9911796707
TMI Blog1998 (7) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... use notices for different periods, imposing penalty of an equal amount under Rule 173Q of the Rules and confiscating plant and machinery with option to redeem on fine of Rs. 50 lakhs, appellant has filed these applications seeking waiver of the requirement of pre-deposit of the amount of duty and penalty under Section 35F of the Act. We have heard both sides. 2. Appellant, engaged in the manufacture of cosmetic goods was paying appropriate duty on the clearances. Certain facts which had not been disclosed earlier were discovered during investigation and in the light of these facts, seven show cause notices in respect of clearances made during the overall period from August, 1995 to June, 1997 were issued proposing demand of differenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment against the sale price payable to the appellant. It was found that the premises in which the appellant was running the factory belonged to a company associated with MRL and the premises were taken on monthly rent of Rs. 1 lakh and rent had not been paid. Learned Counsel for the appellant points out that the rent had been subsequently paid though not on the respective due dates. 3. On the basis of the above data, the Commissioner came to the conclusion that the price shown in the agreement between the appellant and MRL was not the normal price since it had not taken into consideration the royalty payable by the MRL, interest on advances and the like and that additional consideration in this behalf must be regarded as having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er also did not rest on any such relationship and therefore, the Commissioner could not have acted on the wholesale price charged by the MRL to their dealers invoking Rule 7of the Valuation Rules. He also pointed out that the wholesale prices charged by MRL would include the profit margin, establishment charges and distribution expenses of MRL and there is no principle of law by which these items of expenses can be included in the assessable value of the goods in hand of the appellant under Section 4(1)(b) of the Act. This contention is sought to be resisted on behalf of the Department by pointing out that the price agreed to between the appellant and MRL was a depressed price and not the normal price as contemplated under Section 4(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty of around 5 crores, cost of imported components and expenses of around 5 crores, the balance would be 7 crores and the royalty payable would be 5% of this amount namely, Rs. 35 lakhs. It is pointed out that the addition of Rs. 35 lakhs would be not to the assessable value but to the wholesale price and duty element in this regard would be around Rs. 27 lakhs as duty as 30%. On the question of advances also, it is pointed out that if the element of interest is to be added to the wholesale price and duty worked out, the additional duty that may become payable on account of alleged additional consideration may not exceed Rs. 25 lakhs at the most and the appellant has already furnished bank guarantee for Rs. 25 lakhs at the stage of investi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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