TMI Blog2015 (8) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 11 would have to be relied upon - which gives the authority the power to make a best judgment assessment - we find that on facts in the present case, the cost of manufacture plus 15 per cent principle would not be attracted for the simple reason that it is found that in point of fact, sales made to arm's length purchasers were way below cost - To apply the cost plus principle on facts where arm's length sales are made at well below cost is to choose a principle that would work arbitrarily as the endeavour of the assessing authority is to arrive at an arm's length wholesale cash price to value the aforesaid manufactured articles for purposes of levy of excise duty. - Impugned order is partly set aside - Decided partly in favour of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Joint Venture Company was established in the year 1996 between the appellant on the one hand and CIBA-Geigy Limited, Basel, Switzerland and its subsidiary CIBA India Private Limited, Mumbai, on the other, with an investment of ₹ 600 million, with the lion's share of investment being by CIBA-Geigy Limited and its subsidiary at ₹ 456 million and the appellant investing ₹ 144 million. For this reason, CIBA-Geigy Limited and its subsidiary held 76 per cent of the shareholding of the newly formed Joint Venture Company which is M/s. Petro Araldite Private Limited (hereinafter referred to M/s. PAPL) and 24 per cent of the shareholding was held by the appellant. This joint venture was established for the manufacture of Epoxy R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as struck by the Commissioner (Appeals) in an appeal from the Order-in-Original dated 30.07.2003 by the appellant. We find cogent reasons given by the CESTAT to agree with the Order-in-Original and not with the appellate order dated 19.03.2004. This being the case, ordinarily we would have dismissed the present appeals. However, it has been pointed out by Shri S. K. Bagaria, learned senior counsel appearing on behalf of the appellant, from a chart that, in fact, arm's length sales, on which there is no dispute (which accounts for roughly 14 per cent of the production of the appellant), were also made at prices way below the cost of production for the simple reason that the international prices at that time were very very low. Details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on facts in the present case, the cost of manufacture plus 15 per cent principle would not be attracted for the simple reason that it is found that in point of fact, sales made to arm's length purchasers were way below cost. A best judgment assessment must be made reasonably and not arbitrarily. To apply the cost plus principle on facts where arm's length sales are made at well below cost is to choose a principle that would work arbitrarily as the endeavour of the assessing authority is to arrive at an arm's length wholesale cash price to value the aforesaid manufactured articles for purposes of levy of excise duty. We, therefore, set aside only that portion of CESTAT which applies the cost plus principle and decide the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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