2002 (11) TMI 718

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....duty paid on these soap noodles and other inputs that it used in the manufacture of soap. 2. The question of determining the assessable value of soap noodles manufactured by Lever was in dispute, and the soap noodles that the appellant received had been cleared by Lever on payment of duty provisionally determined. As a result of finalisation of these assessments, Lever was required to pay, and actually paid, duty of Rs. 26.73 lakhs (with which we are concerned in appeal E/3738) and Rs. 34.40 lakhs (the subject-matter in the other appeal). The departmental officers countersigned the certificates that it issued certifying the payment of duty. Based on these certificates, the appellant took credit, in terms of sub-rule (2) of Rule 57E ....

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....or whom they carried out job-work. It is also an admitted position that HLL themselves manufactured soap noodles and supplied them to the appellants. For this reason, unlike the case with other inputs which HLL purchased from open market and allowed the appellants to avail Modvat credit on them, there involved no sale-purchase transaction either between their manufacturer and HLL (for the reason that HLL itself was the manufacturer) as also between HLL and the appellants so far as soap noodles for which the dispute has erupted, is concerned. For this reason, the aspect of recovery of duty or for that matter additional amount of duty by the manufacturer of inputs (soap noodles) namely HLL from the manufacturer of final products viz. appellan....

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.... material. However, the provisions of sub-rule (2) of Rule 57E do not require that the incidence of duty which is transferred must necessarily be through the mechanism of sale or purchase. It does not, in other words, require that the duty, the incidence of which is transferred, should necessarily form a part of the sale or purchase. We agree that in the normal course, the question of transfer of the incidence of duty independently of price may not arise. The price paid for the goods is the normal mechanism by means of which such incidence takes place, but this does not mean that where there is no sale and purchase, incidence of duty cannot be transferred at all. 7. The object of requirement in sub-rule (2) of Rule 57E that the inci....