AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 492
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....ment of the party for the period 1.4.94 to 31.8.97 are finalized with the issue of this order. The party is directed to deposit the above amount immediately." 2.1 The appellants are engaged in manufacture of- a. Cotton Yarn and Fabrics of Cotton classifiable under Chapter 52 of the First Schedule to Central Excise Tariff Act, 1985; b. Blended yarn of Polyester and Cotton, Polyester Viscose Yarn, Fabrics of Polyester Viscose and Polyester Cotton classifiable under Chapter 55 ibid. 2.2 The yarn produced by the appellants was partly consumed by them for manufacture of grey and processed fabrics and partly sold. 2.3 The provisional assessment of the appellants for the period 01.04.1994 to 31.08.1997 was initially finalized by the Deputy Commissioner Central Excise Division-III Ghaziabad vide Order in Original No 184/2000 dated 28.02.2001. The appeal filed by the appellants before the Commissioner (Appeal) was dismissed by the Commissioner Central Excise (Appeal) Ghaziabad vide his Order in Appeal No 139/2003 dated 31.03.2003. Appeal filed by the Appellant before Tribunal against the order in appeal was allowed by the tribunal vide Final Order No 660/....
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....abad, who by the impugned order upheld the order of adjudicating authority as stated in para 1, supra. Against this order of Commissioner Central Excise (Appeal) appellants have preferred this appeal. 3.1 In their appeal appellants have challenged the impugned order stating that- i. Order in appeal is a non speaking and clearly passed without application of mind. The order fails to take into consideration the documentary evidences justifying the valuation of goods. It has been passed merely reiterating the findings given by the adjudicating authority. ii. The order has been passed without taken into consideration the directions given by tribunal while remanding the matter to original authority. In its order remanding the matter back to original authority, tribunal had clearly directed the adjudicating authority to determine the assessable value in light of the decisions of Hon'ble Supreme Court and Tribunal on the subject. iii. Tribunal had remanded back the matter to adjudicating authority with specific direction to determine the value in light off the decisions in case of- a. Scan Synthetics [2002 (142) ELT 147 (T)] b. Ashok Leyland....
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....[2001 (133) ELT 97] b. Grasim Industries [2001 (139) ELT 370] c. Goramal Hiramal [1994 (69) ELT 269 (T)] d. Devangere Cotton Mills [1999 (108) ELT 807 (T)] e. Fiat India Pvt Ltd [2004 (167) ELT 82 (T)] f. Gurunanak refrigeration Corporation [20003 (153) ELT 249 (SC)] x. The finding recorded by the Commissioner (Appeal) that the comparable price are neither contemporaneous nor concurrent with the yarn captively consumed or stock transferred is perverse and erroneous. Since undisputedly there are comparable prices available in respect of the most of varieties of yarn sold at the factory the same was to be made the basis for assessment. xi. The confirmation of duty demand that normal price was less than the cost of production is ex facie erroneous and irrelevant in view of the decision of the Apex Court in case of Gurunanak Refrigeration, supra. xii. The adoption of the weighted average price was also in consonance with the provisions of law and is in accordance with the decision of Apex Court in case of Somaiya Organics Ltd [2007 (218) ELT 321 (SC)]. xiii. Determination of the value of goods on the basis....
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....y determining the cost of production which exceeds the actual cost of production as indicated in table below: Item Amount 'Rs Packing Cost (Not applicable for yarn captively consumed 2.55 Interest and Administrative Expenses (already forms part of conversion cost of Rs. 33/ Kg. Hence duplication 20.21 Notional Profit (assumed) (conversion cost includes the profit of the job worker. Hence No profit can again been taken. Exorbitant) 14.25 Cost of Polyester Fibre taken as R 91 against Rs. 73.80 13 Total 50.01 xx. Demand of duty on 1% Depot Charges is not sustainable and is contrary to the decision of Apex Court in case of Indian Oxygen Limited [1988 (36) ELT 723 (SC)]. xxi. Demand of duty on processed fabrics is unjustified and not sustainable as it is based on presumptions and assumptions. In respect of the processed fabrics the transaction price is actually available and should form the basis of assessable value. xxii. There are quantification errors in the adjudication order and impugned order which needs to be rectified. 4.1 We have heard Shri Atul Gupta and Shri Utkarsh Malviya, Advocates for the Appellants and Shr....
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....price through depot in different states will vary on account of sales tax and will not call for adverse inference in view of decision of Apex Court in case of Videocon International Ltd [2005 (180) ELT 312 (SC)] xi. Transaction price in open economy is always determined by negotiation and such prices may vary from person to person. In any case, such independent prices available for factory gate sale was never in dispute. xii. The factory gate price was higher than that price at which the goods were transferred to depot. However they had throughout insisted upon adoption of factory gate price for determination of assessable value. xiii. Further fabric was sold by them to independent buyers and increasing the cost of fabric by increasing the cost of yarn cannot be justified. Thus the demand made on the fabrics is totally unjustified. xiv. Without any allegation or evidence of receipt of additional consideration, the allegation that the prices were kept lower to evade central excise duty is surmises only and has no legal backing. xv. Even in terms of CAS 4 the charges towards administrative overhead and interest cannot be added to the asses....
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....No show cause notice was issued. Under the order in original dated 28.2.2001 and amount of Rs. 21,97,26,743/- is confirmed against the appellant. Appeal filed was dismissed by the Commissioner (Appeals) by order dated 31.3.2003. 3. The appellant is engaged in the manufacture of cotton and man-made yarn. 15% of the yarn produced is sold ex-factory. 38% to consignment agents for onward sale. 47% is consumed captively in the manufacture of fabrics. It is claimed that fabrics are sold by the appellant directly from factory gate. 4. The appellant had filed price declarations declaring the assessable value of the yarn being stock transferred to depots/consignment agents for onward sale. The market rate of yarn (countwise) was declared. Form 1.10.96, weighted average selling price realized by the depots during the previous month was taken and after deducting excise duty incidence, the assessable value was computed. The appellant paid the duty on the assessable value declared. Similarly, in the case of captive consumption of yarn, assessable value was computed with reference to weighted average selling price of yarn sold from depots and/or the factory gate during the prev....
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....Rule 6(b)(ii) of Valuation Rules. The value of the yarn sold ex-factory and also transferred through depots were also assessed on the same basis. Consequently, enhancement was made in the value of processed fabric. 9. ........................... 10. The Revenue has no case that the copies of the relied on documents, as requested by the appellant, were made available to it before the adjudication order was passed. Admittedly, no show cause notice is also issued. Under these circumstances, we are of the view that the whole matter has to be considered by the adjudicating authority afresh after giving a proper opportunity to the appellant. 11. When an assessee has clearance is different modes, namely, sale at factory gate, sale through depots and clearance for captive consumption, how the assessable value has to be arrived at, has been the subject matter of the decisions of this Tribunal as well as the Hon'ble Supreme Court of India. Such decisions are Scan Synthetics Ltd. v. CCE Jaipur 2002(142) ELT 147 (T), Ashok Leyland Ltd. CCE, Madras 2002 (146) ELT 503(SC) and CCE New Delhi v. Guru Nanak Refrigeration Corpn. 2003 (153) ELT 249 (SC). While the adjudi....
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....3-NB(A) dated 17.10.2003, it is observed that CESTAT's observation are general in nature. In para 10 of their order CESTAT has opined that- "the whole matter has to be considered by the adjudicating authority afresh after giving a proper opportunity to the appellants." Further in para 11 of their order the CESTAT has desired to take note of the ratio of following decisions:- i. Scan Synthetics Ltd. v. CCE Jaipur 2002(142) ELT 147 (T), ii. Ashok Leyland Ltd. CCE, Madras 2002 (146) ELT 503(SC) and iii. CCE New Delhi v. Guru Nanak Refrigeration Corpn. 2003 (153) ELT 249 (SC). From the perusal of above 3 judgments it is observed that the facts are different in that case. From a perusal of sub section (1) of Section 4, it is clear that "the duty of excise is chargeable on any excisable goods with reference to value which shall subject to the provision of that section, be deemed to normal price at which the goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal provided that the buyer is not a related person and the price is the sole consideration for the sale. In the....
