ROYAL ENTERPRISES Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) Appellant is an engineering unit. They have been carrying out various fabrication works for Railway Coach Factory at Kapurthala.

(2.) The present appeal is directed against the duty demand of over Rs. 24 lakhs, made with regard to fabrication of "bottom side wall sheets" for Railway Coach Factory during the period January, 1996 to July, 1999.

(3.) The duty demand is being resisted on the ground of limitation. The appellant's contention is that the relevant facts about the fabrication activities carried out by the appellant and method of valuation were known to the Revenue authorities and therefore, the demand made by resorting to extended period as provided in the proviso to Section 11A of the Central Excise Act, 1944 is not sustainable. The demand is on the ground that the appellant did not include the value of free supply raw materials in the assessable value, while paying duty on 'bottom side wall sheets'. The submission of the appellant is that the appellant had been carrying out fabrication work for Railway Coach Factory for several years and in all those cases, iron and steel sheets required for fabrication were supplied free by the Railway Coach Factory. Under the contract, the appellant was being paid only fabrication charges and the appellant was paying duty on fabrication charges. It is pointed out that this issue was the subject matter of investigation in 1992 itself when summon dated 27 -12 -1992 was issued to the appellant asking them to produce all the relevant documents relating to fabrication work carried out for Railway Coach Factory. The documents summoned under that letter specifically included the contract with Railway Coach Factory and appellant's sales invoices etc. In reply to this summon the appellant had produced copies of the contracts, sales invoices and other connected papers. However, no order was passed directing the appellant to pay duty on the free supply raw materials. With particular reference to fabrication of bottom side walls, it is submitted that the invoices raised by the appellant at the time of clearance of these goods specifically mentioned the contract number. It is their submission that it would be seen from those contracts that there is a specific mention of issue of raw materially the Railway Coach Factory to the appellant against bank guarantee to be provided by the appellant and that the contract also provided for "nil" excise duty. It is the appellant's submission that since these facts were in the knowledge of the Central Excise authorities, it was for them to carry out proper valuation of the goods fabricated by the appellant and to make timely demand of duty. The learned Counsel for the appellant emphasised that in a case like this, where relevant facts were known to both sides, it is not open to the Revenue authorities to issue duty demand on the ground of suppression of facts with intent to evade payment of duty. Learned Counsel has submitted that it is clear from the conduct of parties that there was no intention on the part of the appellant to evade any central excise duty. Duty if payable, could have been passed on to the Railway Coach Factory, if only demand was raised on time.