2005 (4) TMI 65 - SUPREME COURT

Whether the appellants are liable to pay excise duty on the basis of the sale price of the buyer to its dealers in Uttar Pradesh and not based on the appellants' sale price to independent dealers?

Held that:- The first proviso to Section 4(1)(a) of the Act was never invoked by the Department either in the show cause notice or in the impugned order and it was for the first time that the appellate Tribunal in the impugned order has sought to sustain the impugned order by invoking the first proviso to Section 4(1)(a) of the Act. It is thus seen that the Tribunal has gone totally beyond the show cause notice and the order of the Collector, which is impermissible. The appellate Tribunal cannot sustain the case of the Revenue against the appellants on a ground not raised by the Revenue either in the show cause notice or in the order. The impugned order of the Tribunal which had gone beyond the show cause notice and the order of the respondent-Collector is, therefore, liable to be set aside.

The assessable value on which the duty has been paid by the appellants, in the present case, even in respect of transactions with Syndet in Uttar Pradesh is higher than the approved assessable value for Okhla factory of Syndet and this itself proves the bona fide of the appellant and the genuineness of the price particularly when the goods are only 'Fena' brand sold practically to the same dealers.

This issue, therefore, is no longer res integra and, therefore, the Collector could not have confirmed the demand under Section 4(1)(b) of the Act when there are significant sales at the factory gate to the independent buyers throughout India. It is not permissible on the part of the CEGAT to change the basis of the demand since the assessee was asked to show cause only in relation to applicability of Section 4(1)(b) of the Act. Thus the appellate Tribunal remanded the matter for quantification of duty demand.