Commnr. Of Central Excise, Aurangabad vs M/S. Bajaj Auto Ltd

2) The issue in this appeal relates to the valuation of aluminum castings manufactured by M/s. Anurang Engineering Co. Ltd. (for short `Anurang') which in turn is based on the purchase price of aluminum ingots supplied by M/s. Bajaj Auto Ltd., Waluk, Aurangabad (for short `Bajaj'). Anurang, who is Respondent no. 4 in this appeal, is engaged in the manufacture of aluminium castings, commonly known as "handle bar body", "crank case clutch", and castings used as motor vehicle parts, classifiable under Chapter Sub-heading 8708.00 and 8714.00 of the Central Excise Tariff Act, 1985. Bajaj, the Respondent no.1, was supplying inputs - aluminum ingots after purchasing the same from other manufacturers to Anurang for the relevant period under the cover of invoices issued under Rule 57F(2) and Rule 57(3) of the Central Excise Rules, 1994, after reversing the MODVAT credit availed on the said input.

aluminum ingots to Anurang was on the basis of fair market price mutually agreed between the parties. It also claimed that there was no provision in Central Excise Laws which imposed 4 an obligation on a person to sell his goods at a particular price in such transactions. They also claimed that the notice and the demand therein was time-barred as it had been issued beyond the time prescribed under Section 11A of the Act (since the notice was for the period June 1998 to September 1999, and the notice date was 05.03.2001 and was served by post on 22.03.2001), and that jurisdictional officers of the specific division of the Department were well aware of these facts, since both the units are situated under the jurisdiction of the same division. It was also contended that there was no deliberate suppression of facts, or mis-statements or intention to evade Central Excise Duty on their part. Anurang, in their reply, had stated that the price charged by Bajaj to them was for sale of ingots and similarly, final product sold by Anurang to Bajaj was contracted/negotiated prices and, therefore, they have not contravened any provisions of the Act and the Rules framed thereunder.

5) After adjudication, the adjudicating authority held that the prices charged by Anurang were depressed prices coloured as negotiated prices. Further, Bajaj was supplying 5 drawings/designs/specifications free of cost to Anurang to get the goods manufactured according to their specifications from them, which the Department claimed was for aiding each other for mutual business interest so that the production cost of each other is kept at a minimum and the Central Excise Duty is discharged at a lower rate. The adjudicating authority has further observed that by providing inputs at lower landed cost and drawings and designs free of cost, Bajaj was incurring part of the production cost of the finished goods manufactured and supplied exclusively to it. Thus, the adjudicating authority has concluded that Anurang contravened Rule 5 of Central Excise (Valuation) Rules, 1975 read with Section 4 of the CE Act, and Rule 9 read with Rules 52A, 54, 173F and 173G of the CE Rules. Accordingly, the adjudicating authority vide Order-in- Original No. 12/CEX/2002 dated 31.03.2002, levied duty of `27,71,594/- under Section 11A(1), penalty of `27,71,594/- under Section 11AC, and interest under Section 11AB against the assessee - Anurang. The adjudicating authority also imposed penalty on Bajaj of `2.7 lakhs, and personal penalties of `50,000 on Mr. Anurag Nareshchandra, Director, Anurang, 6 and Mr. Ranjit Gupta, Vice-President, Bajaj, under Rule 209A of the Central Excise Rules, 1944.

17) In view of the above, we set aside the order passed by the Tribunal, and remand the matter to the Tribunal to determine whether on the facts of the case, any of the grounds enumerated in the proviso to sub-section (1) of Section 11A of the Act are made out by the Revenue and thereby the Revenue is justified in invoking the extended period of limitation to make demand of duty under the Act.

19) In view of the above discussion, we allow this appeal and set aside the impugned order passed by the Tribunal and remand the matter for fresh consideration of all the issues raised by both the parties. Liberty is reserved to both the parties to place on record such other material, which is available in their possession in support of their case. We clarify that we have not expressed any opinion on the merits of the claim of either of the 1 parties in this appeal. In the facts and circumstances of the case, parties are directed to bear their own costs.