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....ication of Rule 6(b) of the Valuation Rules 1988 (as they existed at the material time). The provisions of Section 4 of Central Excise Act, 1944 and the Valuation Rules, 1988 as far as they are relevant for the present case are reproduced below: "4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale : Provided that - i. where in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the norm....
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....he material characteristics of the goods to be assessed and of the comparable goods, (ii) if the value cannot be determined under sub-clause (i), on the cost of production or manufacture, including profits, if any, which the assessee would have normally earned on the sale of such goods; (c) ........... 5.7 The phrase "normal price" used in the Section 4 of the Central Excise Act, 1944 has been interpreted by the Hon'ble Supreme Court on number of occasions and after taking note of most of the earlier decisions, in case of FIAT India Hon'ble Apex Court observed as follows: 29. Section 4 of the Act, as we have already noticed, speaks of valuation of excisable goods, with reference to their value. The 'value' subject to other stipulation in Section 4 is deemed to be the 'normal price' at which the goods are 'ordinarily' sold to the buyer in the course of 'wholesale trade' where the buyer is not 'related person' and the 'price' is the 'sole consideration' for the sale. Against this background, for the purpose of this case, we have now to consider the meaning of the words 'value', 'normal price', 'ordinarily sold' and 'sole consideration', as used in Sectio....
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....kind and quality is sold or is capable of being sold by the manufacturer." 34. In Tata Iron and Steel Co. Ltd. v. Collector of Central Excise, Jamshedpur, (2002) 8 SCC 338 = 2002 (146) E.L.T. 3 (S.C.), it is held that "it is true to be seen that under the said Act excise duty is chargeable on the value of the goods. The value is the normal price i.e. the price at which such goods are ordinarily sold by the assessee to a buyer, where the buyer is not a related person and the price is the sole consideration for sale." 35. In Union of India and others v. Bombay Tyre International Ltd & Ors. (1984) 1 SCC 467 = 1983 (14) E.L.T. 1896 (S.C.), it is held that "it is true, we think, that the new Section 4(1) contains inherently within it the power to determine the true value of the excisable article, after taking into account any concession shown to a special or favoured buyer because of extra-commercial considerations, in order that the price be ascertained only on the basis that it is a transaction at arm's length. That requirement is emphasised by the provision in the new Section 4(1)(a) that the price should be the sole consideration for the sale. In every such case, i....
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....referred to goods being ordinarily sold in the course of wholesale trade at the time of removal, constituted the basis of the assessable value." 39. In Siddhartha Tubes Ltd. v. CCE, (2005) 13 SCC 564, at page 567 = 2006 (193) E.L.T. 3 (S.C.), it is held : "5......The essential basis of valuation under Section 4 of the Act is the wholesale cash price charged by the appellant. Normal price under Section 4(1)(a) constituted a measure for levy of excise duty. In the present case, we are concerned with assessment and not with classification. Duty under Section 4 was not leviable on the "conceptual value" but on the normal price charged or chargeable by the assessee. (See Union of India v. Bombay Tyre International Ltd.)" 40. In CCE v. Bisleri International (P) Ltd., (2005) 6 SCC 58 (at page 61) = 2005 (186) E.L.T. 257 (S.C.), it is held : "10. At the outset, it may be mentioned that under Section 4(1)(a), "value" in relation to any excisable goods is a function of the price. In other words, "value" is derived from the normal price at the factory gate charged to an unrelated person on wholesale basis and at the time and place of removal. 11. I....
