Appeal No 4542 NM of 1985
From the Order dated 1061985 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No EDSB T A No 88 of 1980 A M Chandrasekharan VJ Francis NM Popli for the Appel lant
B Datta Additional Solicitor General Ms section Relan and Mrs Indra Sawhney for the Respondent
The Judgment of the Court was delivered by 320 RANGANATH MISRA J
This appeal under section 35 L of the is directed against the decision of the Customs Excise and Gold Control Appellate Tribunal upholding the decision of the Appellate Collector of Central Excises Madras
The short facts rele vant for disposal of this appeal are that the appellant manufactures aluminium wire rods out of duty paid EC grade aluminium ingots on job basis on behalf of various custom ers
Between September 1974 and May 1977 it received a sum of more than 6 lakh rupees from customers by issue of debit notes over and above the amounts received under regular invoices
The Excise Authorities came across 966 such debit notes and on the basis thereof called upon the appellant to show cause why that amount which was said to be handling charges should not be added to the invoice price and differ ential duty thereupon be recovered
The Revenue took the stand that there was suppression of information on the part of the appellant with regard to collection of handling charges and therefore the notice was issued under Rule 10ic of the Rules framed under the Act
The Assistant Collector confirmed the demand after cause was shown
The Appellate Collector upheld the demand by dismissing the appeal
The Tribunal has confirmed the Appellate order
There is no dispute that with effect from 1101975 a new Section 4 has been inserted into the Act providing for the mode of valuation
In view of the fact that the period involved in this appeal is from 27974 upto 31577 the period upto 30th of September 1975 would be covered by the old Section 4 and from 11075 till 3151977 the provi sions of new Section would apply in the matter of determin ing the assessable value
It is not disputed that from 15775 the levy price of aluminium had been statutorily fixed at Rs7062 per metric ton
It is the contention of the appellant that on the basis of Rule 6bi of the Valuation Rules the price of Rs7062 should be adopted as being the price of comparable goods and with effect from 1101975 the assessable value should have been fixed under proviso ii to Section 4ia or Section 41b of the Act at the same amount
The admitted position is that there has been no sale between the appellant and the customers of the material
The appellant was collecting Rs600 per metric ton as conversion charges and Rs60 per metric ton as handling charges
The dispute in the appeal is confined to the question as to whether Rs60 per metric ton collected as handling charges could be added for computation of duty
Two contentions are advanced in support of the appeal firstly Rs60 which was collected as handling charges was not to be taken into 321 account for computing duty and secondly the notice dated 13th of October 1978 had been issued more than a year after the last date of the period in question and was barred by limitation
Prior to 68
1977 Rule 9 which corresponds to Section 11 A of the Act provided a period of one year for taking of proceedings while Rule 10 corresponding to the present section 11 of the Act prescribed a period of 3 months for such purpose
With effect from 681977 when the rules were amended the period of six months was substituted for the period of three months and the period of five years substituted for the period of one year
The Tribunal has held that the period of five years was applicable to the facts of the case on the basis that it is a case of suppres sion
It is the case of the appellant that for convenience the arrangement between the appellant and its customers was that instead of the customers collecting the ingots on the basis of allotment at their respective factories and then transporting the same to the appellant situated at Belgaum in the State of Karnataka the appellant was being permitted to lift the allotted ingots directly and after carrying out the manufacturing process it used to deliver the same to the customers
The handling charges were intended to cover the appellant s expenses in lifting the ingots
The Tribunal has therefore come to the right conclusion in holding that the handling charges represented pre manufacturing cost
We agree that the Tribunal came to the appropriate conclusion in holding that the handling charges became a part of the value for computation of duty
The Tribunal has recorded a finding that the appellant had suppressed the disclosure of receipt of handling charges and therefore the longer period of limitation applied
The same view had been taken by the departmental authorities
We see no justification to take a different view on the facts
The only other submission of the appellant which remains for consideration is the tenability of the contention that the period of limitation under the old provision having expired the five year rule which has been applied was not available to be applied
Undoubtedly the rule is intended to relate back and cover a period of five years from the date jurisdiction under the rule is invoked
The provision is therefore retrospective in operation
It is not the stand of the learned counsel for the appellant that only when a period of five years has elapsed from the date of introduction of the rule jurisdiction under the rule can be exercised in respect of that preceding period of five years
Once the rule comes into existence and jurisdiction under the rule is invoked it has got to cover a period upto five years preceding 322 the date of issue of notice
The Tribunal has endorsed such action of the departmental authorities
The plea of limita tion has no force
Both the contentions in support of the appeal fail
We dismiss the appeal but without costs
APJ Appeal dis missed


Summary:
Between September 1974 and May 1977 the appellant re ceived more than 6 lakh rupees from its customers by issue of debit notes over and above the amounts received under regular invoices for manufacturing aluminium wire rods on job basis on their behalf
The Excise Authorities issued notice under Rule 10ic of the Central Excise Rules 1944 to the appellant to show cause why the aforesaid amount called as handling charges should not be added to the invoice price and differential duty recovered
The Assistant Collector confirmed the demand after cause was shown which was upheld by the Appellate Collector and confirmed by the Tribunal
In the appeal to this Court on behalf of the appellant it was contended 1 that on the basis of Rule 6bi of the Valuation Rules the statutory levy price of aluminium should be adopted as being the price of comparable goods and with effect from 11075 the assessable value should have been fixed under proviso ii to s41a or s41b at the same amount
2 that Rs60 which was collected as handling charges was not to be taken into account for com puting duty and 3 that the notice was barred by limita tion
Dismissing the appeal HELD 1 With effect from 1101975 a new s4 has been inserted into the Central Excise  Salt Act 1944 providing for the mode of valuation
The period involved in this appeal is from 2791974 upto 3151977
Therefore the period upto 3091975 would be covered by the old s4 and from 1101975 till 3151977 the provisions of new section would apply for determining the assessable value
320E 319 2 As per arrangement between the appellant and its customers the appellant was permitted to lift the allotted ingots directly and after carrying out the manufacturing process it used to deliver the same to the customers
321C D 3 There has been no sale of the material between the appellant and the customers
The appellant was collecting Rs600 per metric ton as conversion charges and Rs60 per metric ton as handling charges
320G 4 The handling charges were intended to cover the appellant s expenses in lifting the ingots
The Tribunal has come to the right conclusion in holding that the handling charges represented pre manufacturing cost and became part of the value for computation of duty
321D E 5 Rule 9 which corresponds to s11 A of the Act pro vided a period of one year for taking of proceedings while Rule 10 corresponding to the present section 11 of the Act pre scribed a period of three months for such purpose
With effect from 681977 the period of six months was substi tuted for the period of three months and the period of five years substituted for the period of one year
321B C 6 The rule is intended to relate back and cover a period of five years from the date jurisdiction under the rule is invoked
The provision is therefore retrospective in operation
321G 7 Once the rule comes into existence and jurisdiction under the rule is invoked it has got to cover a period upto five years preceding the date of issue of notice
321H