Per Justice K. Sreedharan :

Appellant, M/s. Escorts JCB Ltd. are engaged in the manufacture of Excavators Loaders. Central Excise Officers of Anti Evasion Branch, Faridabad visited their premises and came across some invoices. Insurance policies taken out from the appellants premises showed that goods sold by them were insured with National Insurance Company Ltd. till the goods reached buyers premises. On that basis it was held that property in the goods solddid not pass from the appellants to the buyer till the goods reached the premises of the buyer. So the value of the goods at the place where it was sold should be the basis for assessment to duty under Central Excise Act. Assessments were not made taking note of the said value upto the date of inspection by the authorities. It was also found that towards transit insurance charges .40% of the invoice value was realised while .13% alone was actually spent towards insurance charges. On this ground show cause notice dated 24.3.98 was issued to the appellant calling upon them why -

(i) Central Excise duty amounting to Rs. 29,65,532 on value of Rs. 2,61,60,197 (as per details given in Annexure V VI), not included in the assessable value should not be demanded from them under Rule 9 (2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944.

(ii) Central Excise duty amounting to Rs. 98,219 voluntarily debited on 18.10.1997 should not be confirmed as having been correctly debited under Rule 9 (2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944.

(iii) Penalty under Rule 173Q of the Central Excise Rules, 1944, should not be imposed for the aforesaid contraventions. (iv) Penalty under Section 11AC of the Central Excise Act, 1944 should not be imposed on them.

(v) Interest under Section 11AB of the Central Excise Act, 1944, should not be demanded.

(vi) Extended period of 5 years should not be invoked under proviso to Section 11A of the Central Excise Act, 1944 for demanding the Central Excise duty beyond period of six months as the party suppressed the facts.

2. Appellants submitted their defence. They also filed written objection regarding their defence. They were given personal hearing. After considering the entire facts and circumstances of the case and the contentions raised by the party, the Commissioner passed Order No. 4/98 dated 23.7.98, which is in the following terms:

"(i) I confirm the Central Excise duty amounting to Rs. 29,65,532 (Rupees twenty nine lacs sixty five thousand five hundred thirty two only) under Rule 9 (2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944 as proposed in the show cause notice 24.3.98. M/s. Escorts (JCB) Ltd. 23/7, Mathura Road, Ballabgarh (Faridabad) is ordered to pay the aforesaid amount forthwith together with interest leviable as per law.

(ii) I confirm the Central Excise duty amounting to Rs. 98,219/- (Rupees ninety eight thousand two hundred nineteen only) voluntarily debited by the party on 18.10.97 as correctly paid under Rule 9 (2) of the Central Excise Rules read with Section 11A of the Central Excise Act, 1944.

(iii) I also impose a penalty of Rs. 30,63,751 (Rupees Thirty lakhs sixty three thousand seven hundred fifty one only) on M/s. Escorts (JCB) Ltd. 23/7, Mathura Road, Ballabgarh (Faridabad) under Section 11AC of the Central Excise Act, 1944."

3. Learned Representative representing the appellant raised three contentions before us. The first one is that sale of the goods took place at the factory gate and the price for the goods at the factory gate which is the place of removal, should be the basis for assessment under Section 4 of the Central Excise Act. The second contention is that .40% of the invoice value was realised as insurance charges and that was proper quantification even though in fact .13% alone was utilised, thereby no amount should have been added to the value for assessment as had been done in the impu