MYSORE ROLLING MILLS (P) LTD. v. COLLECTOR OF CENTRAL EXCISE, BELGAUM

The Judgment of the Court was delivered by H

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A RANGANATH MISRA, J, This appeal under section 35-L of the Central Excises and Salt Act, 1944 is directed against the decision of the Customs, Excise and Gold (Control) Appellate Tribunal up- holding the decision of the Appellate Collector of Central Excises, Madras. The short facts relevant for disposal of this appeal are that the appellant manufactures aluminium wire rods out of duty paid E.C. B grade aluminium ingots on job basis on behalf of various customers. Between September 1974 and May 1977 it received a sum of more than 6 lakh rupees from customers by issue of debit notes over and above the amounts received under regular invoices. The Excise Authorities came across 966 such debit notes and on the basis thereof called upon the appellant to show cause why that•amount which was said to be handling charges should not be added to the invoice price and differen- c tial duty thereupon be recovered. The Revenue took the stand that there was suppression of information on the part of the appellant with regard to collection of handling charges and, therefore, the notice was issued under Rule IO(i)(c) of the Rules framed under the Act. The Assistant Collector cimfirmed the demand after cause was shown. The D Appellate Collector upheld the demand by dismissing the appeal. The Tribunal has confirmed the Appellate order.

There is no dispute that with effect from 1.10.1975 a new Section 4 has been inserted into the Act providing for the mode of valuation. In view of the fact that the period involved in this appeal is from E 27.9.74 upto 31.5.77, the period upto 30th of September, 1975 would be covered by the old Section 4 and from.1.10.75 till 31.5.1977, the provisions of new Section would apply in the matter of determining the assessable value. It is not disputed that from 15.7.75 the levy price of aluminium had been statutorily fixed at Rs.7062 per metric ton. It is the contention of the appellant that on the basis of Rule 6(b )(i) of the F Valuation Rules the price of Rs.7062 should be adopted as being the price of comparable goodti and with effect from 1.10.1975 the assess- able value should have been fixed under proviso (ii) to Section 4(i)(a) or Section 4(1)(b) of the Act at the same amount. The admitted posi- tion is that there has been no sale between the appellant and the customers of the material. The appellant was collecting Rs.600 per G metric ton as conversion charges and Rs.60 per metric ton as handling charges. The dispute in the appeal is confined to the question as to whether Rs.60 per metric ton collected as handling charges could be added for computation of duty.

Two contentions are advanced in support of the appeal; firstly, H Rs.60 which was collected as handling charges was not to be taken into

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account for computing duty and secondly, the notice dated 13th of A

" October, 1978 had been issued more than a year after the last date of I the period in question and was barred by limitation. Prior to 6.8.1977, Rule 9 which corresponds to Section 11-A of the Act provided a period of one year for taking of proceedings while Rule 10 corresponding to the present section 11 of the Act prescribed a period of 3 months for such purpose. With effect from 6.8.1n77, when the rules were amen- B ded, the period of six months was substituted for the period of three months and the period of five years substituted for the period of one year. The Tribunal has held that the period of five years was applicable to the facts of the case on the basis that it is a case of suppression. It is the case of the appellant that for convenience the arrangement bet- ween the appellant and its customers was that instead of the customers c collecting the ingots on the basis of allotment at their respective factories and then transporting the same to the appellant situated at Belgaum in the State of Karnataka, the appellant was being permitted to lift the allotted ingots directly and after carrying out the manu- facturing process it used to deliver the same to the customers. The · handling charges were intended to cover the appellant's expenses in D lifting the ingots. The Tribunal has, therefore, come to the right con- clusion in holding that the handling charges represented pre-manu- facturing cost. We agree that the Tribunal came to the appropriate conclusion in holding that the handling charges became a part of the value for computation of duty. E The Tribunal has recorded a finding that the appellant had suppressed the disclosure of receipt of Iiandling charges and, there- fore, the longer period of limitation applied. The same view had been taken by the departmental authorities. We see no justification to take a different view on the facts. F The only other submission of the appellant which remains for consideration is the tenability of the contention that the period of limitation under the old provision having expired the five year rule which has been applied was not available to be applied. Undoubtedly, the rule is intended to relate back and cover a period of five years from the date jurisdiction tinder the rule is invoked. The provision is, there- G fore, retrospective in operation. It is not the stand of the learned counsel for the appellant that only when a period of five years has elapsed from the date of introduction of the rule, jurisdiction under the rule can be exercised in respect of that preceding period of five years. Once the rule comes into existence and jurisdiction under the H rule is invoked it has got to cover a period upto five years preceding

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A the date of issue of notice. The Tribunal has endorsed such action of the departmental authorities. The plea of limitation bas no force. '1 Both the contentions in support of the appeal fail, We dismiss the appeal but without costs. B A.P.J. Appeal di' aissed.