2014 (1) TMI 678

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.... SBSPL. On the ground that the price adopted for sale was less than the price (assessable value) arrived at on the basis of raw material costs plus conversion charges etc. required to be worked out as per Valuation Rules, proceedings were initiated against the appellant by issue of show-cause notice on 30th September 2010. As a culmination of proceedings, demand for differential duty of Rs. 46,29,121/- with interest has been confirmed in respect of clearances made during the period from September 2005 to July 2006. Penalty equal to the duty demanded has also been imposed. 2. Learned counsel on behalf of the appellant submits that before starting the manufacture on the job work basis for SBSPL, the appellant had written a letter to the ra....

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....ue of waste/scrap which arises during the manufacturing process was allowed to be sold by the appellant and appellant was allowed to retain the sale proceeds. He submits that because of this, the manufacturing cost came down substantially. Further he submits that the fact that some of the raw material were available with the appellant before commencement of manufacture on job work basis and these raw materials were included in the manufacturing process was also not disclosed. He points out that the principal manufacturer namely SBSPL did not file any declaration with the department about manufacture on job work basis by the appellant and in such a situation, the transaction value cannot be adopted and therefore the department had enough gro....

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....en confusing and there is lack of clarity. Further, it is also seen that initially by not giving the agreement copy certain important factors could not be seen/verified. In view of the fact there is substantial difference between the value arrived at on the basis of Valuation Rules and the transaction value and there is no explanation for this difference; we feel that the appellant has not been able to make out a prima facie case in their favour on merits. As regards financial difficulties, the learned counsel submitted that the appellant company had been referred to BIFR but now they are expecting to be taken over by another company. 5. In the totality of circumstances, we consider that appellant should be required to put to some terms ....