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....ds are sold to that class. The proviso does not mean or provide that merely because the assessee sells at different prices to different classes of buyers, the price of that commodity becomes an unascertainable price. The price of that commodity will remain the normal price at which those goods are ordinarily sold by the assessee to the public, in other words, the price at which they are sold in the market." 42. In Procter & Gamble Hygiene & Health Care Ltd. v. Commissioner of Central Excise, Bhopal, (2006) 1 SCC 267 = 2005 (190) E.L.T. 289 (S.C.), it is held : "9. This case relates to valuation. At the outset, we would like to clarify certain concepts under the excise law. The levy of excise duty is on the "manufacture" of goods. The excisable event is the manufacture. The levy is on the manufacture. The measure or the yardstick for computing the levy is the "normal price" under Section 4(1)(a) of the Act. The concept of "excisability" is different from the concept of "valuation". In the present case, as stated above, we are concerned with valuation and not with excisability. In the present case, there is no dispute that AMS came under Sub-Heading 3402.90 of the T....
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....rice' would be the price which must be the sole consideration for the sale of goods and there cannot be any other consideration except the price for the sale of goods and it is only under such situation Sub-Section (1)(a) of Section 4 would come into play. In the show cause notices issued, the Revenue doubts the normal price of the wholesale trade of the assessees. They specifically allege, which is not disputed by the assessees, that the 'loss making price' continuously for a period of more than five years while selling more than 29000 cars, cannot be the normal price. It is true that in notices issued, the Revenue does not allege that the buyer is a related person, nor do they allege element of flow back directly from the buyer to the seller, but certainly, they allege that the price was not the sole consideration and the circumstance that no prudent businessman would continuously suffer huge loss only to penetrate the market and compete with other manufacturer of more or less similar cars. A prudent businessman or woman and in the present case, a company is expected to act with discretion to seek reasonable income, preserve capital and, in general, avoid speculative investments.....
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.... that Hon'ble Apex Court has in case of Universal Glass Ltd [2005 (182) ELT 3 (SC)] has held as follows: "12. The concept of "value" in the 1944 Act, as it then stood, was related to the price at which goods were capable of being sold. The said value was not restricted to the manufacturing costs plus net-profits but it covered various expenses on components which contributed to the increase in the market price, that is to say, expenses on components which contributed to "value addition". For determination of the value, where the normal price was not ascertainable for the reasons that such goods were not sold in the market or for any other reason, the nearest ascertainable equivalent thereto was required to be taken into account, in the manner prescribed, and accordingly in the case of captive consumption, the "value" for assessment of duties had to be equivalent to "the normal price" as defined under Section 4(1)(a) of the Act. Accordingly, the 1975 Rules had to be applied for computing the value of the bottles manufactured by the assessee and consumed by JIL. 13. Under Rule 6(b) of the said 1975 Rules, applicable to this case, the first option was to value the go....
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....ized. In the present case, even if the capacities of the bottles supplied to JIL on one hand and bottles supplied to "other buyers" on the other hand are the same, still the size and the shape of the bottles would make the relevant difference. JIL is a liquor manufacturer whereas Kissan, Dabur, Hamdard etc. are manufacturers of food and medicinal preparations. Therefore, the shape and size of the bottles supplied to JIL cannot be compared with the shape and size of the bottles supplied to Kissan, Dabur, Hamdard etc. Even the thickness of the glass of the bottles supplied to a liquor manufacturer would be different from the thickness of the glass of the bottles supplied to a manufacturer of drugs/food products. Rule 6(b)(i) casts a duty on the department to approve the assessable value and it is for the department to find out whether there are goods comparable to the assessee's goods. However, the proforma of the price list in part VI(a) under the heading "comparable goods, if known to the assessee" indicates that the particulars of comparable prices have to be given by the assessee. In terms of Rule 6(b)(i), such value has to be of comparable goods manufactured by the other assesse....
