LAKSHMI AUTO COMPONENTS LTD. (NOW Vs. CCE

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, we proceed to deal with the appeal.

(2.) THE appeal is against a demand of duty of over Rs. 88.00 lakhs, raised by the Commissioner in adjudication of two show -cause notices, one dated 6.2.2003 and the other dated 7.3.2003. The appellants are also challenging the penalties imposed on them by the Commissioner. It appears from the records and submissions of both sides that, during the period of dispute [1/7/2000 to January 2003], the appellants were a subsidiary of M/s. TVS Motor Company Ltd. They were manufacturing components for motor vehicles, on job work basis, out of the raw materials supplied by the holding company. Duty payable on such components cleared to the holding company during the above period was determined by the cost construction method in terms of the decision of the Hon'ble Supreme Court in the case of Ujjagar Prints (III) v. Union of India 1989 (39) ELT 493 (SC) as well as the Court's judgment given in Pawan Biscuits Co. Pvt. Ltd. v. Collector. The show -cause notices questioned this modus operandi and sought to levy duty on the above goods in terms of Rule 10 of the Central Excise (Valuation) Rules, 2000 on assessable value determined by adopting 115% of the cost of production. This basis of valuation was opposed by the assessee, who, before the adjudicating authority, submitted, inter alia, that the basis adopted in the show -cause notices for valuation of the subject goods was not sustainable in the absence of allegation of mutuality of interest between them and the buyer. The assessee also challenged a part of the demand of duty on the ground of time -bar. It was claimed by the party that the procedure adopted by them was totally within the knowledge of the Department and nothing was suppressed and, therefore, the larger period of limitation was not invocable against them. Learned Commissioner rejected these submissions and proceeded to confirm the demand of duty as proposed in the show -cause notices. Hence the impugned order, wherein the adjudicating authority rejected the assessee's substantive claim, which was based on certain judicial authorities, squarely on the strength of the Hon'ble Supreme Court's judgment in Commissioner of Central Excise, Indore v. S. Kumar's Ltd. . The appellants are challenging the Commissioner's decision, mainly on the ground that many of the submissions made by them were not considered. It is said that the impugned order is not a speaking order on many of the issues raised before the Commissioner.

(3.) AFTER giving careful consideration to the submissions of learned Counsel and learned SDR, we note that the impugned order was passed on 30.11.2005 after concluding hearing on 11.11.2005. The judgment of the apex Court in the case of S. Kumar's Ltd. (supra) was passed on 21.11.2005 and the same was published much later. It is submitted by learned Counsel that the said judgment was published in December 2005 only. The grievance raised by the counsel on behalf of the appellants is that no opportunity whatsoever was given to them by learned Commissioner for making submissions with regard to the apex Court's judgment in S. Kumar's Ltd. (supra). It is also submitted by counsel that, in the case of S. Kumar's Ltd. (supra), the apex Court was remanding the case for a decision on the primary question as to whether the assessee was "related" to their supplier. Thus, learned Counsel has endeavoured to distinguish S. Kumar's Ltd. (supra) from Ujjagar Prints III (supra) relied on by the assessee. We have heard learned SDR with reference to the apex Court's judgment in S. Kumar's Ltd. (supra). Both sides have placed before us their versions of the facts of the instant case and we have considered the same. The show -cause notices refer to the buyer -company as a unit "related" to the assessee. In their written submissions filed with the Commissioner, the assessee specifically pleaded that, unless 'mutuality of interest' was established between them and the buyer, it was not open to the Department to treat the buyer as a "related" person in terms of Section 4 of the Central Excise Act. When the matter came to the Commissioner, he brushed aside the submissions made by the assessee and the case law cited by them, only to decide the case with reference to the judgment in S. Kumar's Ltd. (supra) and, that too, without giving the party any hearing on this aspect. In our considered view, this conduct of learned Commissioner is manifestly in breach of the principles of natural justice. After reading the judgment of the apex Court in S. Kumar's Ltd. (supra), we find that the ratio of this decision is contained in para 24 of the judgment. The relevant part of para 24 is reproduced below: