ITI (TID) LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant challenges the order of the Commissioner made on 22.4.2004, confirming demand of central excise duty amounting to Rs. 1,18,39,818/ - and imposing a penalty of the like amount as also requiring the interest to be paid on the delayed payment of duty.

(2.) THE appellant is engaged in the manufacture of telephone instruments and parts thereof classifiable under chapter heading 8517 of the Central Excise Tariff Act, 1985. From 1.3.2000, the Notification No. 9/2000 -CX., required the instruments meant for retail sale, to show the MRP on their packages. The appellant supplied telephone instruments to the Department of Telecommunications (DOT) and MTNL who gave them to the customers on rental basis, to the subscribers by retaining the ownership of the instruments. The appellant also sold some telephone instruments in the open market on MRP basis. According to the Revenue, the appellant had declared the pattern of sale in their letter dated 27.3.2000, that they would sell the instruments on contract prices to the DOT/MTNL and there would be no MRP involved. However, they cleared instruments on MRP basis to DOT/MTNL and it appeared on enquiry, that they had not declared prices of the bulk supplies to DOT/MTNL. In their show cause notice dated 21.1.2004, the Revenue alleged that the appellant had willfully suppressed the facts by clearing the instruments to DOT/MTNL on MRP by taking abatement, with an intent to evade payment of duty. It was alleged that the appellant had willfully suppressed and cleared the telephone instruments to DOT/MTNL on MRP basis availing the benefit of Notification No. 9/2000 -CX., dated 1.3.2000, which involved central excise duty to the tune of Rs. 1,18,39,818/ -.

(3.) IN their reply, the appellant contended that the department itself was in doubt about the application of Section 4A in cases where the telephone sets were sold to institutional buyers and that the appellant had maintained complete transparency by keeping the department informed about their doubts. It was pointed out that the Central Board of Excise and Customs by their circular No. 625/16/2002 -CX. had informed that the Ministry had accepted the opinion of the Law Ministry that the valuation of telephone instruments supplied in bulk to telephone department will be done as per Section 4 of the Central Excise Act, 1944, and the instruments sold in the market with printed MRP would be assessed under Section 4A of the Act. In answer to the allegation of suppression of facts, the appellant replied that, information was furnished to the department about the clearances with effect from 1.3.2000 to 31.3.2000, and there was no suppression of facts. In paragraph 5.12 of the reply, it was specifically contended that the demand for the period from 1.3.2000 to 31.3.2002 was raised on 21.1.2004, which was beyond the period of one year from the "relevant date" and, therefore it was barred by limitation.