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....and in terms of capital investment and thus the prices of similar goods were not available. Under the above circumstances, the Tribunal should not have interfered with the well reasoned order of the adjudication passed by the Commissioner. 18. Before concluding, we may refer to one of the arguments advanced on behalf of the assessee. It was urged that the costing method adopted by the Commissioner was faulty inasmuch as the assessable value calculated by him was inter alia based on the profits of JIL and not on the profits of the assessee. It was urged that the assessee was a division of JIL. That, the assessee had submitted its profit and loss account with its written submission on 22-10-1996 which accounts have been brushed aside by the Commissioner stating that they were prepared after the earlier round of litigation and, therefore, reliance cannot be placed on such accounts. 19. As stated above, in the present case, since there were no comparable prices available for determining the normal price under Rule 6(b(i), the only alternative was to decide the value under Rule 6(b)(ii) by adopting the best judgment principle based on the cost of production and the pro....
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....aterial used in the manufacture of the said machinery, had issued a show cause, to show cause why the assessable value should not be re-fixed and the duty fixed on the re-fixed assessable value after taking into consideration the cost of raw material plus manufacturing cost plus reasonable profit margin. The adjudicating authority after considering the reply filed had confirmed the show cause notice and had directed the assessee to pay the difference in excise duty. In the appeal filed before the Tribunal, the assessee had succeeded. In the appeal filed by the department, this Court was of the view that since in the show cause notice issued by the adjudicating authority there was no allegation that the wholesale price to the buyers was for consideration other than the one at which it was purported to be sold or that it was not at arms length and further, there was no allegation that there was any flow back from the buyer to the assessee and therefore, the department cannot take a stand that the normal price was not ascertainable for the purpose of valuation under Section 4(1)(a) of the Act and therefore, the Tribunal was justified in accepting the whole sale price as the correct pr....
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....y, as we have already noticed that for nearly five years the assessee was selling its cars in the wholesale trade for a 'loss price' and therefore, the conditions envisaged under Section 4(1)(a) of the Act, namely; the normal price, ordinarily sold and sole consideration are not satisfied. We further hold that the decision in Bisleri's case (supra) will also not assist the assessees for the reason that the issue that came up for consideration is entirely different from the legal issue raised in these civil appeals. Before we conclude on this issue, we intend to refer to the often quoted truism of Lord Halsbury that a case is only an authority for what it actually decides and not for what may seem to follow logically from it. We may also note the view expressed by this Court in the case of Sushil Suri v. Central Bureau of Investigation & Anr. (2011) 5 SCC 708, wherein this Court has observed, "Each case depends on its own facts and a close similarity between one case and another is not enough because either a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of on....
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....s on Rule 6(b)(i) of Valuation Rules the assessee relies on Rule 6(b)(ii). Section 4(1)(a) of the Act is applicable when the buyer is not a related person. Section 4(1)(b) relates to a case where the price is not ascertainable. 9. Stand of the appellant is that comparable price is available because there were two units at Captainganj and Barabanki. The assessee tried to make a distinction by submitting that the product was captively consumed. CEGAT appears to have taken the stand that one day high price cannot be applied even though Rule 6(b) may apply. There is no dispute relating to the period from April 1999 to December 1999. For the period from April 1994 to February, 1999 the same was covered by a show cause notice dated 26-3-1999 and for the period March 1999 it is covered by a show cause notice dated 31-8-1999. CEGAT had come to the conclusion that no principle has been formulated and expressly no reason has been given. The stress is on nearly ascertainable equivalent as the expression 'ascertainable' means ascertained. There may be different rates for different periods. There may be cases where even for the periods the highest and the average prices may be taken. T....
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....s of buyers provided they are not related persons and under this proviso, even the contract price for supply of a specified quantity of goods to a buyer over a particular period can be treated as "normal price" for that buyer. As per proviso (ii) to Section 4(1)(a) in case of goods with price control, the price fixed by the Government shall be deemed to be the normal price. As per clause (iii) of the Section 4(1)(a) where all the sales are through related persons, the price at which such related persons sell the goods to independent buyers will be the normal price. As per clause (b) of Section 4(1) where the normal price of such goods is not ascertainable for the reasons that either such goods are not sold or for any other reason, the "nearest ascertainable equivalent of normal price" shall be determined in such manner as may be prescribed. Section 37(2)(a) empowers the Central Government to make rules, among other things, for determining under Section 4, the nearest ascertainable equivalent of the normal price. The Central Government framed Central Excise (Valuation) Rules, 1975 in exercise of the powers under Section 37 of the Central Excise Act. These rules prescribe the method ....
