Decided on September 13,2006



Arijit Pasayat, J. - (1.)These two appeals are directed against a common judgment of the Central Excise and Gold Control Appellate Tribunal, New Delhi, (in short the CEGAT). Respondent (hereinafter referred to as the assessee) preferred the appeals before the Tribunal against a common order dated 31.3.1997 passed by Commissioner of Central Excise, New Delhi (in short the Commissioner). The issues involved in the appeals were (a) the valuation of "packaged type Air Conditioner" and (b) whether the extended period of limitation is inviolable in demanding duty. The basic facts in a nutshell are as follows:
(2.)The respondent is engaged inter alia in the manufacture of, inter alia, package type Air Conditioners falling under Tariff Item No. 29-A of the erstwhile Tariff and Chapter heading No. 84.15 of the Central Excise Tariff Act, 1985 (in short the Tariff Act). According to the appellant, the respondent was selling the air conditioners by assembling the same at site through orders procured from various authorities by way of Tenders/Contracts. The Contracts /Tenders entered into by the assessee are broadly divided into nine components:
1. Compressors

2. Accessories

3. Pumps

4. Cooling Towers

5. Humidification & heating etc.

6. Ducting material

7. Plumbing material

8. Civil Work

9. Electrical material

Undisputedly, the respondent was filing its price list in respect of compressors and accessories i.e. Item Nos. 1 & 2 as noted above. Premises of the respondent, where activities were being carried on, was visited by Central Excise Officers on 7.3.1987. Certain records were examined. Concerned officers were of the view that there was evasion of duty by mis- declaration. Respondent had cleared the air conditioners without payment of duty by taking the plea that packaged type air conditioners were being cleared in a knocked down condition and were assembled directly at site and were not therefore assessable as air conditioners. Show cause notice was issued on 12.10.1988 for assessment years 1984-85, 1985-86 & 1986-87 (part period).

(3.)On 28.3.1989 the officials again visited the premises and found that the respondent was continuing to clear the goods and was not correctly working out the duty payable. The second show cause notice was issued for the period covering assessment year 1986-87 (residual part), 1987-88 and 1988- 89. The extended period under proviso to Section 11(A) of the Central Excise Act, 1944 (in short the Act) was invoked. After considering these submissions made by the respondent, these two show cause notices were adjudicated and duty demand of Rs.12,20,936/- was confirmed and penalty of Rs. 1,00,000/- was imposed in respect of first show cause notice. For the subsequent show cause notice a duty demand of Rs. 2,79, 169/- was confirmed and penalty of Rs. 30,000/- was imposed. Respondent preferred appeals before CEGAT. By a common order, CEGAT remanded the matter to the Commissioner for fresh consideration with regard to valuation, rate of duty and limitation. On fresh adjudication on 31.3.1997 Commissioner noted that the respondent had wrongly filed the price list in Part I on the issue of valuation. Out of nine items, in respect of two items there was no dispute. Commissioner excluded the valuation of the civil work from the assessable value. Demand of Rs.9,34, 179/-for the consolidated period was confirmed and penalty of Rs.2,00,000/- was imposed under Rules 9(2), 173 Q and 226 of the Central Excise Rules, 1944 (in short the Rules). The order was challenged by the respondent before the CEGAT. Without discussing in respect of the individual items, the Tribunal allowed respondents appeal relying on a decision of this Court in PSI Data System Ltd. v. CCE . It however, held that the extended period of limitationwas to be applied. It was noted that in respect of the first show cause notice dated 12.10.1988 that since the copies of the contract were not furnished along with price list which were filed in Form I and not in Form II which is meant for the contract prices, Department was not aware of the existence of the contract. In respect of second show cause notice, it was held that the respondent had not refuted the finding of the Commissioner to the effect that goods were cleared without the cover of the excise document and without entering them in the Statutory records. Therefore, it was held that the extended period of limitation was available. But since it held that because of disputed items were not to be included, adjudicating authority has to work out the assessable value with a view to determine whether any duty is to be demanded from the respondent. If any duty was to be demanded, the amount of penalty was to be worked out at the discretion of the Collector to be imposed.

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