ORDER
S.L. Peeran, Member (J)
1. By the impugned order No. 9/99 dated 30.7.1999, the Commissioner has taken a view that the assessee being manufactures of Linear Benzene Sulphuric Acid (LABSA in short), which is commonly called Acid slurry, has undervalued the goods while selling the same to various customers viz. M/s. Hindustan Lever Limited, M/s. Naga Detergents (P) Ltd., M/s. Super Chem Industries, M/s. Alpha Detergents (P) Ltd., M/s. Kelkar Industries, M/s. Vivid Detergents Limited etc. He has held that the clearances made on the job ‘work basis were on higher value. It has been alleged that the Commissioner has held that the appellants had deliberately created the gradation only to avoid the adoption of independent selling prices available for comparable goods for the purpose of assessment of the consignments; that they had wilfully mis-led the department by artificially creating two different grades of LABSA only to evade Central Excise Duty by under valuing LABSA manufactured/cleared by them on job work basis. Initially a Show Cause Notice had been issued by the Superintendent on 30.1.1997 on the same ground. The officers had already visited factory in 1996 and had taken all the details and, therefore, the Show Cause Notice subsequently issued on 18.9.1998 on the same ground alleging suppression is barred by time. They had submitted that without prejudice, they had, on being persuaded and coerced had paid duty by TR 6 Challans, to an extent of Rs. 21,37,551/-for clearance made during the period November 1995 up to February 1997, arising from Show Cause Notice dated 30.1.1997. Therefore, they submit that subsequent Show Cause Notice dated 18.9.1998 covering period January 1996 to September 1996 is not sustainable. In this regard, they rely on judgments rendered in the case of Neyveli Lignite Corporation v. CCE wherein it has been held that extended period of limitation is not applicable when a demand for a subsequent period been raised under normal limitation and demand for earlier period raised subsequently. They rely on the following judgments on the issue of time bar.
(i) Padmini Products 1989 ELT (43) SC 195 : 1989 (25) ECR 289 (SC) : ECR C 1507 SC
(ii) Sunil Plastic Industry 1990 ELT (45) 576
(iii) United Brothers 1990 ELT (45) 455(Tribunal) : 1989 (24) ECR 716 (Cegat)
(iv) Nylon Laminated Belts 1990 ELT (49) 138(Tribunal) : 1989 (24) ECR 716 (T)
(v) Gwalior Rayons 1993 ELT (65) 121 : 1993 (44) ECR 554 (T) (vi) Indian Oil Corporation 1990 ELT (48) 80(Tribunal)
(vii) John Shalex Paints 1990 ELT (49) 348 (Karnataka HC) : 1991 (33) ECR 211 (Kar.)
(viii) J.K. Synthetics 1990 ELT (50) 653(Tribunal)
(ix) Collector v. Aromatics Intermediators and Chemicals 1991 ELT (51) 49 (Tribunal) – 1991 (35) ECR 95 T
(x) Viromed Labs 1991 ELT (53) 152(Tribunal) : 1991 (37) ECR 729 (T)
(xi) Chempar Drgus
It is further submitted that the clearances to the bulk supplier was on a large scale viz. job work and what is cleared on job work basis was on a lesser value and hence the job work prices cannot be compared with the bulk sales.
2. The Counsel submitted that the value of the goods supplied to the job suppliers should be the value as declared on the basis of Purchase order but not on the basis of small direct factory sales. In this regard, the Larger Bench judgment rendered in the case of S. Kumars Ltd. v. CCE, Indore is relied, which is based on Apex Court judgment rendered in the case of Ujagar Prints Ltd. v. UOI 1989 (39) ELT 493(SC). They also rely on the judgment of the Tribunal rendered in the case of Prafful Industries Ltd. v. CCE, Mumbai which, according to the Counsel, clearly applies to the facts of the case. He however, relied on the Apex Court judgment rendered in the case of CCE, Coimbatore v. Elgi Equipments Ltd. 2001 (128) ELT 52(SC) and submitted that mandatory penalty under Section 11AC and interest under Section 11AB cannot be imposed as that came into existence on 28.9.1996 and the period involved was prior to 1996. The learned Counsel also took several other grounds in the matter.
3. The learned SDR submitted that although the department had collected all the information in the year 1996, prior to the issue of first Show Cause Notice, yet the Show Cause Notice issued in 1998 is sustainable as there was suppression and mis-declarations in the matter and hence the clearances to job suppliers on a lesser value was rightly rejected by the department. He contended that the grade supplied to both the factory gate as well as on job work was different. This was denied by the learned Counsel and agitated through the record that the grade was one and the same.
4. On a careful consideration, we notice that the appellants have made out a strong case both on merits as well as on time bar. The Larger Bench, in the case of S. Kumars Ltd. (supra) has clearly held that the value has to be in terms of the one which is supplied to the job supplier and not comparable to the separate factory sales in terms of Ujagar Prints Ltd. case. This view has been followed by the Tribunal in the case of Kalyani Ferrous India Ltd. v. CCE, Belgaum 2002 (148) ELT 341 (Tri-Bang,). It has been held that goods manufactured by appellants on ‘job work’ basis and cleared to customer in a manner not involving sale, to be valued on the basis of costing data as per the Apex Court’s clarificatory order in Ujagar Prints case and not as per sale price of goods sold to other independent buyer. Furthermore, both these rulings clearly apply to the facts of the case. Further, we notice that the department had collected all the information and had issued Show Cause Notice on 30.1.1997 and the appellants had been persuaded to pay the amounts. Therefore, after lapse of long time, a show cause notice was issued on 18.9.1998 for earlier period. On a careful consideration and perusal of record, we find that no suppression or mis-declaration of the details had been furnished and, therefore, subsequent Show Cause Notice was clearly barred by time. On both the grounds, the appellants succeed and hence, we allow the appeal in the light of several judgments cited before us.
(Pronounced in open Court on 4.4.2025)