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....ds of some other assessee, adjustments have to be made for difference in the labour cost. Another point which has to be kept in mind while determining the value under Rule 6(b)(i) on the basis of the price of the comparable goods is that what is being determined under Rule 6(b)(i) is the "nearest ascertainable equivalent of the normal price" and, therefore, the value so determined must satisfy ingredients of the normal price as closely as possible and, therefore, the price of the comparable goods to be adopted should be the price at the time of removal or as close as possible to the time of removal of the goods to be assessed to duty. 4.2.2 The normal price of the goods is the price at which the goods are 'ordinarily' sold in the course of wholesale trade. It is a sort of representative price of the goods during a particular period. Hon'ble Supreme Court in the case of A.K. Roy and another v. Voltas Limited (supra), in para '19' of the judgment has observed that while determining the price which is to represent the real value of the goods to be taxed, the price must be conservative in every respect. Therefore, while determining the price of the goods being cleared for capt....
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....uation of goods captively consumed but is with regards to the valuation of goods cleared to sister concern, declaring the value which was lower than the value of same goods cleared to other independent buyers. Tribunal has upheld that since the sale price of same goods is available the same should form the basis for determination of value of the goods cleared to sister concern. This decision is distinguishable on facts. vii. Sankeshwar Hoisery Industries [2003 (161) ELT 942 (T)] In this case the issue was in respect of clearance of the goods to sister concern on the basis of declared value. Tribunal held that since the same goods were sold to defence, the sale price of the goods to defence will form the basis of clearance of the goods to the sister concern. This decision to is distinguishable on facts. viii. Baroda Rayon Corporation [1999 (109) ELT 988 (T)] In this case the tribunal has decided that the average of the sale price to different class of buyers can be the basis for determination of the value of the goods consumed captively, against the higher of the price charged from one class of buyer. In this case also there was no dispute about the identity of goods cap....
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....e placed is not correct. In all the decisions of tribunal relied upon by the Appellant there was no dispute about the fact that the very same goods were captively consumed and sold to the independent buyers also. In all the four decisions it was also not in dispute that cost of production was higher that the sale price. In fact there was no dispute about applicability of Rule 6(b)(i). In all the case the dispute was with regards to sale price and admissible deductions from the said sale price to arrive at value of goods consumed captively. In the present case controversy is with regards to applicability of Rule 6(b) (i) or 6(b)(ii) in the facts of case. Hence we do not find any support from these decisions for resolving the dispute and these decisions can be distinguished. 5.11 In view of the decisions as discussed above and the provisions of law as stated in this respect it can be stated that i. value of the goods captively consumed during a particular assessment period has to be determined by application of Rule 6(b)(i) first and in case it is not possible to determine the value in terms of Rule 6(b)(i) the value needs to be determined by application of rule 6(b)(i....
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....ote of the above authorities and determine the cost of production in accordance with the said decisions. 5.14 In respect of the stock transfers to the depot for the sale from depot the value in terms will have to be finally determined in terms of Section 4(2) of the Central Excise Act, 1944. Thus it will be the sale price of the said goods stocked transferred to the depot, when sold to independent buyers and the sale price being the consideration for sale. Thus appellants have to satisfy the adjudicating authority with reference to the actual sale price from the depot for finalization of the value as per Section 4(2). Hence in this respect also the matter needs to be remitted back to original authority for reconsideration. 5.15 In case of clearance of fabric, the appellants have discharged the duty on the basis of actual sale price to the independent buyers. When the appellants were discharging the duty on the basis of actual sale price to the independent buyers, without showing additional consideration in any form being received by the appellant revenue cannot discard the value determined by the appellant for discharging the duty. Original authority has in his order demanded....
