FEDDERS LLOYD CORPORATION PVT Vs. CCE

JUDGEMENT

(1.) APPEAL E/2186/89 -A has been filed by the assessee and E/2346/90 -A has been filed by the Department against Order -in -Original No. 11/89 dated 21.3.1989 passed by the Collector of Central Excise, New Delhi confirming the demand of differential duty on Air -Conditioners manufactured and cleared by the assessee during the period March, 1981 to May, 1985 and imposing penalty on the manufacturer.

(2.) ASSESSEE , engaged in the manufacture of Air -conditioners and Refrigerators was till 1980 selling around 98% of the manufactured goods to M/s. Lloyds Sales Corporation (in short, Lloyds) stated to be a sister concern and related person and selling 2% to hospitals and factories which were covered by exemption Notification No. 56/78. It appears that there were some factory gate sales to two or three dealers. Lloyds was selling the goods directly to consumers at prices much higher than the wholesale price charged to Lloyds and to other buyers at the factory gate. At the instance of the Department, assessee was paying duty on the retail price charged by Lloyds to consumers duly adjusted by deduction of 15% to convert the price to wholesale price. During the earlier period price lists were filed in Part V as required by the department treating Lloyds as a related person.

(3.) WITH effect from January 1980, assessee stopped filing price lists in Part V and commenced filing price lists in Part I declaring factory gate price and without specifically disclosing Lloyds as a related person and the percentage of sales at the factory gate and to Lloyds. After investigation it was found that 98% of the goods were sold to Lloyds who in turn sold the goods to consumers at higher price and hardly 2% of the goods were sold at the factory gate and that too mainly to consumers clearances to whom would attract concessional rate of duty under Notification 56/78. Assistant Collector issued notice referring to the above facts, alleging suppression of material facts and proposing demand of differential duty for the period from March 1980 till 1985 and seeking to invoke the larger period of limitation under the proviso to Section 11A(1) of the Act. Since it was pointed out by the assessee that the Assistant Collector had no jurisdiction to invoke the proviso, the Collector on 27.3.1986 issued a similar notice for the period of five years prior to the notice, that is, March 1981 onwards. In this notice also the Collector proposed to arrive at the assessable value on the basis of the retail price charged by Lloyds to consumers without any adjustment or deduction. Assessee resisted the notice on merits and on limitation and also contended that if retail price charged by Lloyds is to be taken into consideration, various expenses incurred by Lloyds in marketing the goods to retail consumers should be deducted.