AURANGABAD ELECTRICALS (P) LTD. versus THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD

Citation: [2010] 13 S.C.R. 957 · Decided: 12-11-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2010] 13 (ADDL.) S.C.R. 957 
AURANGABAD ELECTRICALS (P) LTD. 
v. 
THE COMMISSIONER OF CENTRAL EXCISE AND 
CUSTOMS, AURANGABAD 
(Civil Appeal No. 2694 of 2006) 
NOVEMBER 12, 2010 
[D.K. JAIN AND H.L. DATTU, JJ.] 
A 
B 
Central Excise Act, 1944 - ss.11A and 11AC - Central 
Excise Rules, 1944 - r. 9(2) and 209A - Show cause notice 
C 
issued to assessee on the allegation that inputs used in 
manufacture of assessee's final product were under-valued 
which led to evasion of duty - Adjudicating commissioner 
passed order demanding differential duty and penalty -
Appellate Tribunal affirmed the order but reduced the penalty D 
- Contention of appellant that both, the Commissioner and 
the Tribunal non-suited it mainly on the ground that it did not 
supply the details of the final product and the landed cost of 
the inputs supplied ·during investigation or in their reply to the 
show cause notice - On appeal, held: Though the appellant 
E 
did not produce any material/data as to the actual expenses 
incurred, however, it did produce a price valuation certificate 
issued by its Chartered Accountant -
The certificate was 
purportedly filed by it before the Appellate Tribunal after the 
appeals were heard and reserved for judgment - However, 
technicalities should not defeat rendering of complete justice 
F 
to a litigant - Matter remanded to Appellate Tribunal to verify 
and consider whether the said certificate which had been 
placed on record by the appellant, would assist it in support 
of its defence - Administration of justice. 
The appellant-assesee was engaged in the 
manufacture of motor vehicle parts, namely 'magneto 
assembly'. For manufacture of the final products, viz. 
magneto assembly, the appellant-assessee purchased 
G 
957 
H 
958 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R. 
A some of the inputs from M/s. Bajaj Auto Ltd., which was 
also the principal consumer of its final products. Show-
cause notice was issued to the appellant-assessee on 
the allegation that it was receiving inputs from Mis. Bajaj 
at under-valued landed cost by not including the element 
B of landed cost of inputs incurred on account of sales tax, 
octroi, freight, insurance, loading, unloading and 
handling charges and that the appellant was further 
undervaluing the clearances effected by it to M/s. Bajaj 
so that the production cost by both of them was kept at 
C a minimum and central excise duty was discharged at a 
lower value. The appellant-assessee replied to the show-
cause notice whereafter the adjudicating Commissioner 
passed order demanding differential duty- of Rs.84 lakhs 
under Section 11A(2) of the Central Excise Act, 1944 read 
o with Rule 9(2) of the Central Excise Rules, 1944 and 
penalty of Rs.69 lakhs under Section 11 AC of the Act. The 
Appellate Tribunal while confirming the orders of the 
adjudicating Commissioner reduced the penalties 
imposed on the appellant from Rs.69 lakhs to Rs.10 
E lakhs. 
In the instant appeal, the appellant contended that 
both the adjudicating commissioner and the tribunal non-
suited it mainly on the ground that the appellant and M/ 
s. Bajaj did not supply the details of the final product and 
F the landed cost of the inputs supplied during 
investigation or in their reply to the show cause notice. 
Allowing the appeal, the Court 
HELD:1.1. Though the appellant did not produce any 
G material/data as to actual expenses incurred on account 
of freight, loading, unloading charges, profit margin etc., 
the appellant-assessee submitted that it could have 
supported its defence pleaded in its objections to the 
show cause notice by producing relevant documents 
H including the certificate issued by its Chartered 
AURANGABAD ELECTRICALS (P) LTD. v. COMMNR. OF 959 
CENTRAL EXCISE AND CUSTOMS 
Accountant but due to unavoidable and unforeseen 
A 
circumstances, could not produce the same. The said 
certificate issued by the Chartered Accountant, which is 
in respect of valuation of normal price of Magneto 
Assemblies manufactured and sold by the appe1lant to M/ 
s Bajaj in wholesale, points out freight charges incurred 
B 
by the appellant for getting material from Bajaj to the 
appellant, as well as loading and unloading charges, 
consumables overheads and profit. If such payment was 
made, then the whole premises on which the. show cause 
notice issued pales into insignificance. The appellant had 
C 
produced the Certificate along with the other papers filed 
before the Tribunal, may be a

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