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....ake it abundantly clear that adjudicating authority should consider the matter not on the basis of conjectures, presumptions and assumptions as has been done in this order but determine whether any consideration over and above the actual sale price to independent buyers has been received. In case no such additional consideration is established the demand cannot be made in respect of the sale of processed fabrics to independent buyers. 6.1 In view of discussions as above we set aside the impugned order and the remand the matter back to original authority for redetermination of the issues in view of the observations made by us in para 5.11 to 5.15. 6.2 Since the matter is quite old, original adjudicating authority should reconsider the matter and dispose of the matter after allowing the opportunity of hearing to the appellants and following the principles of natural justice within a period of six months from the date of receipts of this order. 6.3 In remand proceedings appellants should fully cooperate and provide all the relevant and information required by the adjudicating authority for redetermination of the issues without seeking unnecessary adjournments in the matter. ....
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.... VP 65:35 18.000 89.000 107.000 196.000 2/40 VP 6 2/40 VP 52:48 27.000 199.000 343.000 542.000 52:48 45 VP 55:45 63.000 63.000 8 45 VP 52:48 24.000 799.000 37.000 836.000 2/40 PV 9 2/60 VP 52:48 63.000 146.000 12.000 158.000 65:35 & 10 30 100% Poly. 8.000 8.000 45 VP 52:48 are the major varieties. Total 144.000 2081.000 The above tables reveal that the quantum of direct sale from factory was very low in comparison to the yarns stock transferred or captively consumed. As found in case of P.C. yarn and P.V. yarn, there had been almost no direct sale from factory gate, during March-94 to May-96, of a number of varieties of cotton yarn. These varieties are 2/20 k, 30, 30 Ch, 2/30 k, 2/30, 34k, 2/38, 40k, 2/40k, 2/56k, 60, 2/60, 2/74, 80, 2/80 and 2/50. In respect of the other varieties of cotton yarn, the quantum of the direct sale from the factory vis-Ã -vis the yarns transferred to their depots consignment agents and captively consumed is given below:- Document 3 TABLE-III SL Variety No. Cotton Yarn of Qty. of Yarn Qt....
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....able, recourse will have to be taken under Section 4(1)(b). Likewise the judgment in case of Scan Synthetics Ltd. Vs CCE Jaipur is also not applicable as ingredient of Section 4 (1)(a) not existed in the instant case. Similarly the judgments in Gurunanak Refrigeration case is also not applicable in the case as "the normal price itself is not ascertainable in most of the counts of yarn captively consumed. Document 4 It is observed that the direct sales from the factory were effected against negotiated /contracted prices. The contractual nature of transactions at the factory gate is strengthened by the statement dt.07.08.97 of Shri Narula, (Q.No.28) statement dt.8.9.97 of Shri J.P. Jain of Marketing Department of HRM (Q.No.22) and statement dt.15/16.9.97 of Shri S.K.Thakkral, Deputy General Manager (Commercial) of HRM (q.No.31). All of them in their aforesaid statements, have stated that the prices were negotiated by the marketing department with the customers and dispatch advices with requisite details were received by them in the factory. This is the reason that they declared in Annexure-II declarations that ....
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....maintained by them or not, they have all along been holding their views that because of frequent market fluctuation in the prices, it was not possible. In earlier paras of this order it has been discussed as to how the same yarn had been sold on the same day at two different prices to different buyers. In normal course, there should not have been two prices. The instances discussed in the said para indicate the fact that they had been selling their yarns arbitrarily. It is therefore. difficult to accept their contention that the difference in the prices was only on account of market fluctuation. However, if. it is presumed that the fluctuation in the prices was on account of fluctuation in the market and this led HRM to negotiate prices in respect of each transaction. Document 5 the question arises, whether each such price may be taken into account for determination of assessable value of yarn captively consumed or sold at factory gate or transferred to the de pots/consignment agents? To find out answer to the said question, the pattern of fluctuation and the legal position need to be examined. The scrutiny of the price lists/Annexu....
