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M/s Phaarmasia Ltd. Versus Commissioner of Central Excise, Hyderabad

2015 (5) TMI 246 - SUPREME COURT

Valuation of goods - Levy of penalty u/s 11AC - appellant was not taking into consideration the "other works overhead" element in arriving at the assessable value though according to the Department, it formed part of the costing element of 'conversion cost' shown in the costing report - Held that:- Appellant had not included the cost of 'other works overhead' in arriving at the assessable value though it forms part of the costing element of 'conversion cost' shown in the costing report. - there .....

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ant which had prepared the said costing and submitted to the Department. Therefore, the appellant cannot feign ignorance or be pretentious about its innocence in allegedly acting upon the cost audit report as supplied by P&G. - Decided against assessee. - Civil Appeal No. 7357 of 2004 - Dated:- 22-4-2015 - A. K. Sikri And Rohinton Fali Nariman,JJ. For the Petitioner : Mr M P Devanath, Adv., Mr Vivek Sharma, Adv., Ms L Charanaya, Adv., Mr Aditya Bhattacharya, Adv., Mr R Ramachandran, Adv., Mr Hem .....

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r of Central Excise has been dismissed. The appellant had been doing the job work for M/s. Procter & Gamble Hygiene & Healthcare Limited (hereinafter referred to as P&G). The agreement in this behalf was signed between P&G and the appellant in December, 1994, for the manufacture of various goods such as Vicks Action 500, Vicks Vaporub Super Balm, Ultra Clearasil and Mediker on job work basis. Raw material for this purpose was to be supplied by the P&G. The appellant had been .....

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f cost sheet and noticed that the appellant was not taking into consideration the "other works overhead" element in arriving at the assessable value though according to the Department, it formed part of the costing element of 'conversion cost' shown in the costing report. This resulted in issuance of show cause notice dated 30.07.2001 demanding an amount of ₹ 45,50,625/- as differential duty for period July, 1996, to September, 2000. Penalty of equivalent amount was also .....

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s been dismissed by the CESTAT vide orders dated 16.10.2004 however, penalty of ₹ 2 lakhs imposed under Rule 173 Q of the Rules has been set aside. In this appeal preferred against the order of the CESTAT, learned Counsel for the appellant submitted that he was not questioning the order on merit insofar as it holds that the 'other works overhead' should have been calculated in the cost which was to be calculated by the appellant for payment of excise duty. However, he submitted tha .....

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ugh it forms part of the costing element of 'conversion cost' shown in the costing report. The argument by the learned counsel for the appellant, however, was that there was no intentional omission/ suppression on its part inasmuch as the differential duty was paid on the basis of average cost of raw material as intimated by P&G in their cost audit report and therefore, the appellant acted bona fide in relying upon the said report and recalculating the differential duty based thereup .....

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