Jyoti Balasundaram, Member (J)

1. The allegation against the appellant herein is that it deflected the value of ammonia compressors to accessories and thereby evaded payment of Central Excise duty to the tune of Rs. 45,98,146.60.

2. The appellant is a partnership firm engaged in the manufacture of ammonia compressors falling under T.I. 29(A) of the erstwhile CET. During the period relevant for the purpose of this appeal, it was a small scale unit, holding L-4 licence availing of exemptions available to S.S.I. units from time to time Price lists had been filed in Part I since 1.98.1 classification lists had been filed effective from 1-4-1983, showing exemption from duty for 1st clearances of ammonia compressors of Rs. 2.5 lakhs to be cleared by or on its behalf from one or more factories for home consumption during the period 1983-84 vide Notification No. 64/83 dated 1-3-1983 exemption from SED under Notification No. 86/83 dated 1-3-1983. Exemption from duty in terms of Notification No. 80/62 was claimed in respect of parts of refrigerating air conditioning appliances machinery of ammonia compressors, namely :-

"Suction Discharge service pipe line valve assembly, Ring set, Ring guide, Suction valve, Discharge valve, Discharge valve plates, Discharge head, Piston, Flexo oil seal assembly, Main bearing, Big end bearing, outer bearing, Housing, Sleeves, force-feed lubricating oil pump, shells, Crank shaft, Safety head, Pulleys , Plates, Connecting rods, C.I. Bushes, Gudgeon pins, Lock pins, Ammonia valves"

3. The allegation levelled by the Department was that, by raising separate bills for accessories, on which much higher value than the cost of manufacture of such exempted accessories has been charged, the appellants have sought to suppress the real value of compressors in order to avail of the benefit of exemption based on value of clearances.

4. We have heard Shri A.K.S. Bedi, learned advocate for the appellant Shri Prabhat Kumar, learned DR, for the respondents.

5. The plea of limitation cannot be accepted as the appellant did not make a correct and truthful declaration while submitting price lists for approval. We are not satisfied that there was no suppression or mis-declaration on its part. The circumstances of this case warranted the invoking of the extended period of limitation of 5 years.

6. The main issue for consideration is the method of computation of assessable value of the compressors - whether in terms of Section 4 of the CESA or Rule 6(b)(i) or 6(b)(ii) of the Valuation Rules. The Department has valued the compressors at Rs. 31,798.00 while the value declared by the assessee in the price list is Rs. 8,500.00. The value in each financial year has been taken into account as the value of compressors plus value of set of fittings. The value of compressors has been calculated on the basis of the price list of one M/s Sunder Singh Sons and on the basis of market enquiry.

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7. The stand of the Department is that the invoicing pattern reveals under-invoicing the value of compressors and over-invoicing that of accessories supplied along with them. The assessable value could not be arrived at the terms of Section 4 there were no comparable prices due to the fact that almost all manufacturers of ammonia compressors were under declaring the price. The Department has computed the value of the accessories supplied with 7" X 7" compressors at Rs. 4,990.00 based on the price list of such non-excisable accessories of other manufacturers and on the basis of market enquiry, and the value of the compressor at Rs. 31,798.00 while the assessee's declared value is Rs. 42,500.00 for accessories Rs. 8,500.00 for compressor. At this stage of the arguments, it is pointed out by Shri Bedi that the value of Rs. 4,990.00 has been arrived at by taking into account only 6 items of accessories namely :-

(1) Flywheel

(2) Motor pulley

(3) Six foundation bolts nuts

(4) Ring guide drum

(5) Set of spanners

(6) Suction value

as evident from pag