Case: M.K. Kotecha  Vs. Commnr.Of Cent.Excise,Aurangabad

the three units of the appellant. The contract price agreed upon was based on complete break-up of the charges including the prices of the RCC pipes and collars. The said pipes were manufactured in the factory of the appellant. They were cleared therefrom. The pricing of RCC pipes and collars was indicated in the project reports. They were based on the pricing guidelines fixed by Maharashtra State Sewerage and Water Board. The said Board had made rate analysis to arrive at the value of the RCC pipes and collars. Therefore, the appellant knew of the comparability of his goods with those of other manufacturers. Hence, the Collector was right in coming to the conclusion that the appellant had wilfully mis-stated and suppressed the facts in order to mislead the department. Consequently, the department was right in invoking the larger period for demand of duty under the proviso to Section 11A(1). 21. Lastly, on facts, we find that Rules 1 to 6 of the Valuation Rules, 1975 had no application. As stated above, Rule 6(b) was applicable to captive consumption. In this case, Rule 6(b) was not attracted. Therefore, the department was right in making best judgment assessment under the aforestated Rule 7 of the Valuation Rules, 1975. 22. In the case of United Glass v. Collector of Central Excise, reported in 1995 (75) ELT 209 , this Court held that Rule 7 of the Valuation Rules, 1975 was in the nature of a residuary rule, applicable only when valuation cannot be decided under other rules. In the present case, the department was, therefore, right in invoking Rule 7. 23. Mr. C.N. Sree Kumar, learned Counsel for the appellant submitted that since the classification lists and the price list were earlier approved, subsequently found to be erroneous or defective, reclassification and liability to pay duty would commence only from the date of show-cause notice and not for the period prior thereto. He further submitted that the omission to enter correct prices in the price list did not amount to contravention of Rule 173C. In support, he relied upon several authorities. 24. In the case of Universal Cables Ltd. Satna v. Union of India and Others, reported in 1977 (1) ELT page J.92, on which reliance was placed on behalf of the appellant, it was held that omission to enter correct price in the price list was not a contravention of Rule 173C within the meaning of Rule 173Q. However, on facts, the High Court found that the assessee had filed list in the proper form and in the manner prescribed under Rule 173C showing the price of the goods and, therefore, there was no contravention of that rule. In the present case, as stated above, there is a contravention of Rule 6(b) of the Valuation Rules, 1975 read with Part VI(a) of the price list proforma. Hence, the judgment in the case of Universal Cables Ltd. (supra), is not applicable to the present csae. 25. In the case of Collector of Central Excise, Baroda v. Cotspun Limited, reported in VIII (1999) SLT 368=1999 (113) ELT 353 , this Court held that the word “short-levy” in Section 11A(1) will not apply to cases where excise duty was levied on the basis of approved classification list. Learned Counsel for the appellant heavily relied upon on this authority. In our view, the said judgment has no application to the present case for two reasons : firstly, the basis of the said judgment is obliterated in view of the Amendment Act No. 10 of 2000 by which the expression “short-levy” has been redefined to include levy resulting from mistaken approval granted to the classification list. The validity of this amendment has been upheld in a recent judgment of this Court in the case of ITW Signode India Ltd. v. Collector of Central Excise, reported in I (2004) SLT 54=(2004) 3 SCC 48 , to which one of us [Dr. AR. Lakshmanan, J.] was a party. Secondly, the decision in Cotspun Limited’s (supra), was confined to interpretation of the word “short-levy” in Section 11A(1). That judgment was not concerned with the proviso to Section 11A(1). In fact, vide para 67 of the judgment of this Court in ITW Signode India Ltd. (supra), it has been observed that the extended period of limitation under the proviso can be invoked in case of positive acts of fraud, collusion, wilful mis-statement or suppression of fact on the Part of the assessee and that such a positive act must be in contradistinction to mere inaction. The present case is not a case of simple omission. It is a case of wilful mis-statement leading to under-estimation of value of goods cleared by the appellant. In the circumstances, we do not find any merit in this appeal.26. Before concluding, we may point out that under the show-cause notice, the department had alleged that the appellant had collected extra amount to the tune of Rs. 21,74,963/- in the guise of central excise duty over and above the duty actually paid to the department. The Collector found that the appellant had collected the said amount under the guise of Central Excise duty from his clients, who were billed for full quantum of duty paid whereas under the relevant notification, the appellant had paid duty at nil rate or at lower rate. Despite this finding, the Collector came to the conclusion that the said finding was based on presumptions and not on evidence and consequently, the Collector dropped the demand for Rs. 21,74,963/- made under Section 11D as not capable of being substantiated. Surprisingly, no appeal was preferred by the department to the Tribunal in respect of the demand for Rs. 21,74,963/-. Even the Collector did not make further inquiries to substantiate such demand.We are conscious of the rising revenue deficit. In several matters, we find slippages of revenue on such counts. Therefore, we expect, Mr. Mohan Parasaran, Additional Solicitor General, to bring our present judgment and order to the notice of the Finance Ministry.