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TMI Blog2019 (5) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... hi Textiles Pvt Ltd Hyderabad are processors of textiles. They have entered into an agreement with M/s Karnataka Handloom Development Corporation Ltd (KHDCL) (a Govt of Karnataka Undertaking) as per which they received grey fabric and returned it after processing. They have been discharging central excise duty as job workers on the cost of raw materials plus processing charges. A show-cause notice was issued after investigation by the department alleging that the assessee have not taken full cost of the raw materials while arriving at the assessable value. They have only taken the price as declared by KHDCL in their price declaration given to the respondents which is lower than the actual price shown in the delivery challans. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains that in case of short-supply or damage of goods, amounts will be recovered at the rate of grey fabrics as mentioned in the Delivery Challans. In para 25 of the impugned order he observed as follows: "25. I find that the component of transit risk in the price of grey fabrics furnished in the delivery note is a notional value depicting a kind of penalty in case of default by M/s Sanghi. In the instant case, by own submissions of M/s KHDCL, transit risk accounts for short supply, quality defects etc., and amount would be recovered from M/s Sanghi at the rates shown in the delivery notes and this rate of recovery has been arrived at by adding 15% to the standard procurement cost Eg. Standard procurement cost of grey shirting is Rs. 26/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the merits of the case, the learned counsel would reiterate the arguments made in the order-in-original. He took us through the copies of delivery challans and the price lists given by M/s KHDCL and would submit that the difference in prices is on account of 15% transit risk. He further submits that in case any raw material supplied by M/s KHDCL is damaged or not returned, they will be liable to pay to M/s KHDCL an amount equal to what is indicated in the delivery challans. He would argue that price in the delivery challan is meant only for that purpose. Otherwise the price declaration for excise made by M/s KHDCL (a Govt of Karnataka undertaking) should form the basis for central excise duty. 5. We have considered the arguments of both si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll my/our stocks lying with you till said amount is reimbursed to you in full. For K.H.D.C.L Sd/- Dy Manager Marketing (VVS & Proc)" It is evident from the above that the price declaration may not be the actual rate of the fabric and if the actual rate of fabric is different excise duty on the same is agreed to be reimbursed to M/s Sanghi by M/s KHDCL in full on a demand being raised by the excise authorities M/s KHDCL was not in dispute. This price declaration further gives M/s Sanghi a right of lien on stocks lying with them until such reimbursement is made in full. From the above it appears prima facie that the price declaration indicates only a tentative price and not actual price of the goods. The actual price of goods may differ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel that on an identical case, in the case of Sharda Synthetics Ltd (supra) the Tribunal Mumbai has ruled in favour of the assessee. Para-4 of this order reads as follows: "4. We have gone through the rival submissions. We find that the only ground raised in the show-cause notice for seeking to revise the assessable value was proposed adoption of the price declaration in the delivery note as the value of the grey fabrics. A perusal of para 55 and 56 of the Order-in-Original clearly shows that the said charges has not been sustained by the Commissioner. After having specifically not sustained on such charges, the Commissioner has gone on to confirm the demand on grounds not invoked in the show-cause notice. We find that the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prices to different class of buyers. This Court, further, held that to claim benefit of proviso to Section 4(1)(a) of the Act, a trade practice must be averred and shown to exist and it must be shown that there is different class of buyers and only on basis of facts averred and proved, a conclusion can be reached that the sale is to a different class of buyers. This is a condition precedent for invoking the first proviso to Section 4(1)(a) of the Act. As already noticed, neither the show cause notice nor the Collector's order nor the CEGAT order makes any such averment let alone proving the same with evidence. On this ground alone the invocation of First Proviso to Section 4(1)(a) of the Act must fail. Further, the first proviso to Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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