2000 (8) TMI 464 - AT - Central Excise

Summary

Issues:
1. Challenge against order-in-original No. 431/CEX/93 by the Revenue.
2. Allegation of differential duty amounting to Rs. 7,47,096.59.
3. Imposition of penalty under Rule 173Q for contravention of Central Excise Rules.
4. Dispute regarding the relationship between the respondent and M/s. H.V. Industrial Electronics.
5. Appeal against the dropping of proceedings by the Collector.

Analysis:

Issue 1: Challenge against order-in-original
The Revenue challenged order-in-original No. 431/CEX/93, dated 31-12-1993, passed by the Collector of Central Excise & Customs, Aurangabad. The dispute arose from the differential duty amounting to Rs. 7,47,096.59 claimed in relation to transactions completed for the period 1-4-1989 to 31-12-1991. Additionally, a penalty under Rule 173Q for contravention of Central Excise Rules was sought to be imposed.

Issue 2: Allegation of differential duty
The show cause notice dated 12th November, 1992, alleged that the respondent sold goods to M/s. H.V. Industrial Electronics at a 40% discount, while the latter passed on only a 25% discount to dealers. This discrepancy led to the claim of a differential duty. However, the Collector, after considering detailed objections from the respondent, dropped the proceedings initiated based on this notice.

Issue 3: Dispute over relationship between parties
The crux of the matter was the relationship between the respondent and M/s. H.V. Industrial Electronics. The Revenue contended that they were 'related persons', implying additional consideration in transactions. However, the Collector found no evidence to substantiate this claim. The absence of mutuality of interest and lack of material proving a relationship led to the conclusion that the transactions were on a principal-to-principal basis, not between related parties.

Issue 4: Appeal against dropping of proceedings
The appeal challenged the Collector's decision to drop the proceedings. The argument that M/s. H.V. Industrial Electronics acted as a sole selling agent for the respondent was not entertained as it was not part of the original show cause notice. The absence of evidence supporting a relationship between the companies justified the Collector's conclusion, and the appellate tribunal upheld the decision.

Conclusion:
Ultimately, the appellate tribunal dismissed the appeal, affirming the Collector's decision that the transactions between the respondent and M/s. H.V. Industrial Electronics were on a principal-to-principal basis. The lack of evidence establishing a relationship between the parties led to the rejection of the Revenue's claims, resulting in the failure of the appeal.