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]However, the annexure to the price list indicates that the appellant had mischievously priced the said RCC pipes/collars on cost basis without estimating the profits. The Price List proforma in Part VI(b) refers to cases where comparable prices are not available and consequently, the determination of assessable value was required to be done on the basis of the total cost. The particulars required to be given by the assessee under Part VI(a) are different from the particulars under Part VI(b) of proforma price list. Under Part VI(a), the particulars are required to be given in respect of excisable goods not for sale but for captive consumption on the footing that the assessee is aware of the comparable prices. In that respect, he is required to give assessable value of the comparable goods under Part VI(a). Similarly, under Part VI(a), the assessee is required to give particulars of the difference, if any, in the material characteristics of the goods under assessment and comparable goods. On the other hand, in cases falling under Part VI(b), the assessee is required to furnish particulars of cost of production or manufacture on a separate sheet, annexed to the price list. The 3rd and the 4th column of Part VI(b) refers to computation of assessable value of goods based on the aggregate cost, together with the profits that would normally accrue to the assessee. [See: Column (5) of PartFurther, in the present case, the appellant submitted before the Collector that he had undertaken a composite contract (project) and, therefore, the prices of comparable goods were not available. However, as found by the Collector on evidence, the RCC pipes and collars were manufactured by the three units of the appellant. The contract price agreed upon was based on complete break-up of the charges including the prices of the RCC pipes and collars. The said pipes were manufactured in the factory of the appellant. They were cleared therefrom. The pricing of RCC pipes and collars was indicated in the project reports. They were based on the pricing guidelines fixed by Maharashtra State Sewerage and Water Board. The said Board had made rate analysis to arrive at the value of the RCC pipes and collars. Therefore, the appellant knew of the comparability of his goods with those of other manufacturers. Hence, the Collector was right in coming to the conclusion that the appellant had wilfully mis-stated and suppressed the facts in order to mislead the department. Consequently, the department was right in invoking the larger period for demand of duty under the proviso to Section. In the case of United Glass v. Collector of Central Excise, reported in 1995 (75) ELT 209 , this Court held that Rule 7 of the Valuation Rules, 1975 was in the nature of a residuary rule, applicable only when valuation cannot be decided under other rules. In the present case, the department was, therefore, right in invoking Rulevalidity of this amendment has been upheld in a recent judgment of this Court in the case of ITW Signode India Ltd. v. Collector of Central Excise, reported in I (2004) SLT 54=(2004) 3 SCC 48 , to which one of us [Dr. AR. Lakshmanan, J.] was a party. Secondly, the decision in Cotspun(supra), was confined to interpretation of the wordin Section 11A(1). That judgment was not concerned with the proviso to Section 11A(1). In fact, vide para 67 of the judgment of this Court in ITW Signode India Ltd. (supra), it has been observed that the extended period of limitation under the proviso can be invoked in case of positive acts of fraud, collusion, wilful mis-statement or suppression of fact on the Part of the assessee and that such a positive act must be in contradistinction to mere inaction. The present case is not a case of simple omission. It is a case of wilful mis-statement leading to under-estimation of value of goods cleared by the appellant. In the circumstances, we do not find any merit in this appeal.26. Before concluding, we may point out that under the show-cause notice, the department had alleged that the appellant had collected extra amount to the tune of Rs. 21,74,963/- in the guise of central excise duty over and above the duty actually paid to the department. The Collector found that the appellant had collected the said amount under the guise of Central Excise duty from his clients, who were billed for full quantum of duty paid whereas under the relevant notification, the appellant had paid duty at nil rate or at lower rate. Despite this finding, the Collector came to the conclusion that the said finding was based on presumptions and not on evidence and consequently, the Collector dropped the demand for Rs. 21,74,963/- made under Section 11D as not capable of being substantiated. Surprisingly, no appeal was preferred by the department to the Tribunal in respect of the demand for Rs. 21,74,963/-. Even the Collector did not make further inquiries to substantiate such demand.We are conscious of the rising revenue deficit. In several matters, we find slippages of revenue on such counts. Therefore, we expect, Mr. Mohan Parasaran, Additional Solicitor General, to bring our present judgment and order to the notice of the Finance Ministry.