TMI Blog2003 (1) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... the amendment to Section 4 of the Central Excise Act, 1944 w.e.f. 1-7-2000, the appellants started clearing the goods based on the sale price at which the goods were sold to EFL. 4. Two show cause notices dated 26-7-2001 and 22-11-2001 were issued to the appellants demanding differential duty of Rs. 1,87,41,973/- and Rs. 3,90,445/- respectively and proposing a penalty. The show cause notices were based on identical grounds as follows :- Whereas it appears that M/s. APIC have contravened the provisions of Section 4 of Central Excise Act, 1944 read with Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (herein referred as Valuation Rules, 2000) and the erstwhile Rules 9(1), 173C, 173F and 173G of Central Excise Rules, 1944 (now Rules 4 and 8 of the Central Excise Rules (No. 2 of 2001) inasmuch as they have sold their goods to or through their related person namely M/s. Eureka Forbes Ltd., but failed to declare and adopt appropriate price at which these goods were sold by M/s. Eureka Forbes Ltd., for the purpose of payment of duty resulting in under valuation of goods. Therefore, it appears that the differential duty short-paid is not only recovera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntilal Chunilal and Others 1986 (26) E.L.T. 289 (S.C.) (b) Cosmos (India) Rubber Works Pvt. Ltd. v. UOI 1988 (36) E.L.T. 102 (Bom.) (c) Hingorani Air Products v. CCE, Baroda 1997 (89) E.L.T. 513 (Tri.) (d) Dawn Apparels Ltd. v. UOI 1989 (43) E.L.T. 372 (e) Zerographers Ltd. v. CCE, Allahabad 1999 (108) E.L.T. 372 (T) (f) Samtel Electron Devices Ltd. v. CCE 2000 (118) E.L.T. 262 (T) (g) Samcor Glass Ltd. v. CCE, Jaipur 2001 (130) E.L.T. 783 (T) (h) Beacon Neyrpic Ltd. v. CCE, Madras 2001 (133) E.L.T. 590 (T) = 2001 (44) RLT 659 (T). A.4 In the instant case it is an accepted fact that sales are made both to related as well as unrelated parties. The difference in price on the goods sold to EFL and the unrelated buyers is about 30-32%; that during the period 2000-01 EFL had made a profit before tax of about 5.75% and the corresponding profit of the appellants is about 6.08%. A.5 This would clearly indicate that the relationship between the appellants and EFL has not influenced the price and therefore the transaction value should be accepted for the sales made to EFL. A.6 The other ground of the Commissioner to hold that the relationship had influenced th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etation of the Valuation Rules. The Commissioner has also observed that this is not a case of clandestine removal, wilful evasion of duty, fraud or collusion with intent to evade duty and that all the information about the transactions was within the knowledge of the department. The Commissioner has also accepted that penalty is not leviable unless there is clandestine removal or intent or attempt to evade or avoid payment of duty. Under these circumstances the action of the Commissioner in imposing penalty under Rule 173Q is unsustainable. 8. The learned SDR for the Revenue while reiterating the orders of the Commissioner took us specifically through the findings as arrived at in Paras 21 to 31 of the impugned order and submitted that the Commissioner has very carefully considered and analysed the scope of the provisions of the new Valuation Rules and which principle of Valuation Rules, he is applying when he is arriving at the Best Judgment Assessement under the provisions of the Rule 11 of the Valuation Rules. She took us through the various decisions and the considerations as to why the Commissioner has not relied upon the case laws cited. And thereafter it was submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the appellants own calculations to quantify duty amounts of Rs. 1,23,04,147/- and Rs. 2,52,987/- which are within and less than the demands proposed in the show cause notices. Para 38 is as under : 38. In view of above decision, the demand of duty is to be requantified based on the price of such goods sold by the assessee to the independent customer. In this regard, assessee have submitted that while quantifying the duty in the first SCN, the department has considered the clearance of two goods namely Water Cooler-cum-Purifier and Water Purifier PG 600 for the month of December, 2000 to February, 2001 in the first SCN (SCN is restricted for the period from July to November, 2000) as well as in the second SCN. Correcting the said mistake the assessee have submitted the re-computation of the duty in Annexure 2 and Annexure-3 and arrived at the transaction value from the price charged from the independent buyer with the abatement of 10.5% of Sales Tax on average basis. To certify the average Sales Tax due to different rates of Sales Tax in different States, a certificate was submitted from the Chartered Accountant who certified that the average Sales Tax of 10.65% whereas t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods by the assessee can be summed up in the following manner. (i) No sale at the factory gate but all the goods are stock transferred to their depots. (ii) From depots, the sale was made of all the goods to M/s. EFL as well as to the independent distributors. (iii) M/s. EFL in their onward journey sell the goods namely Water Purifier PG 600, Water Cooler-cum-Purifier and Forbes 3-in-1 to independent distributors. (iv) In respect of other three goods namely Aqua Guard Classic, Aqua Guard Royale and Aqua Guard Nova, M/s. EFL., did not sell the goods in wholesale but on retail basis directly to the consumer. (b) From the above admitted undisputed issues and sale pattern of the assessee, the case, before us; is one of valuation of the goods sold to the related persons with regard to the applicability of the Valuation Rules, 2000. For the ease of discussion and decision, the case is divided into the following issues as advanced by the assessee in their defence. (i) The sale price to the related person is acceptable because the price was the sole consideration and not influenced by any relationship and therefore price charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 4 of the Act This rule has to be read with principles enunciated in Rules 1 to 10. The Commissioner has found that Rule 9 would not be applicable in the facts of this case. Principles of Rule 4 read with Rule 7 could be applied since the values as mentioned in Rule 4 i.e. value of goods sold by the assessee for delivery at any time which applies to valuation of goods sold to an independent buyer is available in this case and since goods are not sold at the factory gate in this case but are transferred to a depot, he has also taken the principles of Rule 7 of the new rules under consideration. (e) From a perusal of the grounds submitted by the learned advocate for the appellants, it is apparent that there is no basic grievance in determining the assessable value as arrived at. They are only contesting, in the submissions made before us that the commercial levels of both class of buyers have not been taken into consideration by the Commissioner and rely upon the case laws to support that such consideration was required. A careful consideration of the submissions and the findings of the Commissioner, especially in Paragraph 34 of the impugned order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , fraud, or collusion with intent to evade the duty..... and since the transactions were within the knowledge of the department, the mandatory interest under Section 11AB has not been demanded on the ground that there is no fraud, collusion or wilful misstatement or suppression of fact or contravention of any of the provisions of the Act or the Rules made thereunder. In view of this, we cannot uphold the assessee liable for a penalty on the ground that negligence though not mala fide, on the part of the assessee has been established which led to contravention of the provisions of the Central Excise Act and the Rules made there-under and further substantial amount of Central Excise duty was avoided on account of the mis-interpretation by the assessee. Therefore, I conclude that the assessee is liable to a penalty under erstwhile Rule 173Q of Central Excise Rules, 1944 as arrived by the Commissioner to cause a visit of penalty and the above findings of the adjudicator are in conflict with the findings as arrived at, as regards the liability for mandatory interest under Section 11AB of the Central Excise Act. A perusal of Paras 43, 44, and 45 of the Order exhibits thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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