ORDER
C.N.B. Nair, Member (T)
1. The appellant is a manufacturer of alloy, carbon and other varieties of steel wire rods. It is liable to pay central excise duty on the goods manufactured by it on ad valorem basis.
2. The appellant was selling its goods at factory gate both to wholesale dealers and to dealer, M/s. General Engineering Works, alleged to be related to the appellant. In addition to factory gate sales, it was also removing wire rods to its depots and carrying out sales therefrom. Assessments were provisional from 1994-95 onwards.
3. Under order dated 3-12-96, the Assistant Collector of Central Excise finalised the assessment in regard to certain price declarations. These were all in regard to sales from depot. It was held that appellant shall be entitled to deduction from the depot price towards freight and octroi. Claim for deduction in regard to all other items was rejected. It is being pointed out that the amount of duty payable on account of this finalisation of assessment is Rs. 55,577/-. The appellant filed no appeal against that order of finalisation of assessment. Thus, it became final.
4. Subsequently, on 30th April 1997 and 11th September 1997, the juris-dictional Superintendent passed orders upon assessment of RT- 12 returns. These orders held that the appellant’s sale prices at the factory gate were less than the prices indicated in the price declaration filed in 1994. It was held that goods were required to be assessed treating the price declarations as assessable value, even though the clearances were for a long period from 1994-95 to March 1997. The duty demand on account of the adoption of higher declared price was over Rs. 80 lakhs. This determination of short-payment was without issuing any show cause notice or hearing the appellant. Subsequent to this order, two show cause notices dated 17-6-97 and 1-10-97 were issued by the Assistant Collector of Central Excise. These notices also raised the same charge of short-levy of duty on account of adopting lower prices for assessment than declared price. The Notice dated 17-6-97 stated that the short-levy has been worked out at over Rs. 89 lakhs by the Superintendent. The notice, therefore, alleged that, “it prima facie appears that the noticees have short paid the duty amounting to Rs. 89,33,877/- on account of claim of depot charges, goods sold at lower price to their sister concern units and goods sold at lower price than price declared in the declaration filed under Rule 173C(II) of the Central Excise Rules 1944”. The notice called upon the assessee file to its objection in relation to the proposed recovery of short-levy. Notice also invoked Rule 9(1) and Section 11A of the Central Excise Act.
5. The appellant contested the demand by pointing out that the duty remains correctly paid inasmuch as sale prices were treated as assessable value in each case. In regard to sale to related person, it was contended that no short-levy has taken place inasmuch as the sale prices to related persons were the same as the sale prices to unrelated buyers.
6. The above contentions on merits were not considered by the lower authorities in adjudication as well as in first appeal. Instead, a view has been taken that since the appellant did not contest the assessment order of the Superintendent and the Assistant Collector by filing appeals, those orders have become final. It was also held that show cause notices in question were merely for the recovery of the levies finalised in terms of earlier orders. Reliance was placed on the judgment of the Hon’ble Supreme Court in the case of C.C.E. v. Flock India and other decisions in regard to finality of orders.
7. It is being pointed out that since the assessment orders of the Superintendent were without serving notice they were not sustainable. As regards the non-filing of appeals against those orders, the submission is that since show cause notice raised the same ground, the appellant entered a consolidated defence rather than contesting each proceeding.
8. As regards the merits of the case, the appellant is not contesting the amount of Rs. 9,55,577/- accruing on account of finalisation of assessment relating to depot sales by the Assistant Commissioner vide his order dated 3-12-96. It is being pointed out that the order was passed after hearing the appellant and the appellant did not file appeal as they were not aggrieved with that order.
9. With regard to the rejection of sale prices for the purpose of assessment, both in relation to sales to unrelated wholesale dealers and related party, the submission is that the invoice prices reflected transaction value and those wholesale transaction values constitute correct assessable value in terms of Section 4 of the Central Excises and Salt Act. It is also being pointed out that it remains clarified in a Circular No. 28/28/94-CX, dated 8-3-94 of the Central Board of Excise and Customs that “The assessee’s invoice will now be used as a transport document as well as the basis for determining the assessable value under Section 4 of the Central Excises and Salt Act in lieu of Gate Pass and the Price List. Multiplicity of documents required for Central Excise purposes is being reduced”. It is being pointed out that this Tribunal in the case of BOC India v. C.C.E., Mumbai II held that assessment will be based on transaction values revealed in the invoice and not based on prices mentioned in the declarations. Learned counsel for the appellant has emphasized that as prices keep on changing from time to time, it is not practicable for an assessee to declare prices in advance. In the present case, the assessments were in respect of goods cleared during a long period of about three years and to make all assessments on a fixed price would be a total negation of commercial reality.
10. Learned DR would contend that the lower authorities were right in refusing to consider the matter on merits inasmuch as the assessment made by the Superintendent had become final for want of any appeal.
11. We have perused record and considered the submissions made by both sides. It is seen that the assessment order of the Superintendent was without any notice to the assessee. It is well settled that notice is required to be served on the assessee in case of any short-levy and the demand determined after proper adjudication. These were not done by the Superintendent. The appellant was issued show cause notices even before appeal period (in regard to Superintendent’s order) was over. These notices referred to the assessment of the Superintendent as working out the short-levy and the notices proposed to recover short-levy in terms of Section 11A of the Central Excise Act and Rule 9(1) of Central Excise Rules. Thus, the assessments of the Superintendent were not treated as final appealable orders even in the show cause notices. In this factual situation, the assessee was right in treating the dispute as open to defence before the Assistant Commissioner and filing its reply before that authority. In view of this, the lower authorities were required to go into the merits of the case.
12. Coming to the merits of the demand, all along the assessee’s case was that the assessments were required to be made in terms of ex-factory commercial prices. Duty payments took place at the time of clearance on the invoice prices. Revenue has no case that prices mentioned in the invoices to unrelated dealers were not commercial prices or that they were favoured prices. Measure of assessable value prescribed in Section 4 of the Central Excise Act is the transaction price in a wholesale transaction. Therefore, the values adopted by the appellant at the time of clearance of the goods were the correct values. It is also not in dispute that sale prices to the alleged related party were the same as sale prices to unrelated buyers. This clearly brings out that sale prices to related persons were also not favoured or non-commercial prices. Therefore, no short-levy took place in regard to the goods sold to the related person also. Thus, the demands made in the order of the Superintendent to the extent of Rs. 8,060,648/-are clearly unsustainable in law and in the facts of the case.
13. The assessments were on provisional basis. Short-levy demand was upon a finding that declared prices should constitute the assessable value. We have already set aside the demand made on this basis. Therefore, penalty is not attracted in the present case at all.
14. In view of what is stated above, the duty demand to the extent of Rs. 9,55,577/- is confirmed. Rest of the duty demand and penalty are set aside.
15. The appeal is ordered in the above terms.
(Dictated and pronounced in open Court)