Vera Laboratories Ltd. Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. this appeal arises from order-in-original no. 73/2000 dtd. 5-3-2001 holding that the appellants had under valued the goods, which were meant for export in comparison with the same goods, which were cleared for home consumption. there is no dispute in this appeal with regard to the applicability of section 4 of the central excise act. the only question is as to whether the clearance of goods by export on payment of duty in terms of rule 12 of central excise rules can be considered as a separate class of buyers compared to the sales made for home consumption. the second question is as to whether there was intention to evade duty and there was suppression of facts for invocation of larger period.2. we have heard both sides in the matter and we have perused the entire records. taking the second question first we notice that the period involved in the matter is 16-1-1998 to october, 1998 and the show cause notice was issued beyond six months on 22-12-99. the appellants had filed all the invoices and rt-12 returns for home consumption. likewise they had filed all the documents with all the details of invoices, etc. for removal of goods for export. the appellants' contention is that there was no intention to evade duty.even if the department was to value the goods as comparable with the value of goods sold in home market even then they would have been eligible for rebate in terms of rule 12. on this point we agree with the id. counsel's arguments and are not agreeable with the arguments of the sdr who referred to the findings given in the order-in-original.the reason being that the appellants had not suppressed any facts with an intention to evade duty. the prices of both the class of buyers had been disclosed in the respective documents. the department should have issued show cause notice within time on the ground that comparable prices for home consumption was available and the appellants should not have under valued the goods sold for export. such a thing was not done.the ground taken by the commissioner that the appellants have committed wilful misrepresentation is not a correct finding. the further finding that appellant is a professionally managed large organization being familiar with central excise law and procedures for several years and hence they should have valued the export goods on par with the home consumption and as they have not done, the larger period is attracted is also not a correct finding. the appellants had furnished all the information required for export of the goods vis-a-vis the goods sold in the market for home consumption. there was no suppression of facts or an intention to evade duty for the purpose of attracting larger period. the department should have issued the notice within six months to safeguard the limitation. as the notice has been issued beyond six months and that there is no suppression of facts or wilful misstatement of facts with an intention to evade payment of duty we are of the considered opinion that the larger period is not invocable in the present case and hence the demands are hit by time-bar and demands are required to be set aside on the time-bar.3. taking the first question of the value of the goods exported to have been valued at the rate of home consumption we are of the considered opinion that in the light of the apex court judgment rendered in the case of basant indus-tries v. addl. commissioner of customs, bombay [1996 (81) e.l.t. 195 (s.c)] the clearances made for export are to be treated as separate class of buyers. a similar finding has also been recorded by the tribunal in the case of cce v. jayshree chemicals ltd. [1999 (108) e.l.t. 710]. in this matter the purchase orders placed by the exporters and confirmation thereof by the assessee were under a contract and there was different prices for some class of buyers in different places. the tribunal accepted the plea of varying prices for different class of buyers and on that ground held that there was no under valuation of goods in terms of section 4(1)(a) of central excise act. likewise in the case of grasim industries ltd. v. cce [2001 (138) e.l.t. 570] it has been held that different prices are permissible even within the same class of buyers provided they are governed by commercial consideration. in the present case the export orders were under a contract and the export contracts were subject to several considerations like competition in international market, fluctuating prices, etc. the appellants have pleaded that due to stiff competition for export and the prices being guided by international prices the export prices are under a separate contract. they have also submitted that foreign buyers are a different class of buyers and par with the indian buyers and different prices are admissible to different class of buyers and there is no stipulation under section 4 that the same price should be adopted for various buyers situated in india and abroad. this submission is required to be accepted as the prices prevailing for exports are on different business consideration than the one which determines the prices of the goods which are sold for home consumption.in view of the judgment rendered by the apex court in the case of basant industries and the other judgments of the tribunal cited supra we have to hold that the clearances of good's made for exports stands on a different class of buyers than the one pertaining the clearances made for home consumption. hence, this plea is required to be accepted.there was no undervaluation in this matter. we find that the revenue itself has accepted the appellants' proposition in adjudication order no. 2/2000-01 dtd. 3-3-2001 passed by the additional commissioner of central excise, visakhapatnam. this order has not been challenged by the revenue and therefore the view of the additional commissioner's order on this point we are required also to take this order for consideration to dispose off this appeal. the foreign buyer is a separate class of buyer under section 4 and fob value adopted being contract value, which includes freight, transportation to the port and taxes up to the port. hence, we allow the appellants' contention. the impugned order is not correct and proper and hence the same is set aside by allowing the appeal.

