HINDUSTAN WIRES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE,

JUDGEMENT

(1.) ON 26.6.98 Central Excise officers of Preventive Division, Faridabad visited the manufacturing premises of M/s. Hindustan Wires Ltd., who are engaged in the manufacture of steel wire, LPG cylinders, SC valves and regulators and came across agreements between the assessee and various Oil Companies viz. M/s. IOC, M/s. BPCC Ltd. and HPC for supply of LPG cylinders with valves and regulators. According to the agreement the goods were to be despatched preferably by rail "freight prepaid". The Oil Companies had the right to require the assessee to despatch the goods by road and in such cases, Oil Companies were to pay the actual freight charges incurred by the assessees. Insurance policies showed that the goods sold were insured by the assessees till the goods reached the buyers premises so the value of the goods at the place of sale was held to be the basis for assessment to duty under the Central Excise Act. Freight and insurance charges were held to be includible in the assessable value upto the place of delivery i.e. buyers premises, by holding that the buyers premises where excisable goods were sold/delivered was the place of removal as per Sub -clause (iii) of Clause (SIC) of Sub -section (4) of Section 4 of the Central Excise Act as amended w.e.f. 28.9.96. Thus a show cause notice dated 7.8.98 was issued to M/s. Hindustan Wires Ltd. for recovery of duty of Rs.10,18,192/ - for the period 28.9.96 to 31.3.98 as a result of inclusion of freight and insurance charges in the assessable value of the goods manufactured and cleared to oil companies, and proposing imposition of penalty under Rule 173Q and Section 11AC and proposing levy of interest. The notice invoked the extended period of limitation under the proviso to Section 11A of the Central Excise Act on the ground of suppression of the fact that the place of removal was buyers premises, (sale took place at the destination) instead of at the factory gate. The Assistant Commissioner confirmed the duty demand with interest @ 20% per annum and penalty of amount equal to duty was imposed under the provisions of Section 11AC of the Act read with Rule 173Q of the Rules. The Commissioner (Appeals) upheld the demand but reduced the penalty to Rs.305 lakhs. The assessee has filed an appeal against confirmation of duty demand and imposition of penalty, while the Revenue has come up in appeal against the reduction of penalty.

(2.) WE have heard Shri Y.K. Kumar, learned Advocate and Shri S.K. Das, learned DR.

(3.) WE find that in identical circumstances, the Tribunal has upheld the duty demand in the case of Escorts JCB Ltd. vs. Commissioner of Central Excise, New Delhi reported in 2000 (118) ELT 650, holding as under: