1982 (7) TMI 263 - Board - Central Excise

Summary

Issues:
1. Appeal against orders of Collector of Central Excise, Patna
2. Determination of assessable value based on related party transactions
3. Application of rules for duty demand calculation
4. Alleged relationship between the two firms
5. Validity of penalty imposition

Analysis:
1. The appeal was filed against the orders of the Collector of Central Excise, Patna, directing the Asstt. Collector, Jamshedpur to calculate duty demand against the appellants. The Collector imposed a penalty of Rs. 1 lakh under rule 173Q of the Central Excise Rules, 1944, for not filing proper price lists before clearing goods.

2. The appellants contended that the two firms were not related as they were independent legal entities. They argued against the application of certain rules like rule 10, which had been abolished, and rule 9 for duty calculation, stating it was not a case of clandestine clearances. They challenged the Collector's orders on various grounds, including deduction on account of freight and other expenses.

3. During the hearing, the appellants explained the history of the case, stating that the product in question, slagwool, was introduced in the Tariff in April 1976. They highlighted the cancellation of their price lists and the current clearances being made under a B. 13 bond.

4. The Collector considered submissions regarding the relationship between the appellants and M/s. Lloyd Insulation (I) and the nature of their sales. The appellants argued that the two firms were not related parties and that certain expenses should be allowed for deduction to adjust the sale price.

5. The Board found that rule 10 and rule 9(2) could not be applied in this case, as there was no suppression of facts or clandestine clearances. Section 11A was also ruled out due to its non-applicability at the relevant time. The Board set aside the Collector's orders for the period not covered by the B. 13 bond and directed appropriate proceedings for clearances under the bond. The penalty under rule 173Q was deemed inapplicable and set aside, as the appellants had filed their price list, and corrective action could be taken by the Department without penalty imposition.