TMI Blog2006 (3) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of their sale pattern it appears that M/s. Vadilal Dairy International Ltd. had entered into an agreement dated 13-12-1992 with M/s. Vadilal Milk Products Pvt. Ltd. (formerly known as Nematic Marketing Pvt. Ltd.) for sale of marketing rights of the ice cream and all other products. In terms of this agreement the marketing rights were acquired by M/s. Vadilal Milk Products Pvt. Ltd. for a consideration of Rs. 80,00,000/- for a period of 5 years. Relevant terms of the agreement for the period of 1-4-1993 to 30-3-998 were as under : (i) M/s. V.D.I.L. shall sell and M/s. V.M.P.L. shall purchase all products manufactured by M/s. V.D.I.L. at price mutually agreed from time to time. (ii) M/s. V.M.P.L. shall make arrangements to sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L. The goods were not available for purchase to any other person excepting the M/s. V.M.P.L. and therefore the sale was not at arm s length. It was felt that prices at which the goods were sold by M/s. V.D.I.L. to M/s. V.M.P.L. did not represent the normal price within the meaning of Section 4(1)(a) of the Central Excise Act, 1944 and under these circumstances the valuation of the goods was required to be done under the provisions of Section 4(1)(b) of the Central Excise Act, 1944 R/w Rule 5 of the Central Valuation Rules, 1975. 3. The investigation revealed that an amount of Rs. 4,72,48,433.00 was incurred on account of advertisement and publicity by M/s. V.D.I.L. on the products of M/s. V.M.P.L. during the period 1993-94 to 1997-98. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to them vide their letter dated 18-9-95. This shows that the department was aware that an agreement between them existed and only then they could have asked for a copy of the agreement. Even otherwise from 25-9-95 onwards, the agreement was in the full knowledge of the department and therefore no suppression can be alleged from 25-9-95 onwards. 6. On merits it was submitted that as per the agreement clause 9 specifically provides that the Buyer shall be entitled to carry out independent advertisement and publicity campaign at its own cost. Under the agreement M/s. V.M.P.L. was under no legally enforceable obligation to carry out any publicity or advertisement of the appellant s products. Such advertisement and sale promotion shall be do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes nothing about the additional consideration received by him. So is the case with the balance sheet as balance sheet also do not indicate the receipt of the payment for sale of the marketing rights. Even after the submission of the agreement in 1995 the department was not sure whether the amount of Rs. 80 lacs was received as their earlier agreement to this effect was cancelled due to non-receipt of the amount. The balance sheet shows nothing about the advertisement and publicity nor they informed the department at any time. Therefore the extended period has been rightly invoked. 9. On merits it was submitted that analysis of the provisions of the agreement reveals that the sale of the marketing rights was coupled with the sale of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of clause 9 of agreement advertisement and publicity was mandatory and not option. 11. We have considered the submission made by both the parties. We find that on limitation the demand is clearly hit by time-bar as in the present case the agreement was entered into when the duty was at specific rate i.e. in the year 1992, and not at ad valorem rates which was introduced only in March, 1994. Therefore when the agreement was entered into at a time when the rate of duty was specific it cannot be said that this was done with the intention to evade the duty as the value of goods has no bearing on the rate of duty. We therefore held that the entire demand is hit by limitation and extended period cannot be invoked. 12. Since entire deman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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