TMI Blog1991 (9) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment of duty under Section 4 of the Central Excises Salt Act, 1944. This aspect is also one of the questions involved in the Collector s adjudication order referred to supra. Brief facts, relating to the Collector s adjudication order, are as follows : 2. Proceedings were initiated against the appellants on the basis of a show cause notice dated 16-3-1983 alleging that the appellants were engaged in the production of Acetaldehyde as a by-product, in their factory, which was classifiable under Item 68 CET and that the appellants had cleared the goods from their factory to different distilleries for mixing it up as denaturant in alcohol which was purchased back by the appellants from the distilleries. The show cause notice also alleged unauthorised removal of Central Excise goods without payment of duty and without following the regular procedure laid down under the Central Excise Tariff Act and Rules including failure to take out a Central Excise Licence and was also for seeking to impose penalty on the appellants. The amount of duty of a total of Rs. 7,76,769.60 was sought to be demanded between the period from 1-3-1975 to 30-9-1980. After considering the appellants reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t data furnished by the manufacturer and adding a percentage of profit which was claimed as the relevant rule by the appellants before the Collector (Appeals). In Appeal No. 2739/87-C, the Collector (Appeals) rejected the appellants appeal before him for exemption under Notification No. 118/75 and for determination of value under Rule 6(b)(ii) instead of Rule 6(b)(i) of the Valuation Rules and also the contention that the products of other manufacturers were not really comparable with that of the appellants. The Collector (Appeals), in this case, held that the assessable value under Rule 6(b)(i) fixed by the Assistant Collector was correct and rejected the appeal. 4. Sh. S.L. Sethi, Ld. Counsel appearing for the appellants, submitted that in respect of the offence case adjudicated by the Collector of Central Excise, the appellants would argue that acetaldehyde is nothing but alcohol minus hydrogen. Its receipt and disposal is controlled by State Excise Authority. The acetaldehyde produced by them is not saleable, but was obtained as a consequence of legal requirement of denaturant alcohol. The acetaldehyde was required in the manufacture of synthetic rubber. He referred to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich their product was compared differed in purity to a great extent and, therefore, are not really comparable. Hence, the Departmental authorities should have determined assessable value on the basis of cost data as envisaged in Rule 6(b)(ii) of the Valuation Rules. The Ld. Counsel pointed out that the purity of the acetaldehyde, produced by the appellants, is only 80 - 85 per cent whereas the purity of the goods with which it was compared by the Department was 90 - 99 per cent. The Ld. Counsel urged that the goods of the other manufacturers are not qualitatively comparable and since the goods are used for captive consumption, the prices ought to have been determined on the basis of cost data only. 5. The Ld. D.R., Sh. Narasimha Murthy, pointed out that the goods are not consumed captively. The appellants had at no time intimated the Department regarding the clearance of the goods in dispute. He referred to the reasoning in this regard occurring in the Collector s adjudication order. Since there was removal of excisable goods without taking due licence from the place of manufacture and without payment of duty by suppression of facts, Rule 9(2) and the longer period for demanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim that there was bona fide belief on their part and, perhaps, that of the Department that the goods were not excisable. In such circumstances, the ratio of the Supreme Court decision in the case ot Padmini Products v. C.C.E. reported in 1989 (43) E.L.T. 195 where the Supreme Court had followed the Chemphar Drugs Liniments will apply. In the present case, the fact that the acetaldehyde was under the regulations of State Excise Department gave a scope for the appellants in their belief that it was probably not subject to Central Excise duty. The removals were, admittedly, taking place on State Excise gate passes and admittedly there were two Inspectors of the Central Excise Department posted to the appellants factory. They have already been issued Central Excise licence for other products. In such circumstances, the observation of the Supreme Court in the case of Padmini Products may be borne in mind Failure to pay duty or take out a licence is not necessarily due to fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value on the basis of value of comparable goods produced or manufactured by the same assessee or by any other assessee after making reasonable and necessary adjustment of all relevant factors in particular, the difference in the material characteristics of the goods to be assessed and the comparable goods. In the present case, the appellants, themselves, have referred to the products of the other manufacturers as being comparable in the proceedings before the Collector of Central Excise. Consequently, the fact that the products of the other manufacturers were having much higher purity, does not, by itself, form a ground for taking the matter out of Rule 6(b)(i) altogether because that rule provides for reasonable and necessary adjustment to be made in respect of relevant factors in particular difference in material characteristics which would include purity of the goods. The Collector (Appeals) in the two orders, both dated 30-9-1985, has correctly held that Rule 6(b)(i) of the Valuation Rules was only applicable and has correctly directed that suitable adjustment arising out of the difference in purity of the appellants product with the comparable goods of other manufacturers sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
