TMI Blog2007 (12) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... of Preventive Unit of Mumbai-VII Commissionerate on 7-2-1998 visited the factory premises and their Head office situated at 2nd floor, Prem Estate, Sant Sawata Cross Road, Mustafa Bazar, Byculla, Mumbai - 400 010 and scrutinized the records maintained for the period 1-4-1997 to 7-2-1998 wherein it was noticed that they had been, inter alia, manufacturing Activated Calcium Carbonate DICAL-S and DICAL-C grades falling under Sub heading No. 3824.90 of the said schedule. The quantities so manufactured were found to have been accounted for in the Central Excise statutory record, viz. RG-1. However, the RG-1 also showed manufacture and clearance of Activated Calcium Carbonate DICAL-S2 and DICAL-C2 grades although no such product appeared to have been manufactured as observed from the production reports. Detailed scrutiny of the RG1 for the year 1997-98 revealed that appellant had from 12th April, 1997 at regular intervals transferred certain quantities from the stock of DICAL-S grade in the RG-1 register to DICAL-S2 grade and from 10-11-1997 transferred certain quantities from the stock of DICAL-C grade to DICAL-C2 grade in the register. The quantities transferred from the stock of DICAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also submitted by the appellant company that in Ulhasnagar Area some of the manufacturers had started supplied very low price and the products which were supplied in the Ulhasnagar area were not of a very high in quality and hence they also started to sell the goods under the different trade name i.e. DICAL-S2 and DICAL-C2 at lower price. It was also submitted that the area of Ulhasnagar is to be considered as a different class of buyers and hence there was no undervaluation. Adjudicating authority after considering the contentions raised by the appellant company came to the conclusion that the appellant had in order to evade duty undervalued, the clearances made to Ulhasnagar area and as such are liable to pay the differential duty. On the question of extended period, it was held by the adjudicating authority that the appellant company having not declared that they are not manufacturing DICAL-S2 and DICAL-C2, but are only changing the labels, hence there was suppression and the extended period has been correctly invoked. Coming to such conclusion the adjudicating authority held as under :- I confirm the duty demand of Rs. 14,13,371/- (Rupees Fourteen Lakhs Thirteen Thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the issuance of show cause notice. It was submitted that the ld. Commissioner has not brought on record that there was no manufacturing activity and relabeling was not amounting to manufacturing activity. 3.1 It was also submitted that it would perfectly legitimate for the appellant to sell the said product at two different prices to the customers located in two different regions namely Ulhasnagar and up country town. It was submitted that the Commissioner ignored the mandatory provisions of the act as well as the judgement of the Hon ble Tribunal wherein it was repeatedly held that it is permissible for the assessee to sell the same goods at different prices to the customers located at different regions because such customers constitute customers belonging to different classes . It was submitted the impugned order has not considered various judgments of the Tribunal. The ld. Counsel relies upon the following judgments :- (1) Goramal Hariram v. CCE [1994 (69) E.L.T. 269 (Tri.) (2) Gujarat Fertilizers v. UOI [1980 (6) E.L.T. 397 (Guj.)] (3) Music India v. UOI [1986 (25) E.L.T. 1032 (Bom.)] (4) Rallis India Ltd. v. Union of India [1991 (55) E.L.T. 493 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the appellant had suppressed the vital information from the Revenue. 5. Considered the submissions made at length by both sides and perused the records. The undisputed facts in this case are the product in question DICAL-S2 and DICAL-C2 are nothing but Activated Calcium Carbonate. It is the contention of the Revenue that the appellant had undervalued their product activated calcium carbonate to a particular area/region i.e. Ulhasnagar, at a price; of Rs. 5000/-, whereas the actual price of the very same product cleared by them to another area as DICAL-S and DICAL-C Rs. 9,500/- PMT. It is an admitted fact that chemical properties of both the products at DICAL-S, DICAL-C and DICAL-S2 and DICAL-C2 are same and the end use is same. We find that the dispute of undervaluation of the products is limited only to the clearances made by the appellant to a specific region i.e. Ulhasnagar, the justification given by the ld. Counsel that the competitors of the appellant who are situated near by their factory premises were selling products at the very same price is well founded. On perusal of the invoices during the relevant period of the appellant as well as of the appellant s competi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tstation distributors, the goods have been sold at the factory gate, but on varying rates. This decision of the Tribunal has been followed in Ind- Sphinx Precision Pvt. Ltd. case (supra). In another judgment in the case of Indian Rayon Industries v. Union of India - 1994 (73) E.L.T. 25, the Delhi High Court held that a ruling by the Central Board of Excise Customs under Section 37B of Central Excises Salt Act on the same issue was contrary to the provisions of the Act. It was a ruling wherein the Board had ruled that wholesale dealers cannot be considered as belonging to different classes merely because they are located in different regions. Such discounts, the Board held, are not permissible. The High Court held that when Section 4 of the Act recognized that in arriving at normal price, assessees could give different discounts to different classes of buyers in accordance with the normal practice of wholesale trade in such goods the Board could not say that discount should be uniform in all circumstances to all categories of buyers all over the country. The court recognised that under Section 4(1)(a), there could be discounts on the basis of regions or other factors. Of cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in different cities to be regarded as different class of buyers - different discounts to such wholesale dealers permissible Section 4 of Central Excise Act, 1944 . We also find that the Tribunal in the case of Commissioner of Central Excise, Vadodara v. Nirma Ltd. as reported at [2005 (191) E.L.T. 1058 (Tri.-Mumbai)] held Different prices in different regions - no allegation made that it was on extraneous consideration or irrational basis - held such pricing was proper and recovery based on highest of such, price set aside - Section 4 of Central Excise Act, 1944 . 6. We find that Hon ble apex court in the case of Kirloskar Brothers Ltd. v. Commissioner as reported at [2005 (181) E.L.T. 299 (S.C.)] has clearly held and affirmed the proposition that classification can be made on the basis of region depending upon the quantum of turnover in a particular region and special factors relatable to that region, and that it cannot be said that the discount should be uniform in all circumstances in all categories of buyers all over the country. 7. In the current case before us, it is undisputed that the purchasers/buyers in the Ulhasnagar regions are a different class of buyers and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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