TaxTMI 
TaxTMI 
2006 (4) TMI 371
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.... sold at the rate of Rs. 1,200/- per kg. to M/s. Sodium Metal Pvt. Ltd. and M/s. VVF Ltd. Penalty was also proposed on the appellant for violation of various provisions of the Central Excise Rules. The show cause notice was adjudicated by the Commissioner under the impugned order by which he confirmed the duty demand of Rs. 1,50,45,438/- by taking the normal price of Triclosan at the rate of Rs. 2,242/- per Kg. under Section 4 of the Central Excise Act and imposed the penalty of Rs. 1,50,45,438/- on the appellant under Section 11AC of the Central Excise Act and penalty of Rs.30 lakhs under Rule 173Q(1)(a) of Central Excise Rules, 1944. 3. The appellants have challenged the findings of the Commissioner on various grounds. It was argued before us that this case was remanded to the Commissioner by the Chennai Bench of Tribunal under Order No. 445/2002, dated 22-3-2002. During the first adjudication proceeding under Order-in-Original No. 12/2000, dated 30-11-2000 penalty of Rs. 30 lakhs was not imposed on the appellants. Now penalty of Rs. 30 lakhs has been imposed under Rule 173Q(1)(a) of the Central Excise Rules. This penalty cannot be imposed by the Commissioner as in the ea....
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....ore, it was not viable to sell such small quantity to such buyers. During the period of investigation they had arranged with M/s. Sodium Metal Pvt. Ltd. to utilize their major portion of the production in the manufacture of Pre-mix and they were selling the goods at the contract price of Rs. 1,200/- per kg. It was also argued that their cost of production was Rs. 746.51 per kg. during 1993, which increased to Rs. 849.99 per kg. during 1998-99. Thus, their selling price of Rs. 1,200 per kg. was giving them margin profit to the extent of 41.18%. Thus, they were not selling the goods at the cost which were either lower than the cost of production or they were suffering losses. 5. The price at which they were selling the goods to M/s. Sodium Metal Pvt. Ltd. cannot be discarded unless it is established that the appellants and M/s. Sodium Metal Pvt, Ltd. are related persons or that the price was not the sole consideration. The Department has not been able to establish any relationship between the appellant and M/s. Sodium Metal Pvt. Ltd. to hold that they are related persons. In the finding of the Commissioner, there is no finding that any additional consideration has flown from ....
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....urchase of Parachlorometaxylenol (PCMX) and with M/s. Godrej Soaps Ltd. for sale of pre-mix compound were on principle to principle basis and purely on commercial consideration, therefore, I may inclined to hold that the allegation that M/s. Sodium Metal Pvt. Ltd. was an agent, dummy and captive unit of M/s. Reckitt & Colman of India Ltd. are not sustainable". It was argued that in the contract the price has been declared and in the price list filed by them in 1993 they have stated that they are selling the goods to M/s. Sodium Metal India Ltd. Under the law they are not required to disclose that whether the final product made out of these inputs will be used by them or to whom it will be sold. The reliance was placed on the following decisions: (1) Pearls of Beauty v. C.C.E., New DeIhi - 2001 (130) E.L.T. 495 (Tri.-Del.), wherein Para 5 of the said decision it was held that "merely because they have not indicated the use of the impugned goods in their classification lists it cannot be alleged, in the facts and circumstances of the present matter that they have wilfully suppressed facts or made wilful mis-statement of facts." (2)  ....
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....; (ii) the price charged should not be normal price but the price lower to the normal price and that extra commercial considerations have reduced the normal price; and (iii) the alleged related persons should be related to the assessee as defined in Section 4(4)(c). Evidence on record in this case does not warrant a finding of mutuality of interest. The manufacturer SEDL and purchaser SCL, on the evidence before us cannot be found to have interest in the business of each other. In any view of the matter the price charged by SEDL and SCL are not shown to be the normal price. Passing on extra-commercial considerations from SCL to SEDL has also not been established. (3) Oscar Pharmaceuticals Pvt. Ltd. & Others v. Collector of Central Excise, New Delhi, 2004 (177) E.L.T. 1087 (T) = 1999 (35) RLT 215 (CEGAT)-relying on Paras 8 and 9 of the said judgment, it was stated that 'Oscar' was manufacturing 'Enrocin' and sold to Ranbaxy the brand name owner. Raw material in Enrofloxacin was purchased by Oscar from Ranbaxy at Rs. 6,000/- per kg. though it was value at Rs. 10, 000/- per kg. by Ranbaxy. On the basis of sa....
