ORDER
Lajja Ram, Member (T)
1. These are two appeals, one filed by M/s. Nadiad Silicates & Chemicals (hereinafter referred to as ‘NSC’), and the other filed by the Revenue, both against the same Order-in-appeal dated 20-8-1983 of the Collector of Central Excise (Appeals), Bombay. As both the appeals emanate from the same impugned order, they were heard together and are being disposed of by this common order.
2. NSC were engaged in the manufacture of sodium silicate classifiable under Item No. 14BB of the erstwhile First Schedule to the Central Excises and Salt Act, 1944 (the old tariff). It was noticed that the price charged from their customers, M/s. National Industries Co., Bombay (hereinafter referred to as ‘NIC’) was much lower than the price charged from other customers. For the period April, 1979 to April, 1982, four show cause notices were issued to them demanding Central Excise duty of Rs. 1,63,185.68. The larger period of limitation was invoked for certain periods, alleging suppression. NSC pleaded defence contending that the goods supplied to NIC had been manufactured on job basis after the raw material had been supplied by the said customer. It was also submitted that the Department was in full knowledge of their price pattern and the fact that the Central Excise duty was being paid by them on lower prices in respect of supplies to NIC. All the four show cause notices were adjudicated by the Asst. Collector of Central Excise, Nadiad, who under his common order dated 31-12-1982 observed that the two firms NSC and NIC had common interests and that NSC had under invoiced the clearances of the excisable goods made to NIC, in comparison with that made to other customers. He confirmed the demand of Rs. 1,63,185.68. The Collector of Central Excise (Appeals), Bombay on appeal upheld the order of the Asstt. Collector of Central Excise, Nadiad, but restricted the demand to the period of six months from the date of the respective show cause notices. From the letter No.V.2 (14 BB) 6/83/MP, dated 28-8-1984 from the Asst. Collector of Central Excise, Nadiad to the Sr. Departmental Representative, it is seen that the amount of duty involved came to Rs. 70,018.75. The Revenue has come in appeal on the point of limitation on the ground that the facts of the case established suppression of facts.
3. The matter was heard on 1-8-1995. When Shri K. Kumar, Advocate with Shri N.C. Sogani, Consultant appeared for NSC. Shri A.K. Singhal, JDR represented the Revenue.
4. Shri K. Kumar, the learned Advocate stated that the NSC were engaged in the manufacture of sodium silicate whose principal raw material was soda ash. For producing 2.2 tonne of sodium silicate, 1 tonne of soda ash is required. As NIC supplied soda ash, the Central Excise duty was paid at lower prices. For other customers they had to procure soda ash at relatively higher prices from the open market and therefore, the prices in respect of such supplies were higher, and the Central Excise duty was paid on higher prices. It was admitted that their value in respect of the supplies to NIC was not a correct value for the purposes of calculating Central Excise duty. It was however, pleaded that the Central Excise law at that time admitted the valuation on the basis of the manufacturing cost and the manufacturing profit. The proceedings relate to the period prior to the Supreme Court’s decision in the case of Bombay Tyres International, and at that time, the law’s understanding was different. The learned Advocate submitted that the value had not been quantified correctly and it needs to be re-determined. For this purpose, he pleaded that the matter may be remanded.
5. Shri A.K. Singhal, the learned JDR replied that the value declared was not correct, and this fact has been accepted by the appellant and that the adoption of the value by the Department was justified. On gate passes, there was no declaration that the goods were produced on job work basis. There was no evidence on record that the goods were produced on job basis. Their relationship with NIC had not been disclosed. He referred to the communication from the Karnataka Soaps and Detergents Ltd. to NIC at page 54 of the Paper Book which shows NIC as the manufacturer of sodium silicate. The Order-in-Original contains details of their special relationship with NIC. Non-declaration of correct value was a misdeclaration and the non-disclosure of relationship was the suppression of facts. In the circumstances, the extended period of limitation has been rightly invoked.
6. In rejoinder, the learned Advocate referred to the Supreme Court’s decision in the case of Cosmic Dye Chemicals v. Collector of Central Excise, Bombay – 1995 (75) E.L.T. 721 (SC) wherein it had been held that intent to evade duty must be proved for invoking proviso to Section 11A(1) of the Central Excises and Salt Act, 1944 (the ‘Act’), for extended period of limitation.
