ORDER
K.K. Usha, J. (President)
1. In this appeal at the instance of the assessee the issue coming up for consideration is whether there can be two prices in respect of sale of a product one for original equipment requirement and the other for spares requirement when the buyer is one and the same for the purpose of assessment under the Central Excise Act, 1944.
2. The appellants are engaged in the manufacture of front axle assembly (motor vehicle part) falling under sub-heading 8708 of the Schedule to the Central Excise Tariff Act, 1985. The appellants are supplying the above goods to M/s. Maruti Udyog Ltd. (MUL) and to various other original equipment (OE) manufacturers in the present case we are concerned with their supply to M/s. MUL. On the basis of purchase orders placed by MUL the appellants supply front axle assembly for OE requirement at a lesser price compared to the price of the same goods supplied against spares requirement. Out of the total quantity supplied to MUL more than 90% would cover OE requirement and spare requirement is less than 10%. Show cause notice was issued on 31-8-99 alleging short-levy for the period August, 1994 to June, 1999. According to the Revenue, the price charged for spares requirement should be taken as the normal price and assessable value should have been arrived at on that basis for the purpose of payment of Excise duty. A corrigendum was issued on 14-12-2000 enhancing the quantum of duty proposed in the original show cause notice.
3. The assessee contended that the sale to MUL for their OE requirement is at a different commercial level from the sale for their spares requirement. It has been accepted so as a trade practice in India and also inter-
nationally in the case of automobile components. They are not related to MUL, that the sale was on principal to principal basis and there is no additional consideration flowing from MUL to the assessee which would entitle the Revenue to reject the transaction value adopted by the assessee in accordance with the provisions of Section 4 of the Central Excise Act 1944. In support of the above contention reliance was placed on CCE v. Hodak Engineering Pvt. Ltd. – 2001 (127) E.L.T. 720. The assessee also contended that the demand is barred by limitation and there is no justification for invoking the extended period of limitation in the facts of the case. The assessee was filing price list prior to 1-3-94 for OE supplies and spare supplies to MUL. They had also filed copies of purchase orders which would clearly show different price for OE and spare supplies. Copies of invoice-cum-delivery challan were also filed by the appellants which would clearly show that they were charging separately for OE and spares. RT 12 returns were filed along with the gate passes. Thus according to the assessee, every assessment documents would clearly indicate that the same item was being supplied at two different prices to MUL.
4. The adjudicating authority repelled all the contentions raised by the assessee and the demand under the show cause notice was confirmed. An equal amount of penalty was imposed and interest under Section 11AB was also directed to be paid. The Commissioner took the view that trade practice has got no legal sanction so far as the Central Excise Rules are concerned and therefore, no reliance could be made by the assessee on the trade practice. According to the Commissioner even though when similar goods are sold at different prices to different class of buyers each such price shall be deemed to be the normal price of such goods in relation to each such class of buyers, such procedure cannot be adopted when goods are sold to same buyers in view of the provisions contained under Section 4 of the Central Excise Act. The decision of this Tribunal in CCE v. Hodak Engineering Pvt. Ltd. was distinguished by the Commissioner holding that in that case comparable price of goods supplied to other original equipment buyers and dealers was available and since no such similar comparable price is available in the present case, the ratio of the decision in CCE v. Hodak Engineering Pvt. Ltd, cannot be applied in the present case. The contention on the application of extended period of limitation was rejected on the ground that the assessee never intimated the department that they were adopting two different sets of assessable value for the same product supplied to the same buyer during the relevant period.
