covered by the following judgments:
(i) Indian Oxygen v. Collector -1988 (36) E.L.T. 723 (S.C.); (ii) Sarda Plywood -1994 (74) E.L.T. 528 (Gau); (iii) Southern Bottlers -1989 (43) E.L.T. 427 (T) [Approved by the Supreme Court in 1997 (92) E.L.T. A 70 (S.C.)]; (iv) Savita Chemicals Ltd. - 2000 (119) E.L.T 394 (T) [Approved by the Supreme Court in 2001 (130) E.L.T. A 262 (S.C.)] and (v) Castrol India 2001 (135) E.L.T. 958 (T).
2. In these judgments it has been laid down that where there is a factory gate price available and where such factory gate sales are at arms – length, the factory gate price is the price that must form the basis of the assessable value even if the assessee sells goods at a higher price from its depots.
3. The Appellants sell nearly 25% of their production at factory gate. They also sell goods through their regional depots at a higher price. The Appellants do not have any depots in Maharashtra, South India, Gujarat and Madhya Pradesh and dealers in these areas purchased their goods mostly from the Appellants at the factory gate. The sales to customers at the factory gate are wholesale sales on a principal
to principal basis.
4. It is the contention of the department that as the Appellants sell goods at a higher price at the depots the same must be taken into consideration for the purpose of calculating the assessable value. This contention has been negated by the aforesaid judgments.
5. It is pertinent to note that the department does not dispute that the factory gate price is a genuine price. The Show Cause Notice in fact only seeks to levy duty in respect of those sales which are made from the depots. No attempt has been made to increase the assessable value of the sales made at the factory gate.
6. The Commissioner has speciously tried to distinguish the judgment of the Supreme Court in the case of Indian Oxygen on the ground that the said judgment is not the latest word on the subject and that the judgment of the Supreme Court in the case of MRF, being later, must be followed. It is submitted that the reliance by the Commissioner on the judgment of the Supreme Court in the case of MRF shows total non-application of mind as in that case there were no factory gate sales at all. All the sales made by MRF are from the depots. This judgment was therefore wholly irrelevant.
7. The demand is also hopelessly time-barred. The show cause notice issued by the Commissioner is dated 27-7-1993 and seeks to demand duty for the period July 1988 to June 1992 on the ground that the Appellants had suppressed the fact that they were recovering a higher price in respect of the depots sales. This contention is ex facie erroneous for the following reasons :
(i) As far back as 25-11-1987 the Audit Party after inspecting the depot invoices issued a query memo, specifically stating that the depot invoices revealed that the Appellants were selling the products at an increased price over and above the cum-duty price which had been approved by the proper officer. They in fact purported to allege that the depot was related person and purported to allege that an amount of Rs. 3.7 Lakhs was recoverable from the Appellants for the period October 1986 to March 1987;
(ii) By their reply dated 15 January 1988 the Appellants replied to the aforesaid query memo; (iii) By a letter dated 28 April 1988 the Appellants also filed a fresh price list in part I along with a questionnaire; (iv) On 16th November 1988 the Superintendent of Central Excise visited the factory and verified various depot invoices and observed that the prices were different from the prices at which the goods were cleared from the factory gate. An explanation was given to the said Superintendent of Central Excise by a letter dated 18 November 1988; (v) By a letter dated 4th December 1988 the Superintendent directed the Appellants to produce depot invoices for verification, which were all produced; (vi) in the meantime, several audits were carried out;
8. From the aforesaid correspondence it can be seen that the department were aware that higher prices were being charged from the depots right from November 1987 onwards. In other words there was no suppression whatsoever of any facts between 1987 and 1993 when the show cause notice was issued. In the circumstances it is submitted that the demand for the period July 1988 to June 1992 is hopelessly time-barred.
9. The Commissioner has totally ignored the correspondence and is only purported to refer to the questionnaire filed with the price list dated 28-4-1988 and is purported to infer that from the questionnaire the department would be in no position to know that the price realized by the assessee from the depots was higher than the factory gate price. This reasoning is manifestly specious as the department were aware that the depot prices were higher than the factory gate price right from 1987, which has been conveniently ignored by the Commissioner.
10. The imposition of penalty is also ex facie illegal as there has been no mens rea whatsoever.
11. It is submitted therefore that the appeal should be allowed.”
2. Shri. M. H. Shaikh, learned DR appearing for Revenue fairly concedes that the appellant’s case cannot be distinguished from the case of Indian Oxygen.
3. After hearing both sides and perusing the records, we find that the learned Commissioner has proceeded on the basis that the Apex Court decision in MRF case has to be followed in preference to the Apex Court decision in the case of Indian, Oxygen. As pointed out by the learned advocate and as conceded by the learned DR, the appellant’s case is similar to the case of Indian Oxygen rather than MRF, where all sales were from the depots except sales to Govt. unlike in the present case where there are sales from factory gate. In view of the fact that the department is not challenging the price of factory gate sales, the same has to be adopted for all sales following the Apex Court decision in Indian Oxygen.
4. We, therefore, set aside the impugned order and allow the appeal.