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2015 (12) TMI 1312 - CESTAT ALLAHABAD

2015 (12) TMI 1312 - CESTAT ALLAHABAD - TMI - Duty demand - Shortage of goods - Valuation - Inclusion of royalty amount - Held that:- Appeal filed by the Revenue is hit by 'Doctrine of Merger'. Vide appellate order by the Commissioner (Appeals), it was held that royalty paid is deductible from the assessable value and the same will not form part of the assessable value if there is evidence of payment to the principal. Against this order, the Revenue did not prefer appeal. According to the direct .....

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aju, Member (T) For the Appellant : Shri M K Mall, AC (AR) For the Respondent : Shri Kapil Vaish, CA ORDER Per Anil Choudhary The Revenue is in appeal against Order-in-Appeal No. 154/CE/LKO/2008 dated 10.11.2008 passed by the Commissioner of Central Excise & Service Tax (Appeals), Lucknow. 2. The brief facts are that an inspection was carried out by Revenue in the factory premises on 10.2.2001 and stock was verified of finished goods and raw materials. In the stock of finished goods, the tot .....

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peared to liable to be reversed. Further inspection was made at Head Office of the appellant at Lucknow on 13.2.2011, some documents and records were examined and recovered under Panchnama. On scrutiny of debit notes for the financial year 1999-00 and 2000-01 it revealed that the appellant had collected an amount of ₹ 3/- per kg. (Rs.2 per kg towards royalty and Re.l per kg for freight) over and above the invoice value from their buyer namely, Crops Health Products Ltd. And M/s Crops Chemi .....

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on @ ₹ 3 per kg as mentioned herein above. Mr. Gupta further mentioned that sevidol is a brand name of M/s Rohne-Poulenc Agrochemicals (India) Ltd. And they pay royalty to them for using their brand name and the same is recovered in part from their buyers. It was further stated that in the financial year 2000-01, debit notes were erroneously issued by oversight as price of that year was inclusive of royalty charges. 2.1 A show-cause notice dated 7.8.2001 was issued wherein it is noticed th .....

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modvatable raw material should not be recovered and further why not excess duty of ₹ 82,934/- be recovered being amount of duty on the amount of royalty and freight collected by debit notes along with interest and penalty was also proposed under Section 11AC read with Rule 173Q. 2.2 The respondent contested the show-cause notice by filing reply and the show-cause notice was adjudicated vide Order-in-Original dated 27.2.2006. An excess stock of 1579 kgs was held liable to confiscation and .....

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318.40 was confirmed as duty on the amount of royalty for the year 1999-00 and ₹ 40,615.20 on the freight collected for the two financial year, total ₹ 82,934/-. Further equal amount of penalty of ₹ 82,934/- was imposed under Section 11 AC read with Rule 173Q for contravention of rules 9, 173F & 173G along with interest on the duty amount. 2.3 Being aggrieved, the respondent preferred an appeal before the Commissioner (Appeals), who confirmed the confiscation and redemption .....

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dia) Ltd. And matter was remanded for verification of such payment to the adjudicating authority. 2.5 Pursuant to remand, vide Order-in-Original dated 18.1.2008, the learned Asstt. Commissioner has examined the issue in detail as regards the royalty paid to M/s Rohne-Poulenc Agrochemicals (India) Ltd. and has found that the respondent have paid an amount of ₹ 12 lakhs. The adjudicating authority also examined a copy of agreement between the appellant and their principal also noticed that t .....

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