ORDER
U.L. Bhat, J. (President)
1. Order-in-original No. 121/89 dt. 25.10.1989 passed by the Additional Collector of Central Excise, Bombay is under challenge in this appeal.
2. The appellant was engaged in the manufacture of Stearic Acid falling under erstwhile Tariff Item 68 and had opted for assessment on invoice value under Notification 120/75 for factory gate sales and also had depot sales. The factory gate sales were governed by Notification No. 120/75. Regarding the goods stock transferred to sales depot, appellant filed price list No. 1/84-85 as required by the Department, declaring Rs. 12,000/- PMT as the price. The price list was approved subject to the condition that differential duty will be paid after actual sale if the factory gate sales were at higher prices. On account of various problems factory was shut down during the period 7.6.1984 to 13.1.1986. On reopening of the factory, 527.050 m.t. of Stearic Acid was transferred to the sales depot in January and February, 1986 paying duty on the approved price of Rs. 12,000/- PMT of which it appeared only a part was sold at the sales depot by the end of February, 1986. W.e.f. 1.3.1986, Stearic Acid stood exempt from payment of duty under Notification No. 116/86. The appellant claimed that in regard to the quantity actually sold at the sales depot, some differential duty had been paid after the reopening of the factory. The appellant did not file revised price list showing the current price. Show cause notice dt. 17.5.1986 was issued alleging that the goods were cleared to the sales depot in January and February, 1986 paying duty on the price of Rs. 12,000/- PMT declared in price list No. 1/84-85 but factory gate sales were at higher prices, that the appellant deliberately failed to file revised price list showing current price and thereby misdeclared value deliberately with intent to evade duty. Notice proposed demand of differential duty on the basis of the price at which factory gate sales had been effected at the relevant time. Though the notice was opposed on merits and on the ground of limitation, the Additional Collector confirmed the demand, without taking note to the contention that part of differential duty had been paid. He also imposed penalty of Rs. 15,000/-. This order is under challenge.
3. Learned Counsel for the appellant did not argue on the merits of the claim and confined his submission to the ground of limitation and the errors in quantification of differential duty as also the imposition of penalty. Learned Counsel for the appellant contended that as a matter of practice, the appellant was clearing goods to sales depot paying duty on the approved value subject to the understanding that if these were gate sales at higher prices, differential duty will be paid and in the present case, differential duty was not paid in view of the total exemption granted under Notification No. 116/86. Therefore, it is urged, that there was no intention to evade duty and no mala fides on the part of the appellant and hence the larger period of limitation under the proviso to Section 11A of the Central Excise Act, 1944 could not be invoked. While it may be that a part of the goods cleared from the factory to the sales depot in January and February, 1986 was actually sold at the depot on or after 1.3.1986, those goods would not be exempt from payment of duty since they had been cleared from the factory before the exemption notification came to force. The price of Rs. 12,000/- had been declared in price list No. 1/84-85 while the subject clearances were made long thereafter. In view of the change in situation, it was the duty of the appellant to have filed revised price list, particularly since the appellant has no case that at or about the time, there was any factory gate sales at Rs. 12,000/- PMT. In these circumstances, we agree with the contention of the Department that there was deliberate misdeclaration of value and the larger period of limitation was rightly invoked.
4. At pages 27 and 28 of the paper book is a statement showing the details regarding clearances effected in January and February, 1986 which was attached to the show cause notice. Items 1, 2, 5, 6, 11, 32, 47, 51 and 54 relate to factory gate sales while the other items relate to transfer to sales depot. The price shown against item 1 and 2 is Rs. 14,500/- PMT. Therefore, the adjudicating authority adopted the same factory gate price for clearances to depot shown in items 3 and 4. Items 5 and 6 show the factory gate sale price as Rs. 14,000/- PMT, while item 8 relating to transfer to sales depot shows the price as Rs. 12,000/- for which the adjudicating authority adopted Rs. 14,500/- as the price. This is not correct since the immediately preceding factory gate price was Rs. 14,000/- PMT. The factory gate price for S. No. 1 to 11 is Rs. 13,250/-. Items 12 to 31 relate to transfer to sales depot at Rs. 12,000/- PMT. For all these items the adjudicating authority adopted Rs. 14,000/- PMT as a price. This is erroneous since the immediately preceding factory gate price was Rs. 13,250/- PMT. The factory gate price seen in item 47 is Rs. 13,250/-. The factory gate price shown in item 54 is Rs. 13,250/-. This is followed by items 55 to 58 relating to stock transfer to sales depot at Rs. 12,000/- PMT for which the adjudicating authority adopted the price as Rs. 14,000/-. This also is erroneous since the immediately preceding factory gate price was Rs. 13,250/- PMT. Thus the demand has to be recalculated after adopting the lower prices indicated above for items 12 to 31,49 to 51 and 55 to 58.
5. We find from the impugned order that the price has been treated as cum-duty price. According to the appellant, a substantial part to the duty demanded had already been paid prior to the show cause notice which has to be verified by the adjudicating authority.
6. In the above circumstances, we waive the imposition of penalty. The impugned order is set aside for the reasons indicated above and the case is remanded to the jurisdictional adjudicating authority for quantifying the amount of differential duty correctly in accordance with the findings and directions contained in this order and for passing a fresh order after giving an opportunity to the appellant. Penalty shall not be imposed in the order to be so passed. Appeal is allowed to this extent.
Order dictated in the open Court.