ORDER
P.G. Chacko, Member (J)
1. Pursuant to the Hon’ble High Court’s direction contained in judgment dated 06.09.2006 in Writ Petition No. 22800 of 2006, we are taking up the appeal for disposal.
2. The appellants are manufacturers of steel bars and rods from ingots. During the period April to July, 1997, they removed such products to a related, raw material supplier viz. M/s. G.K. Steel and Allied Industries, Dindigul, by pavinti duty on the basis of the formula laid down by the apex court in what is called “Ujagar Prints-Ill case’ i.e., Ujagar Prints v. Union of India 1989 (39) E.LT.493 (S.C.) i.e., duty was paid on an assessable value comprising raw material cost and job charges including the job worker’s profit. The goods cleared to the raw material supplier had been manufactured by the appellants on job work basis out of ingots supplied by the former. The raw material supplier, who received the bars and rods in their depots, sold the goods to their buyers at higher prices. The department wanted this higher price to be the basis of the assessable value for the goods cleared by the appellants to M/s.G.K. Steels and Allied Industries, Dindigul during the aforesaid period of dispute. Accordingly, a show-cause notice was issued on 29.01.2002 demanding differential duly from the party for the above period and proposing penalty on them. These proposals were contested on merits as well as on the ground of limitation. The original authority, in adjudication of the dispute, confirmed demand of duty of Rs. 4,48,515/- against the appellants under the proviso to Section 11A(1) of the Central Excise Act and imposed on them equal amount of penalty under Section 11AC of the Act, The appeal preferred by the party against the decision of the adjudicating authority was rejected by the Commissioner (Appeals). Hence the present appeal.
3. Learned Counsel for the appellants submits that the transaction in question is one similar to the one considered by the apex court in Ujagar Prints-III (supra) and, therefore, duty was not recoverable from the appellants on the basis of the sale price adopted at the raw material supplier’s depot but the same could be demanded only on the basis of assessable value based on the formula laid down in Ujagar Prints-III. In other words, the assessable value should comprise the cost of raw material and the job work charges including profit. During the period of dispute, the assessable value was determined only in this manner and duty paid accordingly. It is also pointed out that a similar factual situation had arisen before the Tribunal in the case of Parag Industries Pvt. Ltd. v. Commissioner of Central Excise, Surat-I . In that case, the assessee (M/s. Parag Industries Pvt. Ltd.). were doing job work for the raw material suppliers (M/s. Parag Prints Pvt. Ltd. and M/s. Parag Fabrics) who were related to them. The assessee paid duty on processed fabrics transferred to the related raw material suppliers on payment of duty on the basis of Ujagar Prints-III formula. The department, however, wanted to recover differential duty from them by alleging thai the correct assessable value should be based on the price at which the fabrics were sold by M/s. Parag Prints Pvt. Ltd. and M/s. Parag Fabrics to independent buyers. This demand was held to be illegal by the Tribunal. It was held that, there being no sale of goods by the assessee to the raw material suppliers, the assessable value should be determined on the cost of raw material + cost of manufacture + profit as held in Ujagar Prints-III. We find that the facts of the instant case are essentially similar to those of Parag Industries case. Thus the appellants do have a sustainable case on merits, though their alternative plea of time-bar is by no stretch of imagination acceptable. The appellate Commissioner’s finding on merits, reiterated by JCDR, cannot be upheld.
4. It is an admitted fact that, prior to 01.04.1997, the appellants were paying duty on their products (removed to the same raw material suppliers) on an assessable value based on the latter’s depot prices. It is said that such payment was later realized to be erroneous and, therefore, from 01.04.1997, they switched over to Ujagar Prints-III formula for payment of duty. The appellants, however, did this without intimation to the department. It was as late as in 1999, and that too when queried by the department, that they came out with the depot prices. They suppressed these data till then. Hence the department is justified in having alleged suppression against the party in the show-cause notice for invoking the extended period of limitation as rightly submitted by learned JCDR.
5. In the result, the impugned order is set aside and this appeal is allowed.
(Dictated and pronounced in open court)