Judgment:
1. Arguing for the appellants the ld. Advocate submitted that during the period 1985-86 to July, 1988, they used to file two types of Price Lists; (a) Part [I] Price List in respect of goods sold to consumers at their factory gate at Baroda; (b) Part [VII] Price List in respect of goods stock transferred to consignment agents in various regions such as Amritsar, Patna, Bombay, Bangalore and sold through such agents.
1.2 The prices in Part [VII] were less than those in Part [I] list.
This was because quantity sold by consignment agents was larger than those purchased by the consumers at their factory. The factory gate sales were only Rs. 5,000/-.
1.3 Prices mentioned in Part [VII] price list were those which the appellants expected to fetch on sale by the consignment agent. The Part [VII] price list also contained an undertaking that if the price ultimately realised by sale by the consignment agent was more than the declared, the appellants would pay duty on the difference, The appellants accordingly used to pay duty on difference whenever price realised was higher. No refund, however, was claimed in case the price realised was less than that mentioned in the list. The Department duly approved both Part [I] and Part [VII] price list during the period.
1.4 Show cause notice dated 21-8-89 for the period 1985-86 to July, 1988, however, alleged that since ex-factory price, i.e., Part [I] price list was available the same should also be taken as the assessable value for goods sold through consignment agents. The show cause notice also demanded duty on interest, realised on delayed payments and excess freight. Duty was also demanded on excess transit insurance which the appellants realised in some cases. Commissioner confirmed the total demand for Rs. 25,60,932.72 and also imposed a penalty of Rs. 12,50,000/-.
2. It was the belief of the appellants that clearance made to consignment agents did not involve any sale of goods and as such the transaction was not covered by Part [I] of the price list. They were under the bona fide belief that assessable value of exciseable good was required to be declared through Part [VII] of the price list in case of transfer of goods to the consignment agents. The Excise Authorities were aware of the fact that appellants were utilising different price lists. The price lists were frequently filed and they were approved.
They had drawn a legal inference from these facts and even if such a legal inference was incorrect that would not be a mis-statement or suppression of facts. There was no deliberate attempt to suppress any material fact. In support of his proposition he cited the cases like J.K. Synthetics Ltd. v. CCE - 1990 (50) E.L.T. 653, Sunil Plastic Industry v. CCE -1990 (45) E.L.T. 576, CCE v. Chemphar Drugs and Liniments - 1989 (40) E.L.T. 276 (S.C.); CCE, Baroda v. Kosan Metal Products Ltd. - 1988 (38) E.L.T. 573 (S.C.) and TISCO v. Union of India - 1988 (35) E.L.T. 605.
3. In view of this, he submitted that larger period by invoking proviso to Section 11A cannot be applicable in this case. In regard to duty on excess freight and excess insurance, he submitted that these are not part of manufacturing cost and in support of his contention he cited the case of Baroda Electric Meters Ltd. v. CCE - 1997 (94) E.L.T. 13 (S.C.).
4. Interest on delayed payments is also not liable to be included in the assessable value - Indian Rayon & Industries Ltd. v. C.C.E., Jaipur - 1995 (76) E.L.T. 88.
5. Arguing for the Revenue, the ld. DR, submitted that once ex-factory prices is available, that alone can form the basis of valuation under Section 4 and not the prices of consignment agents. In support of his contention relied upon the Hon'ble Apex Court judgment in case of Indian Oxygen Ltd. v. C.C.E. - 1988 (36) E.L.T. 723 (S.C.). They had made a misleading statement in the price list in Part [VII] by making a declaration that basis of valuation is their normal selling price at the factory gate. In this view of the matter, larger period can be invoked.
6. We have heard both sides. In view of the Hon'ble Apex Court judgment in the case of Indian Oxygen Ltd., the appellants do not have a case on merits and we hold that once ex-factory price is available that alone would be the basis of valuation. In regard to excess freight and insurance charges on which duty has been demanded, we hold following the ratio of Hon'ble Apex Court judgment in case of Baroda Electric Meters Ltd. that such charges are not includable in the assessable value.
7. In regard to limitation, however, it was contended before us that the both prices in Part [I] and Part [VII] were frequently submitted and approved. In fact, at Page 91 price list in Part [I] for the period 20th Jan., 1986, indicates the prices of Sodium Hydro Sulphide for Grade 'P' [90 - 94%] is shown as Rs. 29/ Kg. Price List placed at Page 94 in the appeal papers for the period 22nd May, 1986, indicates price of Sodium Hydro Sulphide 'P' Grade (90 - 94%) per 100 Kgs. as Rs. 25,662. It also mentions that sale is to be effected at Bombay by their agents for which the price is not determinable at the factory gate.
There is also declaration indicating that the basis on which value is claimed in Col. IV the normal price at which the goods are sold at factory gate. There is also declaration that the price as filed in Part [VI] as other parts are not applicable. There is also declaration that they will pay differential duty on the basis of excess price charged by their consignment agent. It is, therefore, clear that full disclosure was made and the two price lists showing different prices were available with the Department. In view of this, the charge of suppression cannot be sustained.
8. We, therefore, hold that demand beyond the period of normal duration, i.e., 6 months is time-barred. Since provision to Section 11A is not sustainable, penalty also cannot be imposed.