2000 (2) TMI 318 - AT - Central Excise

Issues Involved:
1. Valuation under Section 4 of the Central Excise Act for clearances in the Domestic Tariff Area (DTA) from an Export-Oriented Unit (EOU).
2. Applicability of the maximum sale price fixed by the Drug Price Control Order (DPCO) as the assessable value.
3. Allegations of suppression of facts and extended period of limitation.
4. Adherence to Central Board of Excise and Customs (CBEC) Circulars.
5. Request for waiver and stay of pre-deposit of duty and penalty.

Detailed Analysis:

1. Valuation under Section 4 of the Central Excise Act for DTA Clearances from an EOU:
The appellants, an Export-Oriented Unit (EOU), were required to pre-deposit duty and penalty amounts for their appeal to be heard. The core issue was the valuation of goods cleared in the Domestic Tariff Area (DTA) under Section 4 of the Central Excise Act. The appellants argued that the valuation should be based on the transaction value rather than the maximum price fixed by the DPCO.

2. Applicability of the Maximum Sale Price Fixed by DPCO:
The appellants contended that the DPCO only prescribes a maximum retail price and does not mandate a fixed wholesale price. They argued that Section 4(1)(a)(ii) of the Central Excise Act, which pertains to goods sold at a fixed statutory price, did not apply because the DPCO allowed sales below the ceiling price. The Board's Circular No. M.F. (D.R.) F. No. 31/1/75-CX., dated 8-8-1975, clarified that the statutory price applies only when goods are sold at that price. Therefore, the normal price should be the assessable value for goods sold below the maximum price.

3. Allegations of Suppression of Facts and Extended Period of Limitation:
The appellants maintained that they had a bona fide belief that the normal price was the assessable value, supported by the Board's Circular and the general industry practice of selling below the DPCO price. They argued that the extended period of limitation for duty recovery was not applicable as there was no willful intent to evade duty. The statutory order of the DPCO was publicly available, and there was no need to inform another government wing.

4. Adherence to CBEC Circulars:
The appellants cited Supreme Court decisions in Ranadey Micronutrients v. CCE and Paper Products Ltd. v. CCE, which held that CBEC Circulars are binding on the department and cannot be disregarded even if inconsistent with statutory provisions. The Commissioner's refusal to follow the 1975 Circular was against these judgments. The Board's letter dated 23-12-1998 directed that show cause notices demanding differential duty based on DPCO prices should not be enforced, which was not followed in this case.

5. Request for Waiver and Stay of Pre-deposit:
The Tribunal found substantial force in the appellants' arguments, noting that the DPCO prescribes a maximum price, not a fixed statutory price. The Tribunal held that the legal fiction created by Section 4(1)(a)(ii) applies only to statutorily fixed prices, not ceiling prices. The Tribunal also noted that the 1975 Circular was still in force and binding on the department. Given these points, the Tribunal granted a full waiver of the pre-deposit of duty, penalty, and interest.

Conclusion:
The Tribunal set aside the Order-in-Original and remanded the matter to the Original Authority for a de novo consideration, emphasizing adherence to the 1975 Circular and relevant Supreme Court judgments. The appeal succeeded by way of remand, and the stay application was disposed of accordingly.

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