Tribunal adjusts duty liability for M/s Sri Vasavi Pesticides Pvt. Ltd., emphasizes accurate calculations

M/s SRI VASAVI PESTICIDES PVT LTD. Versus COMMISSIONER OF CENTRAL EXCISE SALEM

M/s SRI VASAVI PESTICIDES PVT LTD. Versus COMMISSIONER OF CENTRAL EXCISE SALEM - TMI Issues:
Under-valuation of goods manufactured by the appellant and cleared through distributors and a consignment agent, confirmed demand, penalties imposed under Rule 173Q and section 11AC, defense of separate existence of distributors, calculation of duty based on distributor's sale price, relevance of consignment agent's price post-amendment, verification of calculations, reduction of penalty under section 11AC.

Analysis:
The appeal revolves around the under-valuation of goods by the appellant, M/s Sri Vasavi Pesticides Pvt. Ltd., cleared through distributors and a consignment agent. The Revenue contends that the distributors, M/s Sri Vasai Agencies (SVA) and M/s J.K. Agencies (JKA), were fictitious firms, and the prices at which goods were sold by them should be adopted for valuation. Additionally, for sales through a consignment agent, M/s P.L. Agro Tech (PLAT), the argument is based on the first-time sale by the consignment agent. The confirmed demand against the appellant includes penalties imposed under Rule 173Q and section 11AC of the Act.

The case against the appellant is supported by evidence regarding the operations of SVA, JKA, and PLAT. The facts relied upon in the case of SVA and JKA highlight discrepancies in their operations, including the absence of stock, investments, and separate establishments. The appellant's defense emphasizes the separate existence of SVA and JKA, citing their registration under TNGST/CST and acceptance for sales tax and income tax purposes. However, the tribunal finds that the distributors were established to suppress excise duty payments, evident from the lack of genuine operations and the flow of funds between entities.

Regarding the calculation of duty based on distributor's sale price, the tribunal accepts the appellant's plea to consider the price as cum-duty price and rework the duty liability. The tribunal directs the adjudicating authority to verify calculations and recalculate the liability based on distributor prices. In the case of sales through consignment agents, the relevance of the consignment agent's price post-amendment is discussed, with the tribunal finding no merit in the appellant's arguments.

The tribunal allows the appeal partially, directing the adjudicating authority to comply with the appellant's request for document copies for correct calculations. The penalty under section 11AC is reduced if paid within the specified period, emphasizing the importance of accurate duty liability calculations. The judgment provides a detailed analysis of the issues involved, addressing the under-valuation of goods, defense of distributor's separate existence, calculation of duty, and penalties imposed, ensuring a comprehensive review of the case.