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....own product. The appellants claim that they have not sold the goods during the disputed period at the rate of Rs. 2,242/- per kg. is a situation created by them by refusing to supply the goods at this price to other customers who were willing to buy the goods at this price. Thus, the normal value of Triclosan was Rs. 2,242/- per kg. at which the other customers were willing to purchase the same and not Rs. 1,200/- per kg. at which the product was sold to M/s. Sodium Metal Pvt. Ltd. Thus, the appellant had suppressed the value of the product as they were getting the benefit on the price of soap, shaving cream which was being purchased from M/s. Godrej Pvt. Ltd. and M/s. VVF Ltd. 12. It was also argued that the price of pre-mix were being governed by the appellant as is apparent from the fax dated 25-11-97 sent by M/s. Sodium Metal Pvt. Ltd. to M/s. RCI Ltd. and reply of M/s. RCI under their fax dated 2-12-97 to M/s. Sodium Metal Pvt. Ltd. The fax messages are reproduced as under: (i) Fax dated 25-11-97 "We accept Price Revision of Premix to Rs. 307/Kg and premix for D.L.S. to Rs. 311/Kg w.e.f. 1-12-97 with a most humble request to increase mark-up from Rs. 19.30/Kg to ....
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....it value of Triclosan as Rs. 2,242/- and then 46.4% was being shown as deduction. It was argued that if the contract was for Rs. 1,200/- per Kg during this period then question of Unit price being shown as Rs. 2,242/- and then showing the deduction of 46.4% is misleading as this only shows that Unit price was Rs. 2,242/- and the deductions are given on some account which is not explained in the invoices nor in the pattern of sales. It was, therefore, argued that the normal price of the goods in the ordinary course of trade was Rs. 2,242/- per Kg. Reliance was placed on the decisions of the Supreme Court in the following cases :- (1) Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai, reported in 2000 (122) E.L.T. 321 (S.C.) relying on Para 6 of the said decision where it is stated that the value according to Section 14(1) of the Customs Act, 1962 shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade. The word 'ordinarily' necessarily implies the exclusion of "extraordinary" or "special". (2) Commissioner of Central Excise-II v. TI....
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....here is unforeseen rise in raw material cost, which will be agreed through mutual discussions. From this contract it is clear that this is a legal documents signed by Shri D.D. Kapasi, Managing Director of M/s. Sodium Metal Pvt. Ltd.. However, Shri D.D. Kapasi, in his statement dated 11-1-99, as the Managing Director of M/s. Sodium Metal Pvt. Ltd. stated that the price of Rs. 1200/- per Kg. for Triclosan was arrived at by RCI for us and we accepted it without any negotiations. This statement of Shri Kapasi on 11-1-99 in any manner does not change the situation that the price offered to them by the appellant was not commercial. On the contrary in the contract dated 25-5-93, M/s. Sodium Metal Pvt. Ltd. had accepted the price as per quotations dated 19-5-93 and 21-5-93 and discussions with Shri B.B. Singh General Manager (Chemical Division) of M/s. RCI Ltd. The quotations are given by the seller of the product and it is for the purchaser to accept it or not. Since M/s. Sodium Metal Pvt. Ltd. has accepted the quotations for purchase of the Triclosan, therefore, the statement of Shri Kapasi that the appellant had fixed the price for them is not a ground which show that any manipulation ....
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....be considered as normal price. 14. The main ground on which the Commissioner confirmed the demand is that Triclosan was not ordinarily sold to M/s. Sodium Metal Pvt. Ltd. and M/s. VVF Ltd. The value of goods has to be determined under Central Excise (Valuation) Rules, 1975. According to Rule 4 of Central Excise (Valuation) Rules, 1975, when the assessable value of the goods is not ascertainable for any reason, the value shall be based on the value of such goods sold by assessee for delivery at other time nearest to the time of removal of the goods under assessment subject to adjustment on account of difference in the date of delivery. The Commissioner has found that value charged in 1994 is the value to be adopted for adjustment, which is the value of Rs. 2242/- per Kg. offered prior to October, 1993. He also has found that in normal course there should have been price rise over years. We find that the Commissioner in his order has gone on a wrong track for making adjustment to the value of Triclosan at which it is sold to M/s. Sodium Metal Pvt. Ltd. on the basis of price of Rs. 2242/- per Kg. for other without making any adjustment for the time. There are specific provisio....