DOW LIMITED Vs. COLLECTOR OF CENTRAL EXCISE MADURAI

JUDGEMENT

(1.) THE Order of the Court is as follows :- Invoking Article 226 of the Constitution of India, the petitioner herein has filed the present writ petition, seeking for a Writ of certiorari to call for the records in Order No. 22/91, dated 31-5-1991 issued under C. No. IV/16/123/90-VC of the second respondent and to quash the same.

(2.) IN support of the writ petition, the petitioner herein has filed an affidavit wherein they have narrated all the facts and circumstances that forced them to file the present writ petition and requested this court to allow the writ petition as prayed for. Per contra, on behalf of the respondents, a counter affidavit has been filed rebutting all the material allegations levelled against them one after the other and ultimately they have requested this court to dismiss the writ petition for want of merits.

(3.) PER contra, justifying the action of the respondents, they have filed a detailed counter affidavit. They contended that Hydrochloric acid was fully exempted from payment of excise duty till 28-2-1979 as per notification No. 25/64, dated 1-3-1964. However this exemption was withdrawn and from 1-3-1979 HCl acid was subjected to Central Excise duty as per notification No. 48/79, dated 1-3-1979. The company filed a classification list in respect of HCl acid manufactured on 16-4-1979. The product was described in their declaration as'hydrochloric Acid (on 100% Basis) ". The classification list was approved on 2-6-1979, by the Assistant Collector under Tariff item 14g with a basic excise duty of 10% adv. As the HCl acid manufactured by the petitioner was consumed captively, they also filed a price list in part-VI on 17-4-1979 with a description of "hydrochloric Acid (on 100% basis)". The price claimed for approval was Rs. 25. 27 per MT. However, the Asstt. Collector approved the above price list on 2-6-1979 after ravising the assessable value to Rs. 175/- per MT as the company had sold HCl acid to industrial consumers at the rate of Rs. 175/- per mt prior to 1-3-1979. After their appeal was rejected in this regard, the revised assessable value of the product was accepted by the company and duty was paid accordingly. They also contended that since the HCl acid produced by the petitioner is comparable with that produced by M/s. Mettur Chemicals and industrial Corporation Ltd. , Mettur determination of assessable value of HCl acid produced by the M/s. Mettur Chemicals and Industrial Corporation Ltd. , mettur is legally in order according to Rule 6 (b) (i) of the Central Excise (Valuation) Rules 1975. The price adopted by M/s. Mettur Chemicals and Industrial corporation Ltd. , Mettur was Rs. 200. 56 per MT from 1-3-1979 to 18-6-1980 and rs. 220. 56 per MT from 19-6-1980 onwards of HCl acid of a concentration of about 30%. Hence show cause notice O. C. No. 2173, dated 25-8-1981 was issued by the Range Officer, Tiruchendur Range to the petitioner demanding differential duty to the tune of Rs. 1, 62, 689. 83 on the quantity of HCl acid manufactured and consumed by the petitioner captively during the period from 1-3-1979 to 31-5-1981. The petitioner paid the amount voluntarily. The Asstt. Collector gave a reply vide his letter dated 3-2-1988, that they were permitted to pay that said amount of differential duty on HCl acid as per the particular show cause notice in settlement of the case issues, raised in that notice. Subsequently as a result of further investigation conducted by the jurisdictional Assistant collector, it came to his notice that (i) even though the petitioner had been manufacturing HCl acid of 30-33% concentration, the petitioner accounts 1/3 of the quantity production in RG1 Account so as to arrive at the 100% basis. According to Rule 173b, the petitioner should file a classification list by mentioning the description of the HCl acid as 30-33% concentration. But they furnished the description as HCl acid 100% acid basis in the lists filed on 16-4-1979 and 19-6-1980. The description on classification list filed on 14-4-1981 was also on 100% basis, but upon being informed by the range, the petitioner amended said classification list with description of HCl acid as 30-33%. According to them even though the petitioner filed a revised classification list on 1-4-1981 with correct description, they failed to file a revised price list for the changed description of the goods shown in the above classification list in accordance with sub-rule 10 of Rule 173c of Central excise Rule even after several reminders from Divisional Office. Inter alia is contended by the respondents that during the period under reference the entire quantity was utilised for captive consumption, there is no factory gate sale and subsequently no factory gate price. Hence, the correct procedure for determination of value is by comparison with other manufacturers. According to the respondents M/s. Mettur Chemicals is the only comparable unit for M/s. D. C. W. Ltd. , Sahuouram for the following reasons : (1) both are Public Ltd. , companies; (2) both are situated in Tamil Nadu; (3) both the labour charges incurred are more or less same and hence, the action taken by the department to use the price of these two units as the basis for valuation is fair and sustainable under Rule 6 (b) (i) of the valuation Rules. Further it is also contended by the respondents that though the petitioners industrial licence, refers to 100% HCl acid, this is not of relevance to Central Excise Law. As a licensee under CESA 1944 the petitioner is excepted to make a true and correct declaration of the excisable goods manufactured by them in the classification list/price list and statutory records. They have failed to discharge this obligation. By declaring the concentration of HCl acid manufactured by them as 100% the petitioner was able to manufacture and captively consume three times the quantity actually declared to the Central Excise Department in the statutory records, but paid duty only on 1/3 of the quantity actually used. The petitioners by a simple formula divised by themselves without any sanction, converted the 30-33% concentration HCl acid manufactured by them to 100% concentration thereby consuming three times the quantity for every one tonne of duty paid HCl acid. There was a clear failure on their part to declare the full quantity of acid manufactured and consumed by them. Therefore it is categoric contention of the respondents that the action taken by the department to compare the price of these two units is fair and sustainable under Rule 6 (b) (i)of Valuation Rules.