Judgment:
1. This appeal arises from Order-in-Original No. 73/2000 dtd. 5-3-2001 holding that the appellants had under valued the goods, which were meant for export in comparison with the same goods, which were cleared for home consumption. There is no dispute in this appeal with regard to the applicability of Section 4 of the Central Excise Act. The only question is as to whether the clearance of goods by export on payment of duty in terms of Rule 12 of Central Excise Rules can be considered as a separate class of buyers compared to the sales made for home consumption. The second question is as to whether there was intention to evade duty and there was suppression of facts for invocation of larger period.

2. We have heard both sides in the matter and we have perused the entire records. Taking the second question first we notice that the period involved in the matter is 16-1-1998 to October, 1998 and the show cause notice was issued beyond six months on 22-12-99. The appellants had filed all the invoices and RT-12 returns for home consumption. Likewise they had filed all the documents with all the details of invoices, etc. for removal of goods for export. The appellants' contention is that there was no intention to evade duty.

Even if the Department was to value the goods as comparable with the value of goods sold in home market even then they would have been eligible for rebate in terms of Rule 12. On this point we agree with the Id. Counsel's arguments and are not agreeable with the arguments of the SDR who referred to the findings given in the Order-in-Original.

The reason being that the appellants had not suppressed any facts with an intention to evade duty. The prices of both the class of buyers had been disclosed in the respective documents. The Department should have issued show cause notice within time on the ground that comparable prices for home consumption was available and the appellants should not have under valued the goods sold for export. Such a thing was not done.

The ground taken by the Commissioner that the appellants have committed wilful misrepresentation is not a correct finding. The further finding that appellant is a professionally managed large organization being familiar with Central Excise Law and Procedures for several years and hence they should have valued the export goods on par with the home consumption and as they have not done, the larger period is attracted is also not a correct finding. The appellants had furnished all the information required for export of the goods vis-a-vis the goods sold in the market for home consumption. There was no suppression of facts or an intention to evade duty for the purpose of attracting larger period. The Department should have issued the notice within six months to safeguard the limitation. As the notice has been issued beyond six months and that there is no suppression of facts or wilful misstatement of facts with an intention to evade payment of duty we are of the considered opinion that the larger period is not invocable in the present case and hence the demands are hit by time-bar and demands are required to be set aside on the time-bar.

3. Taking the first question of the value of the goods exported to have been valued at the rate of home consumption we are of the considered opinion that in the light of the Apex Court judgment rendered in the case of Basant Indus-tries v. Addl. Commissioner of Customs, Bombay [1996 (81) E.L.T. 195 (S.C)] the clearances made for export are to be treated as separate class of buyers. A similar finding has also been recorded by the Tribunal in the case of CCE v. Jayshree Chemicals Ltd. [1999 (108) E.L.T. 710]. In this matter the purchase orders placed by the exporters and confirmation thereof by the assessee were under a contract and there was different prices for some class of buyers in different places. The Tribunal accepted the plea of varying prices for different class of buyers and on that ground held that there was no under valuation of goods in terms of Section 4(1)(a) of Central Excise Act. Likewise in the case of Grasim Industries Ltd. v. CCE [2001 (138) E.L.T. 570] it has been held that different prices are permissible even within the same class of buyers provided they are governed by commercial consideration. In the present case the export orders were under a contract and the export contracts were subject to several considerations like competition in international market, fluctuating prices, etc. The appellants have pleaded that due to stiff competition for export and the prices being guided by international prices the export prices are under a separate contract. They have also submitted that foreign buyers are a different class of buyers and par with the Indian buyers and different prices are admissible to different class of buyers and there is no stipulation under Section 4 that the same price should be adopted for various buyers situated in India and abroad. This submission is required to be accepted as the prices prevailing for exports are on different business consideration than the one which determines the prices of the goods which are sold for home consumption.

In view of the judgment rendered by the Apex Court in the case of Basant Industries and the other judgments of the Tribunal cited supra we have to hold that the clearances of good's made for exports stands on a different class of buyers than the one pertaining the clearances made for home consumption. Hence, this plea is required to be accepted.

There was no undervaluation in this matter. We find that the Revenue itself has accepted the appellants' proposition in adjudication order No. 2/2000-01 dtd. 3-3-2001 passed by the Additional Commissioner of Central Excise, Visakhapatnam. This order has not been challenged by the Revenue and therefore the view of the Additional Commissioner's order on this point we are required also to take this order for consideration to dispose off this appeal. The foreign buyer is a separate class of buyer under Section 4 and FOB value adopted being contract value, which includes freight, transportation to the Port and taxes up to the port. Hence, we allow the appellants' contention. The impugned order is not correct and proper and hence the same is set aside by allowing the appeal.