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....proved by it. Such prices were comparable to or higher, and only in exceptional cases, lower, than the prices at which yarn had been stock transferred or the prices negotiated in respect of the factory gate sale. Document 6 It is an admitted fact (Q.No.11/Statement dt.25.6.96 of Shri Narula) that the assessable value of the yarns captively consumed were determined on the basis of the weighted average of the actual selling prices of the previous month provided to the factory by the marketing department. The question is why they did not work out average of the prices at which yarn had been sold directly from the factory? was it not the reason that they did not do so because. (1) there was almost no sale from the factory of the major varieties of yarns which had been stock transferred/captively consumed; and (2) if the average prices were worked out, the same would definitely be more than the prices at which yarns were intended to be stock transferred/captively consumed. There were a large number of instances where the same yarn had been sold by depots/consignment agents at the prices higher than the prices at which such yarns had been st....
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.... in manufacturing and selling of yarn, such price can not be taken as the basis for arriving at the assessable value of yarn. There is a file (hereinafter called "Budget file") which contains details of Budgets for 1994-95 /1995-96 of DCM Shri Ram Industries Ltd. The file also contains a letter dt.28.3.95 of one shri S.K.Baral addressed to the senior General Manager of Hindon River Mills Copies of the said letter appear to have been endorsed to " ED/DGM (Mktg)/WM". The subject matter of the said letter is "Production Programmer For April 95", Beside the aforesaid documents, the file also contains detailed analysis, in respect of production and sale of yarn and cloth. the cost of production and sale and profitability. The said file also contains graphical representations showing weaving performance, spinning performance , process house performance, price comparison. R/M V/s Yarn market trend in cotton prices, and market trend in cotton yarn prices. He further stated that since the basis of classification of overheads under costing and financial accounts were based on different principles. he would not like ....
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.... abnormal difference is found. The comparison is given below:- TABLE-IX Cost/Selling rate as Cum duty Diff. SI. Description No. per the sheet % Diff price at which Col.3 yarn had Col.4 been captively consumed/sol d (in Rs.) 1 20/1PC67:33 136.77 102.35 34.42 33.63% 2 30/1PV67:33 141.90 122.32 19.58 16.01% 3 30/2PC67:33 153.69 130.25 23.44 18.00% 4 40PV48:52 127.91 119.98 7.93 6.61% 5 40C(EXP) 137.06 118.70 18.36 15.47% 6 40CH 136.67 118.70 17.97 15.14% 7 40/2PV 48:52 141.34 129.08 12.26 9.50% 8 45PV 48:52 132.87 127.61. 5.26 4.12% 9 60/2PV48:52 10 40/2PC67:33 168.28 158.91 9.37 5.90% 153.28 139.35 14.03 10.07% (124.70+ED@23%) (9/95) 11 40/2C 166.08 131.611 34.47 26.19% (157.05+ED @5.75%) (10/95) 12 60/2C 13 74/20 177.07 115.82 (167.44+ED @5.75%) (10/95) 197.38 180.57 61.25 52.88% 16.81 9.31% (186.65+ED @5.75%) (9/95) The amount of cost if viewed in the totality of the facts of this case, does not include the post manufacturing expenses and the expenses not related to....
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....to indicate that the actual realization of the same was Rs.126.00 against actual cost of Rs. 132.74. The loss was however, compensated by lowering the assessable value to Rs.118.70 and thereby evading payment of duty on yarn/fabric the net effect of such manoevring is that sales realization becomes equal to or more than the cost of yarn. This is the reason, as is evident from the Balance sheets for 1994-95 and 1995-96, that there was gross profit during the aforesaid period. The details also indicate that out of the 10 varieties in respect of which the prices declared by HRM have been mentioned almost all the varieties show that the declared prices were far below the cost and/ or sales realization of the yarn. The facts mentioned against S.No.11 and 12 indicates that the actual costs of yarn were far more than the declared prices. For example, against actual cost of Rs.145.10 per kg.. the declared prices were Rs.133.00 per kg. It is observed that even the higher declared price was far below the amount of sales realization. TABLE-XI SL Month PC Yarn No. As per Graph Captive consumption Another sheet containin....