GHATGE PATIL INDUSTRIES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS application is for waiver of pre -deposit of amounts of Central Excise duty confirmed against the applicants by the Commissioner of Central Excise as also of amounts of penalties imposed under Section 11AC of the Central Excise Act and under Rule 173Q of the Central Excise Rules on the applicant by the Commissioner as per his order impugned in the captioned appeal. The total amount of duty confirmed by the Commissioner is Rs. 3,42,14,754. Out of this amount, an amount of Rs. 6,35,364 was confirmed in adjudication of the department's show cause notice dt. 4.11.97, demand of Rs. 3,21,57,832 was confirmed in adjudication of show -cause notice dt 2.12.97, demand of Rs. 12,33,802 was confirmed in adjudication of show -cause notice dt. 18.5.98 and demand of Rs. 1,87,756 was confirmed in adjudication of show -cause notice dt. 8.7.98. The demands as raised under show -cause notices dt 18.5.98 and 8.7.98 and confirmed by the Commissioner are not challenged on limitation, whereas those raised under the earlier show -cause notices and confirmed by the Commissioner are challenged in the captioned appeal on limitation. All the four demands are also challenged on the ground of erroneous valuation.

(2.) WE have carefully examined the grounds of the present stay application and have heard both sides. LD. Advocate for the applicant Shri A.V. Naik, has given a brief account of the necessary facts as follows:

(3.) FOR the purpose of this application, we are concerned, briefly, with two issues: [i] Whether the value of assistance material supplied free of cost by M/s. BEML to the applicants was includible in the assessable value of the assemblies supplied by the latter to the former, and if so what should be exact value of the material to be so included [ii] Whether the demands covered by the first two show -cause notices are hit by limitation. On the first issue, Ld. Counsel has conceded that the question whether the value of goods supplied free of cost by a customer to the manufacturer (job worker) is includible in the assessable value of the final product to be supplied by the manufacturer to the customer stands settled by case law, against the manufacturer. In other words, inclusion of value of 'assistance material' in the assessable value of assemblies supplied to M/s. BEML during the period of dispute stands accepted by the applicants. The surviving question is what should be the exact value of 'assistance material' to be so included in assessable value of the assemblies. Ld. Counsel has submitted that this value should be the price at which M/s. BEML had purchasesd the material from their suppliers and not the price at which M/s. BEML sold such material in open market, after including various charges. On the point of limitation, Ld Counsel has submitted that as early as in 1992, the department came to know from the purchase orders placed before them by the applicants that M/s. BEML had supplied 'assistance material' to the applicants free of cost. Such purchase orders were 'among the documents relied on in the show -cause notices issued under the proviso to Section 11A(1) of the Act. However, Ld. Commissioner did not apply his mind to this factual aspect while considering the plea of limitation raised against the show -cause notices. Ld. Counsel, on this basis submits that the entire demand covered by the first two show -cause notices is time barred. Ld. Counsel has also pleaded financial hardships on behalf of the applicants, and has brought on record the 39th Annual Report for the period ending 31.3.2000. Quoting from the profit and loss account as given in this report, Ld. Counsel has submitted that the net loss for the year ending 31.3.2000 is to the tune of Rs. 3,87,44,000. Ld. Counsel has requested for complete waiver of pre -deposit of the duty and penalty amounts on the basis of these arguments on merits, on limitation and on financial hardships.