TaxTMI 
TaxTMI 
1998 (8) TMI 370
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....Section 11AC of Central Excise Act, 1944 and of Rs. 5 lakhs under Rule 173Q of the Central Excise Rules, 1944 and denying benefit of Modvat credit of duty paid on one of the inputs namely, capsules, has filed this application under Section 35F of the Act seeking waiver of the requirement of pre-deposit. This application is opposed by Shri K. Srivastava, SDR. We have heard both sides. 2. Appellant, engaged in the manufacture of microphones, was filing price lists from time to time during the period 1992-97 declaring the wholesale prices at which the goods were to be sold to M/s. AKG Acoustics (India) Ltd. (for short AKG) and was clearing the goods on payment of excise duty on the approved prices. The department came to know subsequen....
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....d by AKG had been filed along with the price lists. The fact that capsules were being purchased exclusively from AKG and that at prices substantially lower than the price charged by AKG to other buyers was suppressed at the stage of approval of price lists. Accordingly, show cause notice dated 5-8-1997 was issued to the appellant reciting the relevant facts summerised above, proposing determination of the assessable value of microphones on the higher prices charged by AKG to their customers and proposing demand of differential duty on that basis invoking the proviso to Section 11A(1) of the Act. Show cause notice also proposed imposition of penalties. Though appellant resisted the notice of merits and the ground of limitation, the Commissio....
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....pellant. The Commissioner did not advert to specifically to these submissions. It is pointed out for the department that while the appellant placed before the Commissioner the aspect of bulk purchase, the aspect of differential packing was not placed before the Commissioner. 5. According to the appellant in view of the landed cost of similar capsules being more or less the same as the prices charged by AKG to appellant and in view of the bulk nature of sales of microphones by appellant no significance can be attached to the difference in prices for capsules charged to the appellant and others by AKG. Even if the differential prices are to be regarded as significant, it is contended only on the difference could have been added to the....
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....ntended that the price lists filed by AKG for capsules before the Assistant Collector disclosed the different prices charged by AKG and there was no suppression of the differential price system adopted by AKG. The contention of the department is that the agreement was not placed before the department by either of the parties and the purchase orders and the price lists did not disclose that the appellant was receiving capsules only from AKG that appellant was to manufacture goods of the brand name of AKG and sell the entire production to AKG and that suppression of these facts would attract the proviso to Section 11A. 8. Having considered the above submissions, in our opinion appellant has made out a prima facie case on the merits fo....