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2000 (5) TMI 76
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....one of the raw materials used is Butyl Rubber. Certain customers supply the said butyl rubber whereas the other customers purchase the product off the shelf without incurring liability of supplying the said raw materials. (b) This pattern of manufacture and sale was known to the department since 1978. On 10-5-1984, the department had issued a show cause notice covering the period April 1982 to July 1983 alleging that the present appellants should be denied facility of clearing the goods on invoice value under Notification No. 120/75 dated 30-4-1975 as the invoice did not reflect the correct assessable value. It was also alleged in the show cause notice that this was done with the intention to evade duty. Vide Order-in-Original Nos. 37-38/85, dated 12-2-1985, the original authority dropped the proceedings. In an appeal before the Commissioner (Appeals), Revenue succeeded in getting a decision from the first appellate authority vide Order-in-Appeal No. 96/85 dated 6-5-1986 wherein the present appellants were denied clearances on invoice value and were directed to file price list under Rule 173C. Ld. Advocate submits that a perusal of the said Order-in-Appeal, which though denied t....
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....oss Account under the head "MATERIALS CONSUMED." BUTYL SUPPLIED BY CUSTOMERS When Butyl Rubber is received from the customers the quantity received is taken on the Stores Bin Cards (quantitative records) kept for butyl separately. Any receipt of butyl or issue thereof is thus controlled quantitatively whether it is own purchased one or the one supplied by the customers. From the documents of delivery of butyl from customers, the Central Excise duty paid thereon is taken credit for in RG23. The duty thus taken credit for is paid to the concerned customer immediately by cheque/demand draft. This amount is debited to the Modvat account and not to Raw Materials. The company has prepared statements showing the details of quantity of butyl rubber received, quantity of butyl used up on the products supplied and the balance available every month party-wise and sent to respective customers. These statements sometimes reveal negative balances against certain customers indicating that butyl rubber is due from them on the supplies made to them. It is also seen that the supplies to many parties are on daily basis/at frequent intervals and not related to the dates of receipt of butyl....
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....rice lists and the basis of differentiation between the two classes of buyers namely the supply or otherwise of one of the raw materials e.g. Butyl Rubber was clearly declared therein. (h) Therefore, ld. Advocates submit that not only all the primary facts were disclosed to the department but even inferential facts to the effect that when the butyl rubber is supplied by the customers, the inventory cost of the appellants is reduced was also made known to the department. Therefore, since the price lists contained all declarations, since issue had already been considered in detail both by Order-in-Original and the Order-in-Appeal noted above, therefore it can now not be said that appellants had suppressed any information with an intent to evade duty. Hence, he claims that demand was also hit by time bar. (i) Ld. Advocates submit that the principle of absorption is clearly defined principle in Accountancy and therefore as long as it is on record that the cost of butyl rubber supplied by customers was also absorbed in the cost of production even though it was listed under the heading "Discou....
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....hased by the appellants themselves has been included therein. Therefore, it is clear that the cost of butyl rubber which was supplied by the customers has not been added to the cost of production. 7.Ld. DR submits that the order impugned also contains a mathematical model calculated to show that the cost of the butyl rubber per unit quantity of final product is about the same as the difference in the assessable value of the same end product when supplied to two types of customers. Therefore, he submits that from these conclusions itself, it is clear that the cost has not been included in the cost of production and hence the assessable value has been artificially depressed. 8.Ld. DR submits that in view of these, it is clear that information disclosed by the appellants in the price lists noted above were not complete and the department was misled and hence there is suppression with an intent to evade duty and extended period has been rightly invoked. 9.He also submits that the order clearly records that appellants were maintaining a confidential pricelist for customers who were supplying butyl rubber and in this price list the condition of supply of butyl rubber was made ex....
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....is direct evidence is in the form of report of the Cost Accountant who was appointed for conducting Cost Audit under Section 14A of the Act as ordered by the Chief Commissioner on the recommendation of the Commissioner. Therefore, it is not even the case here that this Cost Audit was conducted by the appellants at their own initiative. The relevant portion of the report has already been extracted supra. On a perusal of the same, we are of the considered view that the said Cost Accountant has clearly indicated therein that even though the cost of the butyl rubber supplied by the customers has been included under the heading "Discounts & Commissions" in the Profit and Loss Account, the entire amounts under this heading has been absorbed in the cost of production in each year. Thus, the evidence directly points out to a situation where a qualified Cost Accountant, after a detailed cost audit running into many days has reported that the private accounts of the appellants clearly show that the cost of the butyl rubber received from customers has been include in the cost of production. We are of the considered view that no amounts of circumstantial evidence or arguments on mathematical m....