5. It is contended before us by the learned Counsel for the appellant that the Commissioner has erred in coming to the conclusion that there cannot be sale at two different commercial levels in respect of the same goods when the buyer is the same. It is contended that when OE manufacturer places his requirement order under two different categories, he becomes in fact buyer under two different classes (i.e. commercial levels). A manufacturer user is at different commercial level as compared to trader. In the present case MUL is a buyer component for OE requirement as a manufacturer whereas MUL places orders for spares, it is in the role of a trader/dealer. The learned Counsel pointed out that the Commissioner has wrongly declined to follow the ratio of CCE v. Hodak Engineering Pvt. Ltd. The above decision was
later followed by this Tribunal in New Holland Tractors (India) Pvt. Ltd. v. CCE, New Delhi – 2002 (144) E.L.T. 410 (Tri.-Del.). In order to substantiate his contention that there can be more than one price for the sale to the same buyer reliance was placed on the following decisions of this Tribunal, Sterling Abrasives Pvt. ltd. v. Collector of Central Excise, Ahmedabad- 1997 (96) E.L.T. 284, Commissioner of Central Excise & Customs, Pune v. Kirloskar Brothers Ltd. -2001 (133) E.L.T. 97 (Tri.-Mumbai) and Gajanan Auto Engg. Pvt. Ltd. v. Commissioner of Central Excise & Customs, Pune-ll – 2001 (133) E.L.T. 793 (Tri.-Mumbai). It is also submitted that going by the ratio of the decisions of the Supreme Court in Government of India v. Madras Rubber Factory Ltd. – 1995 (77) E.L.T. 433 (S.C.) followed by this Tribunal in CCE, Meerut v. Pashupati Acrylon Ltd. – 2000 (120) E.L.T. 768 (Tribunal) the transaction value has to be accepted so long as the seller and the buyer are not related and the price is the sole consideration. The appellant would further contend that the supply towards requirement of OE and as spare parts are to be treated falling under two separate classes. The price charged for one class cannot be adopted for the other. In support of the above contention/ the appellant placed reliance on MRF Ltd., as well as A.K.G. Acoustics (India) Ltd. v. CCE/ Allahabad – 2000 (125) E.L.T. 713 (Tribunal). The contention on the ground of limitation placed before the Commissioner was reiterated before us by the appellants.
6. The learned DR would contend that none of the above decisions would be of any help to the appellants as there cannot be sale of two classes to the same buyer. He also submits that there is clear suppression of fact of the two different sale prices in respect of the same goods to the same buyer and therefore, invocation of the larger period of limitation is justified.
7. Certain facts are not disputed before us. Sale of front axle assembly to MUL was on the basis of different purchase orders placed by MUL for OE requirement and for spares requirement. The quantum of sale for OE requirement is more than 90%. The question to be considered is whether in the above circumstances can there be two different assessable values in respect of front axle assembly supplied for OE requirement and such goods supplied for spares requirement. It is not the case of the Revenue that the appellants and the buyer are related persons. There is no material relied upon by the Revenue to show additional consideration above the price covered by the invoices had been received by the appellant from MUL. This was the very issue that was considered by the Tribunal in CCE, Pune v. Hodak Engineering Pvt. Ltd. After referring to the department’s case that the same buyer cannot be in more than one class of the buyers at the same time, the Tribunal took the view that there is noting in Section 4 of the Act which would support the stand taken by the Revenue. The Tribunal observed that when the sale is as a component of product manufactured by the buyer he would be buying in large quantity and naturally he would get the goods at a lower price than others. The decision was rendered on the above basis and not for the reason that there was comparable value of goods supplied to other original equipment buyers, as was held by the Commissioner. A similar issue was considered by this Tribunal under the Customs Valuation Rules in New Holland Tractors (India) Pvt. Ltd. It was held that import for supply of components for assembly and supply of spare parts are at different commercial levels and therefore, there could be different transaction values for such imports.
8. In the present case there is no allegation that the appellant is a related person to MUL. There is also no evidence to show that the price paid as per the invoice is not the sole consideration. If that be so, the assessment to excise duty must be on the basis of a normal price at which goods are sold by the assessee to a buyer in the course of wholesale trade as provided under Section 4(1)(a). The provision under Section 4(1)(a) can be given a go by only when the department can prove that the buyer is a related person or the price is not the sole consideration for the sale. This is the view taken by this Tribunal in CCE, Meerut v. Pashupati Acrylon Ltd. after making reference to MRF Ltd. case. We find no reason to take a different view on the facts of the present case. We, therefore, hold that the Commissioner was not justified in holding that assessable value of the front axle assembly sold to MUL for OE requirement should be computed on the basis of the price for spare parts requirement which as mentioned earlier comes only to less than 10% of the sale.
9. We are also of the view that the appellant has made out a case on the ground of limitation. It is not denied that the appellant was filing price list prior to 1-3-94 for OE supplies and spares supply to MUL and the copies of purchase orders showing clearly the difference in price. They were filing other assessment documents like copies of invoice-cum-delivery challan, RT 12 returns filed along with gate passes which would clearly indicate that the same item was being supplied at to different prices to MUL at the same time. The RT 12 returns filed by the assessee had been assessed up to month of October, 1996. It is clear that all the relevant information was available with the department and therefore, the allegation of suppression of relevant facts is totally without any basis.
10. Thus on merits as well as on the ground of limitation demand
affirmed by the order impugned is not sustainable. In the result, we set aside
the order passed by the Commissioner and allow the appeal.