M.K. KOTECHA versus COMMISSIONER OF CENTRAL EXCISE, AURANGABAD

Citation: [2005] 1 S.C.R. 42 · Decided: 04-01-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Dismissed

Judgment (excerpt)

A 
B 
M.K. KOTECHA 
v. 
COMMISSIONER OF CENTRAL EXCISE, AURANGABAD 
JANUARY 4, 2005 
[S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] 
Central Excise Act, 1944-Section I IA(/}, proviso & Section 4-Centra/ 
Excise (Valuation) Rules, 1975-Rules 6(b) & 7-Wilful mis-statement and 
C suppression of facts-Invocation of extended limitation period for recovery of 
duty-Appel/ant-manufacturer cleared goods (RCC pipes and collars) allegedly 
not for sale but for captive consumption-Claiming that prices of comparable 
goods were not known, he priced the RCC pipes/collars on cost basis without 
estimating profits-But he filed price list in Part VJ(a) of price list proforma 
which refers to cases where assessee is aware of comparable prices-Held, 
D such a hybrid mode of pricing, though not permissible, was adopted by 
Appellant to mislead the Department-Further, Appellant knew of the 
comparable prices since the pricing was based on pricing guidelines fixed by 
a Government agency-Collector was right in invoking the extended limitation 
period for demand of duty on ground that Appellant had willfully mis-stated 
E and suppressed the facts-Besides, Rule 6(b) of the Valuation Rules pertaining 
to captive consumption was not attracted on facts-Hence Department rightly 
made best judgment assessment under Rule 7-Centra/ Excise Rules, I 944-
Rule 17 JC-Central Excise Tariff Act, 1985-Sub-heading 6807. 00. 
Government Revenue-Court conscious of the rise in revenue deficit-
F Slippage of revenue-Additional Solicitor General to bring the present judgment 
to the notice of the Finance Ministry. 
Appellant manufacturer, during the period April, 1990 to June, 1992, 
cleared RCC pipes and collars falling under Chapter Heading 6807.00 to 
various Societies under the Lift Irrigation Scheme, by declaring that the 
G RCC pipes and collars were not sold but were captively consumed in the 
projects undertaken by him under the works contract. Accordingly, he 
filed the price list. 
The Collector of Central Excise issued show-cause notice to appellant 
under section l lA(l) of the 1944 Act alleging that while making clearance, 
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M.K. KOTECHA v. C.C.E. 
43 
the appellant had undervalued the prices of RCC pipes & collars by mis- A 
declaring to the Department that comparable prices were not available. 
Appellant replied to the show-cause notice, but the Collector held 
that the appellant had misled the Department by declaring that RCC pipes 
and collars were captively consumed and that comparative prices were 
known to the appellant. 
B 
Aggrieved by order of the Collector, appellant-assessee preferred 
appeal to the Tribunal which was dismissed. Hence the appeal. 
On facts, the basic question which arises for determination is whether 
the appellant knew of the comparability of his goods with those of other C 
manufacturers and whether the appellant had misled the Department by 
declaring that the RCC pipes and collars were captively consumed, 
particularly, when the appellant as a contractor had dr2wn the Tenders 
Scales on the basis of pricing guidelines of Maharashtra State Sewerage 
and Water Board. 
D 
Dismissing the appeal, the Court 
HELD: 1.1. The particulars required to be given by the assessee 
under part VI(a) of the proforma price list are different from the 
particulars under part VI(b) of proforma price list. Under part VI( a), the E 
particulars are required to be given in respect of excisable goods not for 
sale but for captiYe consumption on the footing that the assessee is aware 
of comparable prices. In that respect, he is required to give assessable value 
of the comparable goods under part VI(a). Similarly, under part Vl(a), 
the assessee is required to give particulars of the difference, if any, in the 
material characteristics of the goods under assessment and comparable F 
goods. On the other hand, in cases falling under part Vl(b), the assessee 
is required to furnish particulars of cost of production or manufacture 
on a separate sheet, annexed to the price list. The Price List proforma in 
part Vl(b) refers to cases where comparable prices are not available and 
consequently, the determination of assessable value was required to be G 
done on the basis of the total cost. (56-G-H; 57-AJ 
Collector of Central Excise, Hyderabad v •. Mis Chemphar Drugs and 
Liniments, Hyderabad, 119891 2 SCC 127; Pushpam Pharmaceuticals 
Company v. Collector of Central Excise, Bombay (19951Suppl.3 SCC 462; 
Cosmic Dye Che

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