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

3. The appellant, M.K. Kotecha, proprietor of M/s. Tapi R.C.C. Pipe Product, M/s. Bamnod Cement Pipe Product and M/s. Sakri Cement Pipe Product, is a manufacturer of R.C.C. pipes and collars falling under Chapter Heading 6807.00. During the period April, 1990 to June, 1992, he cleared RCC pipes and collars to various Societies under the Lift Irrigation Scheme, by declaring that the RCC pipes and collars were not sold but were captively consumed in the projects undertaken by him under the works contract. Accordingly, he filed the price list together with the annexure thereto giving following particulars:Price ListPRICE LISTSl. No Excisable Goods + Comparable goods if known to Assessee + + + + Differ-ence if any in mat-erial charac-teristics of the goods & assess-ment of compa-rable goods Value of the Goods in Col. 2 classified and approved + Value of the Goods in Col.2 as appro-ved by the proper officer Rem-arks^ Des-crip-tion Tariff Classi-fication Des-crip-tion Tariff Classi-fication Assessable Value AsPipe Collar + Unit of Sale ^ Pipe Collar ^ ^1 2 3 4 5 6 + 7 8 9 + 10 11RCC Pipe & Collar Size in mm. & class 6807.00 No. 1.1200 mm0 mme lastis applicable to this Price list.I/We declare that particulars herein furnished are complete and true to the best of my/our knowledge and belief.Sd/-Signature of AssesseeAnnexurePrice (Costing Details) of R.C.C. Pipes and Collars : Effective From 6.5.1989 : Pipe Length : 2.5 MTRS.Sl.Size ofClassSteelCem-Sand &Electri- cityLabourSuper- visionTotalProfitCost ofCostPipe of Class NP3 does not require collar in our L.T. Scheme.Cost of each collar = 10% of Pipe Cost i.e. one pipe mouse of length 2.5 mm = 12 collars length.This is to certify that the above cost of each pipe and collar is correctly calculated and the particulars herein furnished are true and fully stated to the best of my knowledge and belief.Sd/-Signature of Assessee.4. On 19.8.1994, the Collector of Central Excise, Aurangabad issued show-cause notice to the appellant under Section 11A(1) of the 1944 Act alleging clearance of RCC pipes and collars to various Societies for their projects under the Lift Irrigation Scheme, during the period April, 1990 to June, 1992, by declaring their prices at the lower rates, by filing the price list in Part VI(b) proforma, on the ground, that, the prices of comparable goods were not available and the goods cleared were not for sale but were for captive consumption. However, according to the show-cause notice, the contract price agreed upon by and between the parties indicated complete break-up of the charges, including the prices of RCC pipes and Collars, consequently, it was alleged that the appellant had undervalued the prices of RCC pipes and collars by mis-declaring to the department that comparable prices were not available. Accordingly, the department called upon the appellant to show cause why differential duty of Rs. 18,34,464/- should not be recovered under Section 11A(1) and why for the period 1st April, 1990 to June, 1992, penalty under Rule 173C should not be imposed.5. By reply dated 27.1.1995 to the show-cause notice, the appellant submitted that the RCC pipes and collars were not marked but used in the Lift Irrigation Scheme; the appellant denied that the contract awarded indicated the break-up of the charges, including the prices of RCC pipes and collars; that in any event, these prices were lower than the prices of comparable goods and that the comparable prices were not available. It was submitted that contract awarded to the appellant indicated the price for the project comprising of cost of material and cost for joining of RCC pipes/collars besides job of excavation and, therefore, the appellant had invoked Part VI(b) proforma supported by a certificate from his Chartered Accountant. It was further submitted that alleged comparable prices given by DSR and MSSIDC were not taken into account at the time of giving of tender; that independent costing was done and that the rates tendered covered the entire job work, hence, prices of comparable goods did not exist. It was further submitted that the RCC pipes and collars, manufactured by the appellant, were not sold as the appellant had undertaken a project on turnkey basis and hence, there was no sale, and, therefore, the appellant had filed the price list in Part VI(b) proforma on cost basis, particularly, because there was no separate contract for sale of RCC pipes and collars. It was further submitted that the RCC pipes and collars were not sold but were used in the project and, therefore, the valuation of such pipes and collars was done on the cost basis.6. By order dated 22.5.1995, the Collector came to the conclusion that the appellant was supplying pipes and collars to various Lift Irrigation Schemes; that in the project reports, the valuation data of such pipes and collars was available which was made known to the appellant at the time of negotiations and that there was substantial difference between the rates quoted by the appellant and the rates quoted in the project reports. It was held, that the appellant had misled the department by declaring that RCC pipes and collars were captively consumed when he knew that Part VI(b) speaks of consumption in the production of other articles. According to the Collector, the said pipes and collars were manufactured by the appellant in his factory and cleared therefrom. It was further held that the appellant had filed a consolidated tender giving costs estimates which included costs of material, labour, supervision, etc.; that these estimates were based on the pricing of collars and pipes in the project reports and, therefore, the Collector confirmed the demand in terms of the show-cause notice. The Collector further found that the Maharashtra State Sewerage and Water Board had made the rate analysis and had arrived at the value of the RCC pipes; that the said Board was a Government agency; that it was in the business of civil construction and, therefore, had a fairly good idea of the standard value of the RCC pipes. The Collector further found that Tenders Scales were drawn by the contractor on the above price guidelines of the Board. The Collector observed that the RCC pipes and collars were standardized products and that what was true of the pricing by the Board was also applicable to the rate contract price given by the Director of Industries. In the circumstances, it was held, that comparative prices were known to the appellant. Accordingly, the demand was made on above grounds for Rs. 18,34,464/- with penalty of Rs. 2 lacs.7. Aggrieved by the order of the Collector, the assessee preferred appeal to the Tribunal which has been dismissed. Hence, this civil appeal.

Reasoning:
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.