1989 (7) TMI 130 - AT - Central Excise

Tribunal Rules Iron Inserts Must Be Included in Concrete Sleeper Value; Notification Benefit Denied for Non-Compliance.

COLLECTOR OF C. EX. Versus MANIBHAI AND BROTHERS

COLLECTOR OF C. EX. Versus MANIBHAI AND BROTHERS - 1989 (44) E.L.T. 727 (Tribunal) Issues Involved:1. Inclusion of the value of malleable cast iron inserts in the assessable value of Monoblock Prestressed concrete sleepers.2. Applicability of Notification No. 120/75-C.E.3. Correctness of the value adopted for the inserts.4. Applicability of the extended period of limitation due to alleged suppression of facts.Issue-wise Detailed Analysis:1. Inclusion of the Value of Malleable Cast Iron Inserts:The primary issue was whether the value of malleable cast iron (MCI) inserts, supplied free of cost by the Railways, should be included in the assessable value of Monoblock Prestressed concrete sleepers. The respondents argued that the value of these inserts should not be included in the assessable value. However, the Assistant Collector held that the value of the inserts had to be included in the assessable value, relying on the judgment of the Supreme Court in the case of Empire Industries Ltd. v. Union of India, which stated that the value of the entire end-product must be taken into account. The Tribunal upheld this view, emphasizing that the intrinsic value of the goods is relevant for ad valorem assessment.2. Applicability of Notification No. 120/75-C.E.:The respondents claimed the benefit of Notification No. 120/75-C.E., which allows for the assessable value to be based on the invoice price. The Tribunal examined the conditions laid down in the notification, particularly provisos (iii) and (iv), which require that the invoice price represents the sole consideration for the sale and is not influenced by any commercial or financial relationship. The Tribunal concluded that the respondents did not satisfy these conditions because the MCI inserts were supplied free of charge, influencing the price of the sleepers. Therefore, the benefit of the notification could not be extended to the respondents.3. Correctness of the Value Adopted for the Inserts:The Assistant Collector had adopted a value of Rs. 18.00 for the MCI inserts, while the respondents disputed this, arguing that the value should be Rs. 11.50 + 4%. The Tribunal agreed with the Assistant Collector's observation that the lower value did not represent the real money value, as the respondents themselves admitted they were unaware of the correct price. Thus, the Tribunal confirmed that Rs. 18.00 was the normal prevailing price.4. Applicability of the Extended Period of Limitation:The issue of whether the extended period of limitation was applicable due to alleged suppression of facts was also addressed. The Department argued that the respondents had not disclosed the contract with the Railways or mentioned that MCI inserts were supplied free of charge in their invoices. The Tribunal referred to the Supreme Court's judgment in M/s. Jaishri Engineering Co. (P) Ltd. v. Collector of Central Excise, which held that suppression of facts justified the extended period of limitation. The Tribunal found that the respondents had not produced the contract or mentioned the free supply of inserts, thus justifying the extended period of limitation.Conclusion:The Tribunal concluded that the value of MCI inserts should be included in the assessable value of the concrete sleepers, the benefit of Notification No. 120/75-C.E. could not be extended to the respondents, the value of Rs. 18.00 for the inserts was correct, and the extended period of limitation was applicable due to suppression of facts. The impugned order was set aside, and the order passed by the Assistant Collector was restored. The revenue's appeals were allowed.