TMI Blog2002 (1) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... develop, fully engineering machine set ups and manufacture the said machines as per the drawings, patterns, jigs, fixtures and tools, etc. which they would develop on separate orders to be negotiated and placed on a principal to principal basis. This agreement dated 10-5-91 was entered into with ITC. The agreement related the preparation of drawings, patterns, jigs, fixtures and tooling necessary for manufacture of certain machines, which ITC requires and would place orders separately, once they approve the designs. This agreement stipulated the supply of a prototype machine by ITC to MKL to develop such drawings, patterns, jigs, fixtures and tools and it specifies that such items will be prepared by MKL, yet they would remain the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany in writing in terms of this agreement; as detailed in Schedule B hereto. c. In order to ensure that MKL manufactures the machines strictly in accordance with the specifications, the prototype and drawings and patterns approved by the company in writing, the Company's representatives will have the liberty of examining the machines manufactured by MKL during the process of manufacturing of such machines and also after the manufacture of the machines is completed, before or after the delivery of machines by MKL to the company." Part IV at Page 6 is for the price of the machines and states : "The price of the machines will be stipulated by the company in the orders placed upon MKL. All such prices shall be arrived at after pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in respect of design and drawings and the machines supplied stands proved and the amount has to be treated as additional consideration for supply of the machines under consideration. Hence the differential duty on the amount liable to be paid by M/s. MKL. The reliance of M/s. MKL on the judgment of the CEGAT in the case of M/s. IAEC Brokers Pvt. Ltd. is misplaced and as against the same is in favour of the department in respect of drawings, designing and technical specification. The contention of M/s. MKL that there is no contract for the manufacture of machinery in the agreement dated 10-5-91 is not correct as held by me above. In the following judgments of the CEGAT it has been clearly held that costs towards drawing, design and techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. 13. As regards limitation aspect the arguments of M/s. MKL are not tenable. M/s. MKL have clearly suppressed the facts of collection of Rs. 43 lakhs towards design and development charges. They have not informed the department about the contract (agreement) at any time. Their claim that it is a bona fide omission is not acceptable inasmuch as the agreement dated 10-5-91 clearly specified the terms of Excise duty as Part VIII with respect to the manufacture of the machines in terms of the said agreement." And he confirms the demand of duty of Rs. 7,41,750/- under proviso to Section 11A and imposed a penalty of Rs. 75,000/- under Rule 173Q. 4. We have heard both sides and considered the material and find :- (a) It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r law. (b) The agreements, i.e. the written orders for the supply of four machines as per the gate passes in this case were not relied upon in the original proceedings nor were they produced before us by Revenue or by the appellants. Therefore it cannot be determined whether the prices in those subsequent orders/agreements, were influenced or otherwise. Each clearance is an assessment based on a separate contracts. A contract price would normally be the value for assessable goods. The Basic Excise Manual of Departmental Instructions on Excisable Manufactured products in Para 71A stipulates : "Further, an assessee may fix different prices depending upon the quantity to be sold, the period of delivery, other normal commercial consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered into, for the supply of each machine, was incorrect/misdeclared. There is a bland statement, in the show cause notice that "the collection of the developing charges have not been made known to the Central Excise department in any manner and thereby M/s. MKL have suppressed the said fact". Therefore no adequate reasons to invoke the proviso under Section 11A(1) on such vague allegations as made in the show cause notice are fore found. Similarly, there is no sufficient cause, for the visit of penalty under Rule 173Q of the Central Excise Rules. Material to invoke the proviso clause of Section 11A(1) and the penal Rule 173Q has to be not only relevant but also adequate and justified, since grave consequences repelt from these charges. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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