7. We have carefully considered the matter. On merits of the case, the appellants have admitted that their prices for sale of sodium silicate to the NIC were not the correct prices for the purposes of calculating Central Excise duty. It has, however, been contended that there was no suppression of the facts and that they were under the bona fide belief that in the case of job work when the raw-material – soda ash – was supplied by the customers, only manufacturing cost and manufacturing profit was to be taken into account for declaring assessable value. The matter related to the period prior to the Supreme Court’s decision in the case of Bombay Tyre International -1983 (14) E.L.T. 1896 (SC). In their submissions before the Asstt. Collector of Central Excise, Nadiad on 22-11-1982, the appellant had submitted as under :-
“Despite our submissions of facts, if it is felt that the assessable value of Rs. 1,200/- was incorrectly taken or duty is short paid in the instant cases, in the name of equity and justice, we pray that the assessable value which your Honour finds to be proper from the data supplied by us may kindly be worked out and intimated to us very early to enable us to make further submissions in the matter in our defence and point out errors if any in working out the assessable value. So that we can thereafter accept job work of our prospective customers as also to enable us to put a stop to this dispute and clear sodium glass on payment of duty on the basis of the assessable value finally approved by your Honour.”
8. The appellant were exempted from filing the regular price lists, and were allowed to determine their duty liability on the basis of the prices shown on their invoices under the provisions of Rule 173C(11) of the Central Excise Rules, 1944. It had been submitted by the appellants that there were large fluctuations in prices of the soda ash and as a consequence, there was frequent fluctuations of market price of sodium silicate. It was on this account that the manufacturers of sodium silicate were exempted from the requirement of filing of price list. The duty liability was determined on the basis of the prices as indicated in their respective invoices. While it has been admitted by the appellants that the lower prices declared by them for sale to NIC were not the correct prices, there is nothing on record to show that the appellant had not followed the proper procedure with regard to their declared prices or had suppressed the relevant facts. Their basis for differential valuation was known to the Department and no objection had been raised in time. Their assessments were finalised by the proper officer. The Collector of Central Excise (Appeals) had observed with regard to the point whether the demands issued to the appellants were maintainable [as] under :-
“As regards, the point at (2) above, I find that the assessments were being made for four years on the invoice value and the R.T. 12 of the appellants were assessed without any objection. Therefore, lower authorities were aware that different prices were charged by the appellants. Therefore, I agree with the appellants that there is no suppression and hence longer period of 5 years is not invokable. I, therefore, hold that demands which are not issued within 6 months from the relevant date are time barred and not enforceable. Regarding omission of rule 10 with effect from 17-11-1980, the appellants’ argument is not acceptable in view of the decision of the Madhya Pradesh High Court in the case of Gwalior Rayon Mfg. (Wvg.) Co. v. Union of India and Ors. 1982 (10) E.L.T. 844.”
The present proceedings were initiated on the basis of audit objection raised in the year 1982. In the circumstances, it appears that the invocation of the larger period of limitation was not proper.
9. The appellants had submitted that the value had not been quantified correctly, it needs to be re-determined and that the matter may be remanded. The matter relates to the years 1979-1982. We find on merits the appellant had no case. On limitation the Collector of Central Excise (Appeals) had already extended relief in their favour and we agree with the conclusions drawn by the learned Collector of Central Excise (Appeals) with regard to the limitation. Further, it is seen that from letter No. V. 2 (14 BB) 6/83/MP, dated 28-8-1984 of the Asstt. Collector of Central Excise, Nadiad addressed to the Sr. Departmental Representative that the correct amount of duty involved has been determined at Rs. 70018.75 and not Rs. 78567.90. In the circumstances, we do not consider that the matter requires to be remanded.
10. Taking all the relevant considerations into account, we find no infirmity in the order passed by the Collector of Central Excise (Appeals), Bombay. We confirm the same. Both the appeals – Appeal No. E/2475/83-A filed by the NSC and the appeal No. E/2612/83-A filed by the Revenue are rejected. Ordered accordingly.
