TaxTMI 
TaxTMI 
2003 (1) TMI 400
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....and after deducting the retailer's margin and other admissible deductions. 3. After the amendment to Section 4 of the Central Excise Act, 1944 w.e.f. 1-7-2000, the appellants started clearing the goods based on the sale price at which the goods were sold to EFL. 4. Two show cause notices dated 26-7-2001 and 22-11-2001 were issued to the appellants demanding differential duty of Rs. 1,87,41,973/- and Rs. 3,90,445/- respectively and proposing a penalty. The show cause notices were based on identical grounds as follows :- "Whereas it appears that M/s. APIC have contravened the provisions of Section 4 of Central Excise Act, 1944 read with Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (herein referred as Valuation Rules, 2000) and the erstwhile Rules 9(1), 173C, 173F and 173G of Central Excise Rules, 1944 (now Rules 4 and 8 of the Central Excise Rules (No. 2 of 2001) inasmuch as they have sold their goods to or through their related person namely M/s. Eureka Forbes Ltd., but failed to declare and adopt appropriate price at which these goods were sold by M/s. Eureka Forbes Ltd., for the purpose of payment of duty resulting in under va....
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....nactment of Rule 10 of the Valuation Rules is a statutory recognition of the principles laid down in the following decisions. (a) UOI v. Kantilal Chunilal and Others - 1986 (26) E.L.T. 289 (S.C.) (b) Cosmos (India) Rubber Works Pvt. Ltd. v. UOI - 1988 (36) E.L.T. 102 (Bom.) (c) Hingorani Air Products v. CCE, Baroda - 1997 (89) E.L.T. 513 (Tri.) (d) Dawn Apparels Ltd. v. UOI - 1989 (43) E.L.T. 372 (e) Zerographers Ltd. v. CCE, Allahabad- 1999 (108) E.L.T. 372 (T) (f) Samtel Electron Devices Ltd. v. CCE - 2000 (118) E.L.T. 262 (T) (g) Samcor Glass Ltd. v. CCE, Jaipur -2001 (130) E.L.T. 783 (T) (h) Beacon Neyrpic Ltd. v. CCE, Madras-2001 (133) E.L.T. 590 (T) = 2001 (44) RLT 659 (T). A.4 In the instant case it is an accepted fact that sales are made both to related as well as unrelated parties. The difference in price on the goods sold to EFL and the unrelated buyers is about 30-32%; that during the period 2000-01 EFL had made a profit before tax of about 5.75% and the corresponding profit of the appellants is about 6.08%. A.5 This would clearly indicate that the relationship between the appellants and EFL ....
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....44) E.L.T. 410 (T) (ii) CCE v. Ashok Leyland Ltd.- 2000 (116) E.L.T. 630 (T) and on penal action not sustainable they have submitted - C.1 The Commissioner has accepted the fact that the demand for duty has arisen only on account of interpretation of the Valuation Rules. The Commissioner has also observed that this is not a case of clandestine removal, wilful evasion of duty, fraud or collusion with intent to evade duty and that all the information about the transactions was within the knowledge of the department. The Commissioner has also accepted that penalty is not leviable unless there is clandestine removal or intent or attempt to evade or avoid payment of duty. Under these circumstances the action of the Commissioner in imposing penalty under Rule 173Q is unsustainable. 8. The learned SDR for the Revenue while reiterating the orders of the Commissioner took us specifically through the findings as arrived at in Paras 21 to 31 of the impugned order and submitted that the Commissioner has very carefully considered and analysed the scope of the provisions of the new Valuation Rules and which principle of Valuation Rules, ....
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....missioner has considered what should be reasonable deductions and thereafter in Para 38 which she read in extensio which is reproduced below, the Commissioner has quantified the demands considering the levy on certain models which were sold by the related persons to dealers and not in retail and relied upon by the appellants own calculations to quantify duty amounts of Rs. 1,23,04,147/- and Rs. 2,52,987/- which are within and less than the demands proposed in the show cause notices. Para 38 is as under : 38. "In view of above decision, the demand of duty is to be requantified based on the price of such goods sold by the assessee to the independent customer. In this regard, assessee have submitted that while quantifying the duty in the first SCN, the department has considered the clearance of two goods namely Water Cooler-cum-Purifier and Water Purifier PG 600 for the month of December, 2000 to February, 2001 in the first SCN (SCN is restricted for the period from July to November, 2000) as well as in the second SCN. Correcting the said mistake the assessee have submitted the re-computation of the duty in Annexure 2 and Annexure-3 and arrived at the transaction value from th....
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....ier to wholesale independent dealers who sell the goods on ward in retail or otherwise. The other brand goods namely Aqua Guard Classic, Aqua Guard Royale and Aqua Guard Nova are sold by M/s. EFL directly to the customer as per their network marketing on door to door basis at a retail price. Therefore, from the above sale pattern, the sale of the goods by the assessee can be summed up in the following manner. (i) No sale at the factory gate but all the goods are stock transferred to their depots. (ii) From depots, the sale was made of all the goods to M/s. EFL as well as to the independent distributors. (iii) M/s. EFL in their onward journey sell the goods namely Water Purifier PG 600, Water Cooler-cum-Purifier and Forbes 3-in-1 to independent distributors. (iv) In respect of other three goods namely Aqua Guard Classic, Aqua Guard Royale and Aqua Guard Nova, M/s. EFL., did not sell the goods in wholesale but on retail basis directly to the consumer. (b) &n....
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....nbsp; The rules now applicable in this case, namely Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 particularly Rules 9 and 10 thereof do not cover this situation, as covered in erstwhile Valuation Rule 6(c)(i). The proviso to the substituted Section 4(1) of Central Excise Act, 1944 also does not provide for such a situation. Therefore valuation in such a situation has to be resorted for under the provisions of Rule 11 which reads as follows : "Rule 11. If the value of any excisable goods cannot be determined under the foregoing rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-­section (1) of Section 4 of the Act" This rule has to be read with principles enunciated in Rules 1 to 10. The Commissioner has found that Rule 9 would not be applicable in the facts of this case. Principles of Rule 4 read with Rule 7 could be applied since the values as mentioned in Rule 4 i.e. value of goods sold by the assessee for delivery at any time which applies to valuat....
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....d or to be incorrect. If they want a deduction based on different 'commercial levels' they have to produce evidence; merely by making a statement and contest. A 'Best Judgment Assessment" is not permissible or available to them. In this view of the matter we find no infirmity in or grounds made to assail the assessment made by the learned Commissioner in determining the valuations and the consequential demands of duties. In view of our findings arrived at by us we find no merits in the alternative plea recorded as A-1 to A-8 of the appellants including the plea of non-cibsuderatuib if 'same level' in grounds B.1 and B.2. (f) As regards submissions on penalty it is found that the Commissioner in Para 43 of the Order has come to a conclusion that "this is not a case of clandestine removal, wilful evasion of the duty, fraud, or collusion with intent to evade the duty....." and since the transactions were within the knowledge of the department, the mandatory interest under Section 11AB has not been demanded....