KAPADIA, J. - (1.) THIS is an appeal under section 35L(b) of Central Excise Act, 1944, preferred by the assessee, against the judgment and order dated 16.2.1999 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai, confirming the demand made by the department for short-levy amounting to Rs.18,34,464/-together with a penalty of Rs. 2 lacs.
(2.) THE short question which arises for determination in this appeal is - whether the department was justified, on facts and circumstances of the case, in invoking the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act, 1944 (hereinafter referred to for the sake of brevity as "the 1944 Act"). 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 List JUDGEMENT_156_JT1_2005Html1.htm The last 'questionnaire' is applicable to this Pricelist. I/We declare that particulars herein furnished are complete and true to the best of my/our knowledge and belief. Sd/- Signature of Assessee ANNEXURE. PRICE (COSTING DETAILS) OK R.C.C. PIPES and COLLARS : EFFECTIVE FROM 6. 5.1989: PIPE LENGTH: 2.5 MTIRS. SL No Size of Pipe Class Steel Rs. Cement Rs. Sand and Metal Rs. ElectricitY Greased Etc. Rs. Labour Charges Rs. Super vision Charges Rs. Total Rs. Profit about 10% Rs. Cost of Pipe Rs. Cost of Collar Rs. 1 1200 mm NP3 1584 642 159 61 75 59 2580 258 2838 - 2 1000 1125 466 101 59 75 47 1873 187 2060 - 3 900 836 424 81 59 75 47 1522 152 1674 - 4 800 " 677 340 77 53 66 40 1253 125 1378 - 5 750 640 330 55 45 60 35 1165 116 1282 - 6 700 568 310 50 45 60 35 1068 107 1175 - 7 600 " 446 235 47 42 50 35 855 86 941 - 8 500 317 183 44 26 53 21 624 62 686 - 9 450 285 158 35 20 30 16 644 64 598 - 10 400 258 147 29 20 29 16 499 50 549 - 11 350 200 140 21 9 26 10 406 41 447 - 12 300 182 1 19 18 8 22 9 358 38 394 - 13 750 P2 575 326 50 35 70 45 1101 110 121 1 121 14 700 556 307 47 30 66 42 1048 105 1153 115 15 600 432 229 33 23 66 42 825 83 908 91 16 500 307 162 23 21 38 26 577 58 635 64 17 450 " 250 133 18 16 33 20 470 47 517 52 18 400 244 102 17 11 27 16 417 42 459 46 19 350 183 82 14 8 23 16 326 33 359 36 20 300 127 72 11 7 22 14 253 25 278 28 RCC Pipe 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 On 19.8.1994, the Collector of Central Excise, Aurangabad issued show-cause notice to the appellant under section 11 A(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 Vl(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 11 A(1) and why for the period 1st April, 1990 to June, 1992, penalty under rule 173C should not be imposed.
(3.) BY reply dated 27.1.1995 to the showcause notice, the appellant submitted that the RCC pipes and collars were not marketed 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 Vl(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. 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 Vl(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.;