TMI Blog2009 (1) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the aforementioned items for M/s. Nilkamal Plastics Limited (NPL) on job work basis. As per the agreement entered into between the appellant and NPL, the latter was to supply the moulds for the manufacture of the various items and the appellant would manufacture final products according to the specifications of NPL. At the time of clearance of the manufactured goods from its premises, the appellant discharged the Central Excise duty thereon on a value arrived at by including the cost of raw material, processing charges, profit and also the amortized cost of the moulds supplied by NPL. The department, however, took the stand that in so far as the moulds for manufacture of the plastic articles was supplied by NPL and further, NPL had some control over the price, at which the goods were to be supplied to it by the appellant, the appellant and NPL would have to be treated for related persons as the purposes of Central Excise valuation and the assessable value was re-worked by treating the sale price of NPL as the assessable value. Two show cause notices were issued to the appellant in this connection for the period from 1-6-05 to 31-12-06. 2.2 While the appellant preferred detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1-6-2006 to 31-12-2006 on KPPL under Section 11A(2) of the Central Excise Act, 1944. (ii) I order that KPPL shall pay interest at the appropriate rate on the duty amount as at (i) above in terms of Section 11AB of the Central Excise Act, 1944. (iii) I impose a penalty of Rs. 5,00,000/- (Rupees Five Lakhs Only) on M/s. KPPL under Rule 25 of the Central Excise Rules, 2002. (iv) I impose a penalty of Rs. 1,00,000/- (Rupees One Lakh Only) on NPL under Rule 26 of the Central Excise Rules, 2002. 3.1 The appellants are in appeal against the above mentioned order of the Adjudicating Authority. 4. Learned Counsel would urge that the impugned order is improper and not in accordance with the law on the following grounds : A. The main reasoning adopted by the Commissioner to confirm the demand against the appellant is that the terms of the agreement between the appellant and NPL which show that NPL will supply the moulds for the manufacture of the plastic articles and also that NPL would fix the price at which the goods are to be supplied to it by the appellant, are sufficient to indicate that NPL and the appellant are mutually interested in the business of each other for bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 was a major investment of the industry, for which the appellant No. 1 had no contribution at all. It was submitted that there was a financial advantage to the appellant No. 1, when they receive mould free of cost from the appellant No. 2. Hence, it was submitted that the transactions are not of principal-to-principal basis and the value/price charged by appellant No. 2, Nilkamal Ltd. to their customers is the correct assessable value for the discharge of duty liability by appellant No. 1. As regards appellant No. 2, it is her submission that the appellant No. 2 has been correctly imposed with penalty, as they had not disclosed this arrangement to the authorities. Hence, penalty imposed on them under Rule 26 of Central Excise Rules, is correct and does not require any interference. 6. We have considered the submission made at length by both sides and perused the records. The issue involved in this case is whether the assessable value as arrived at by appellant No. 1, that is M/s. Kaveri Pet Polyforms Pvt. Ltd. is correct or whether the duty liability has to be discharged by them on the prices on which the final products are sold by appellant No. 2 that is M/s. Nilkamal Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prices of goods manufactured by KPPL and in turn supplied to NPL. KPPL pays duty on the values so fixed and sells the entire goods to NPL. Here I have looked into the differential duty worksheet attached to the Show Cause Notices. It is noticed that the values excluding duties of popular sizes of chairs of KPPL and NPL varies in the range of 47.2% to 66.3%. The prices of stools vary up to 109.4%. The details are noted below : Sl. No. Size Price of KPPL (in Rs.) Price of NPL (in Rs.) % of variation 1 Chr. 4002 121.71 181.00 48.7 2 Chr. 2071 108.26 180.00 66.3 3 Chr. 7015 141.28 208.00 47.2 4 Stool 09 54.93 115.00 109.4 5 Stool 10 69.17 135.00 95.2 7.1 In addition to the above reproduced findings, the Adjudicating Authority has also held that the appellant No. 2 has supplied the moulds, which is approximately costing 8 crores and nobody will give such a huge investment without having interest in the business of each other. It is also held that the appellant No. 1 was give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt on the ground that the assessee on the one hand and Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. on the other were not related persons and the wholesale cash price charged by the assessee to Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. and not the price at which the latter sold the dyes to the dealers or the consumers, represented the true measure of the value of the dyes for the purpose of chargeability to excise duty. This conclusion reached by the High Court was assailed before us by the learned Attorney General appearing on behalf of the Revenue. He fairly conceded that the only part of the definition of related persons in clause of sub-section (4) of Section 4 on which he could reply was the first part which defines related person to mean a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other. The second part of the definition which adds an inclusive clause was admittedly not applicable, because neither Atul Products Ltd. nor Crescent Dyes and Chemicals Ltd. was a holding company or a subsidiary company nor was either of them a relative of the assessee, so as to fall with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Atul Products Ltd. is a wholesale buyer of the dyes manufactured by the assessee but even then, since the transactions between them are a principal to principal, it is difficult to appreciate how the assessee could be said by virtue of that circumstance to have any interest, direct or indirect, in the business of Atul Products Ltd. Atul Products Ltd. buys dyes from the assessee in wholesale on principal to principal basis and then sells such dyes in the market. The assessee is not concerned whether Atul Products Ltd. sells or does not sell the dyes purchased by it from the assessee nor is it concerned whether Atul Products Ltd. sells such dyes at a profit or at a loss. It is impossible to contend that the assessee has any direct or indirect interest in the business of a wholesale dealer who purchases dyes from it on principal to principal basis. 9.1 We also find that the above said ratio has been followed by this Bench of the Tribunal in the case of Commissioner of Central Excise, Bangalore-III v. Campco as reported at 2006 (199) E.L.T. 630 (Tri.-Bang.). We find that the facts in the case of Campco (supra) are identical with the case in hand before us. The ratio of the said de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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