TMI Blog1998 (10) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... pproved prices. Bulk of the Motor cycles were sold to wholesale dealers at the factory in Haryana. Motor cycles were being cleared to Depot in Haryana not far away from the factory gate and sold from the Depot to dealers in Haryana and to institutional buyers. Officers of the Directorate General of Anti Evasion, New Delhi visited the premises of HHML, seized various documents and recorded statements of officials of HHML under Section 14 of the Central Excise Act, 1944. Investigation revealed that customers desirous of buying motor cycles were required to book orders and pay Rs. 500/- and motor cycles cleared to dealers were required to be delivered to customers who paid advance, according to the priority list prepared by HHML. About Rs. 40 Crores was collected in all as advance and this amount was either invested in securities or deposits or units earning interest or used for working capital requirements of the manufacturer. Units so acquired were sold from time to time at substantial profit. HHML was also earning income on certain investments by way of dividend. At the same time, HHML was required to pay interest of only 9% on the booking advances. If the amount used for working c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al consideration accruing on the utilisation of advance amounts as aforesaid. Price lists wrongly declared the price to be the sole consideration. Sale to buyers from whom booking advances were received below cost per unit was not disclosed to the department. To specific queries put by Central Excise Officers, HHML falsely stated that there was no nexus between the earning on account of investments out of booking advances and that a part of the advances had not been utilised for working capital requirements. Recovery of extra amounts through sales depots was not disclosed. Since the sales depot was located near the factory, there was no justification for recovery of extra amount for sales through depot. There was deliberate misdeclaration of prices in the price lists. 5. Accordingly show cause notice dated 5-7-1991 was issued to HHML reciting the above facts and circumstances, referring to various data collected from HHML officials, alleging suppression of material facts with intent to evade duty, proposing demand of differential duty and seeking to avail the benefit of the larger period of limitation under the proviso to Section 11A of the Act and proposing imposition of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the selling price. The price was not lowered on account of the deposit. It was stated that drawing up of the All India price list and maintenance of the same through computer was a very expensive operation for which the deposit amounts were used. There were eight lakh bookings when booking was opened out of which nearly fifty per cent were cancelled and the deposits returned with interest. 7. The additions of the interest earned on the deposits to the declared price for determining the assessable value as done in the impugned order was also assailed by the learned Counsel contending that Rule 5 of the Central Excise Valuation Rules under which such addition was made provided for the addition of only the money value of additional consideration flowing directly or indirectly from the buyer to the assessee whereas in this case the deposits were given by the individual customers and not the wholesale dealers to whom the Motor cycles were sold by the appellant. It was then contended by the learned counsel that the Motor cycles were sold at prices fixed taking into account market conditions and the prices at which their competitors were selling their Motor cycles of comparable ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Departmental Representative. He referred to the finding of the Commissioner in his order where he had mentioned about the statements recorded from the executives of the appellant company in which they had admitted that they had utilised certain part of the deposits received by them for working capital requirement. They had not, however, disclosed this fact to the department while getting their price lists approved. They had also not disclosed that they were selling Motor cycles at higher prices at their depots. Such higher prices were charged to purchasers (institutional buyers) who had not made bookings and had not paid any advance amounts. They had charged lower prices for their factory gate sales to wholesalers who then sold the Motor cycles to persons who had made bookings. Such prices were lower than the cost of production. The officers of the appellant company had admitted that the advance deposits received by them had been used by them for working capital requirements and the earnings by way of interest on such deposit amounts invested by them and capital gains enabled them to reduce the losses. They gave interest at the rate of 9% to their customers who had made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant to wholesalers in Calcutta for sale to buyers there who had not booked for the same and that the motor cycles were sold to them at the same price at which they had been sold to other purchasers who had made bookings. On this point the Senior Departmental Representative submitted that this plea had not been advanced before the Commissioner and had, accordingly, not been considered by him and being a question of fact raised for the first time before the Tribunal, it should not be considered. We find that this plea is valid as there is no submissions by the appellant to that effect recorded in the impugned order. In the present appeal memorandum also such a ground has also not been referred to. We, therefore, do not allow this contention of appellant having supplied Motor vehicles to dealers of Calcutta at prices equal to the prices at which they sold them where deposits had been taken. 10. It is, however, to be noted that appellant has urged that sales are made only to dealers and not to the customers who had made the booking and paid deposits. The deposit amount and interest accrued were adjusted while the customer took the vehicle on allotment on payment of the balance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ex-factory price will be the basis of value under Section 4 of the Act even for goods sold from depot. The differential duty demand by raising the factory gate prices charged to wholesalers to the level of the prices charged to institutional purchasers at the depot is not justified. We hold accordingly. 12. An alternative plea that the demand of duty was, in any case, hit by time bar as the show cause notice was issued more than six months after the relevant dates, was advanced on behalf of the appellant. Such a plea was taken before the Commissioner also but was rejected by him on the ground that there was suppression and wilful mis-statement of facts on their part about utilisation of part of the booking advances received by them to meet their internal capital requirements and the charging of higher price for sale of motor cycles at their depots to institutional buyers. Appellant had also disclosed the fact of their depot sales to the department. The finding in the order that there was suppression cannot be sustained. Similarly the application of the extended period in so far as the loading of the interest element on the sale price has been correctly resisted by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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