BRAKES INDIA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal is against an order passed by the Commissioner of Central Excise demanding differential duty on enhanced value of the goods in question. The subject goods are motor vehicle components manufactured by the appellants in their Solinghur factory and cleared on payment of duty from October 96. The appellants have another factory at Padi (Chennai). Goods manufactured in both the factories used to be removed to a packing unit (a "duty -paid godown") at Sholinghur, on payment of duty and, from his godown, the stock was transferred to their sales depot at Chennai, from where some sales were effected and the rest of the stock was transferred to their sales depots at Pune, Delhi and Calcutta. The appellants paid duty on the subject goods manufactured and removed from the Sholinghur factory during the above period on the basis of the price prevailing at the Chennai depot at the time of removal of the goods from factory. The department objected to this and took the view that the assessable value of the goods should be the price at the Pune, Delhi and Calcutta depots, depending on from where the goods were ultimately sold. On this basis, a show -cause notice was issued to the assessee demanding differential duty on the differential value of the goods for the aforesaid period, by invoking the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, on the basis of alleged suppression of facts. The notice also proposed penalty on the assessee. The proposals were contested. The adjudicating authority rejected the basis of valuation adopted by the assessee and sustained the departmental view, after considering the relevant provisions of Section 4 of the Central Excise Act as amended with effect from 28.9.1996. The authority, however, partly accepted the assessee's plea of limitation, holding that there was no suppression on their part upto 27.6.1997 and therefore the extended period of limitation was not invocable upto this date. Ld. Commissioner accordingly restricted the demand of duty. He also imposed a penalty of equal amount on them under Section 11AC, in addition to a penalty of Rs. 90,000 under Rule 173Q. Hence, this appeal

(2.) HEARD both sides. Ld. Counsel for the appellants submits that the subject goods removed or payment of duty from their Sholinghur factory was a part of stock transfer from the factory to their Chennai depot where a sale price for identical goods was available at the time of removal of the goods from the factory. In such circumstances, further stock transfer from Chennai depot to other depots and subsequent sales from such other depots were immaterial to the valuation of the subject goods under the amended provisions of Section 4 of the Act. According to Ld. Counsel, the Chennai depot price of like goods at the time of removal of the subject goods from the factory was the only price to be adopted as the basis of valuation of the goods in terms of proviso (ia) to Section 4(1)(a) read with the definition of "place of removal" under Clause (b) of Sub -section (4) of the said Section. Ld. Counsel, in this connection, relies on the following decisions of the Tribunal.

(3.) AFTER considering the submissions, we note that the period of dispute is entirely after the amendment of Section 4 of the Central Excise Act, which was effected on 28.9.96 vide Finance Act, 1996. Both sides have adverted to the amended provisions. After the amendment, a depot or any other place or premises from where the excisable goods are to be sold after their clearance from the factory is also a "place of removal" for the purpose of valuation of such goods under Section 4 of the Central Excise Act. "Place of removal" figures significantly in proviso (ia) to Clause (a) of Sub -section (1) of Section 4 also. This provision, which came into force on 28.9.96, reads as under: