ORDER
S.V. Maruthi, Member (J)
1. These two appeals are disposed of by a common order as the issue involved is common to both the appeals. The case of the appellants is that they manufacture Commercial Plywood, Black Board etc. They sell goods at their factory gate and also through their sale depots. Accordingly, they filed price lists under Part-I and got them approved by the Central Excise authorities. While so, two show cause notices were issued by the Collector, show cause notice dated 10-11-1983 for the period commencing from 1-1-1981 to 31-12-1981, 1-1-1983 to 31-12-1983, 1-1-1985 to 31-12-1985; show cause notice dated 14-12-1988 for the period from 1-1-1984 to 31-12-1984 respectively proposing to recover duty on the ground that the appellants sold goods at prices higher than the prices approved in the price lists. The appellants filed their reply. On a consideration of the reply, the Collector confirmed the demand of Rs. 10,86,580/- and Rs. 4,70,711/- and a penalty of Rs. 50,000/- for the years 1-1-1981 to 31-12-1981,1-1-1983 to 31-12-1983,1-1-1985 to 31-12-1985. The appellants have come up in appeal against the order of the Collector.
2. The main contention of the appellants is that when once there is factory gate price under Part-I the said price shall be the assessable value in respect of the sales through depots. ‘He relied on a judgment of the Supreme Court in Indian Oxygen v. C.C.E. 1988 (36) E.L.T. 723 (SC) and various other decisions. The second contention of the appellants is that the show cause notice is barred by limitation.
3. Shri V.K. Jain appearing for the Department reiterated the order of the Collector. The Collector held that, “All the price lists mentioned in the show cause notice were initially approved provisionally and thereafter finally approved after the submission of a few sale bills. For computation of extended period of 5 years under Section 11 A, the date of final approval is to be taken. In all these cases of price lists, the period of 5 years has not expired from the dates of final approval. The company also contended that they have factory gate sales in which prices are not much different from the depot sale prices after allowing deductions of permissible items. This again is not substantial. The depot sale prices have been thoroughly verified on the basis of the sale bills and after allowing permissible deductions it has been found that the major portion of the products have been sold at higher prices by the company. That is to say the ex-factory gate sale was not found to be a genuine one.”
3A. The question therefore, is what should be the assessable value.
4. We may now refer to the allegations made in the show cause notice and it reads as follows:
“The prices realised by the company as per the sale bills from their different sale depots were much higher than the prices shown in the factory gate sale bills on the basis of which the declared prices were approved”.
“Their products are marketed through their different selling centres/depots at Delhi, Jaipur, Ahmedabad, Ludhiana, Bombay, Pune, Madras, Amritsar, Chandigarh, Rohtak, Hapur. Therefore, token factory gate sale price is not the actual value of their products for the purpose of Section 4 of the C.E. & Salt Act, 1944,” “The prices declared by them should be the prices at which such goods are ordinarily sold by the said company to their buyers in course of wholesale trade for delivery at the time and place of removal, where the buyers are not related persons and price is the sole consideration for the sale. Whereas on checking of sale bills (As Annexure – ‘A’) it has been found that the company has been ordinarily selling their goods at higher prices to the buyers from their depots in course of wholesale trade than that the prices declared by them in the price lists. Thus, the said company mis-stated the facts by declaring lower prices in their price lists.”
“The said company intentionally suppressed the correct prices realised by them by sales through their selling depots inasmuch as they did not indicate in their price lists submitted under Rule 173C of the C.E. Rules, 1944, that they were selling their products through their selling depots/centres.”
5. In reply to the above show cause notice, the appellants have stated that:
“We beg to inform you that we have got some factory gate sale also. Whatever quantity is sold at the factory gate it is sold at the declared price to any buyer either local or outside. It will not be correct to say that factory gate sale being a small percentage is outside the purview of sale under Section 4 as noted in the show cause notice. This is the same price which we want to realise at our sale centres alongwith our other expenses incurred on the goods upto the time of sale from the date of clearance from the factory …”
6. A reading of the show cause notice and the reply makes it clear that the Department has not denied or doubted the existence of the price in Part I at the factory gate. Therefore, as long as there is a factory gate price under Part I, it shall be the assessable value even in respect of the sales through their depots in view of the judgment of the Supreme Court in Indian Oxygen v. C.C.E. (supra). It had been categorically held by the Supreme Court that if the ex-factory price is ascertainable, such ex-factory price shall be the basis for determination of value under Section 4 of the Central Excises & Salt Act even in respect of sales through depots.
7. However, it is upon the Department to reject the Part I price provided it is satisfied that the said price is not genuine.
8. The Collector says that, “the depot sale prices have been thoroughly verified on the basis of sale … and after allowing permissible deductions, it has been found that the major portion of the products have been sold at higher price by the company that is to say, the ex-factory sales was not found to be a genuine one.”
9. The finding of the Collector that the ex-factory sale price was not genuine is not based on evidence as we do not find any allegation in the show cause notice to the effect that the ex-factory price is not genuine because even after permissible deductions, the price at factory gate is higher than the actual price at the factory gate. In the absence of such an allegation, we cannot accept the observation of the Collector that the ex-factory price is not genuine. The Annexure ‘C’ to the show cause notice indicates the difference in ex-factory price and the price at depot and the differential duty payable. It does not indicate the difference between the ex-factory price approved and ex-factory price at which the goods are actually sold. Therefore, the finding of the Collector is not based on evidence. Secondly, the Collector has not referred to any evidence in his order, he does not give any particulars as to how the approved ex-factory price is lower than the factory gate price at which the goods are sold in the absence of which the finding of the Collector that the factory gate price is not genuine, is not acceptable. Therefore, we are of the view that the assessable value in respect of depot sales should be on the basis of the approved price lists under Part I. As regards the limitation, when once the assessable value is the factory gate price then the question of suppression of fact and invoking larger period of limitation does not arise. We, therefore, set aside the order of the Collector and allow the appeal.