2006 (3) TMI 664

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....f Act, 1985. 1. On verification of their sale pattern it appears that M/s. Vadilal Dairy International Ltd. had entered into an agreement dated 13-12-1992 with M/s. Vadilal Milk Products Pvt. Ltd. (formerly known as Nematic Marketing Pvt. Ltd.) for sale of marketing rights of the ice cream and all other products. In terms of this agreement the marketing rights were acquired by M/s. Vadilal Milk Products Pvt. Ltd. for a consideration of Rs. 80,00,000/- for a period of 5 years. Relevant terms of the agreement for the period of 1-4-1993 to 30-3-998 were as under : (i)      M/s. V.D.I.L. shall sell and M/s. V.M.P.L. shall purchase all products manufactured by M/s. V.D.I.L. at price mutually agreed from time t....

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....e in the normal course of trade as goods were not available to any other wholesaler dealer for purchase at the factory gate of M/s. V.D.I.L. The goods were not available for purchase to any other person excepting the M/s. V.M.P.L. and therefore the sale was not at arm's length. It was felt that prices at which the goods were sold by M/s. V.D.I.L. to M/s. V.M.P.L. did not represent the normal price within the meaning of Section 4(1)(a) of the Central Excise Act, 1944 and under these circumstances the valuation of the goods was required to be done under the provisions of Section 4(1)(b) of the Central Excise Act, 1944 R/w Rule 5 of the Central Valuation Rules, 1975. 3. The investigation revealed that an amount of Rs. 4,72,48,433.00 wa....

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....as visited by both including CERA and internal audit. 5. The copy of the agreement was asked by Judicial Superintendent on 18-9-95 which was supplied to them vide their letter dated 18-9-95. This shows that the department was aware that an agreement between them existed and only then they could have asked for a copy of the agreement. Even otherwise from 25-9-95 onwards, the agreement was in the full knowledge of the department and therefore no suppression can be alleged from 25-9-95 onwards. 6. On merits it was submitted that as per the agreement clause 9 specifically provides that the Buyer shall be entitled to carry out independent advertisement and publicity campaign at its own cost. Under the agreement M/s. V.M.P.L. was ....

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.... 8. The learned S.D.R. on the other hand submitted that the submission of the sale invoice along with R.T. returns did not advance their case on limitation as it indicates nothing about the additional consideration received by him. So is the case with the balance sheet as balance sheet also do not indicate the receipt of the payment for sale of the marketing rights. Even after the submission of the agreement in 1995 the department was not sure whether the amount of Rs. 80 lacs was received as their earlier agreement to this effect was cancelled due to non-receipt of the amount. The balance sheet shows nothing about the advertisement and publicity nor they informed the department at any time. Therefore the extended period has been righ....