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TMI Blog1993 (11) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Tariff ). They were selling their bulk of the production in the home market to M/s. Singer Sewing Machine Company (hereinafter referred to as Singer ), under an agreement, and Singer in turn were selling those goods to other dealers/customers. The appellants had opted for ad valorem assessment in respect of their goods, under exemption Notification No. 120/75-C.E., dated 30-4-1975 vide their declaration dated 30-8-1975. 4. Simac were asked to show cause as to why they should not be asked to file their price lists in Part IV as required under Section 4(1)(a) proviso (iii) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act ), on the basis of the prices charged by Singer, from their customers. 5. The appellants denied that Singer were their related person and submitted that their goods were sold by them to other buyers also. A good part of their production was exported, and Singer had no concern whatsoever with such exports. They added that they were selling their machines to Singer after negotiating the prices for different orders. 6. The Assistant Collector of Central Excise, Thane Div. I wrote a letter to the appellants on 3-1-1979 to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants. Immediately the matter was listed for hearing on 24-8-1993. On that date nobody appeared on behalf of the appellant; however, under his letter dated 20-8-1993, the counsel for the appellants had filed a certified copy of the orders of the Bombay High Court, which was received in the Registry on 23-8-1993. The matter was listed for hearing on 3-9-1993. Again on 3-9-1993 nobody appeared on behalf of the appellant. The Consultant for the appellants vide letter dated 30-8-1993 had made a request for adjournment on the ground that he will be going on a personal visit to Hongkong/Singapore up to 10-9-1993. Very reluctantly the matter was adjourned to 14-9-1993 when Shri A.S. Sunder Rajan, Consultant appeared for the appellant. The respondents were represented by Smt. C.G. Lal, SDR. 10.1 Sh. A.S. Sunder Rajan, the learned Consultant traced the history of the case and the developments regarding excisability of their goods, the provisions of law and the action taken by the Deptt. from time to time. He submitted that in the review show cause notice the Collector of Central Excise had gone beyond the purview of Section 35A of the Act and that he had taken cognisance of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 711 (Tri.), in which it has been held that the distributors could not be treated as related persons when the delivery of the goods was not influenced by any commercial, financial or other relationship. 11.1 Smt. C.G. Lal, the learned SDR stated that the provisions of Section 35A of the Act were very wide and it is open to the Collector while exercising powers under that Section to take into account, the additional evidence. In this connection she referred to the Tribunal decision in the case of Bell Punch India v. Collector of Central Excise -1983 (14) E.L.T. 2374 (Tri.) (para 15), wherein it has been held that the revision or review could take into consideration the material which may be outside the record for purposes of finding out the correctness of the order under review and that additional enquiry could be conducted and taken into consideration. She also mentioned that the Collector was well within his powers to review the order of the Asstt. Collector, and to hold further enquiry or directing such enquiry to be held by the appropriate authority, and to invoke penal provisions. In this connection she relied upon the following decisions: (1) 1973 (88) ITR 323 (S.C.) - Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty. As regards Notification No. 120/75-C.E., she submitted that the benefit of the notification could be withdrawn in case the conditions subject to which exemption under that notification was available, had been violated. She submitted that in the present case there was evidence that the transactions between Simac and Singer were influenced by their relationship, and as such the benefit was correctly denied. She referred that the decision in the case of Facit Asia -1985 (21) E.L.T. 711 relied upon by the appellant really supported the case of the department. 12. In reply the learned Consultant referred to the decision in the case of State of Kerala v. K.M. Cheria Abdulla Co. -1965 (16) STC 875, and submitted that it was not open to the Collector to rely on additional evidence. He again reiterated that the reviewing authority could not go beyond the purview of the order reviewed. As regards cross-examination he submitted that it was incumbent upon the Collector to offer cross-examination of the witnesses whose statements were relied upon by the department. 13. Written submissions were received from the learned SDR on 23-9-1993, and from the learned Consultant on 24-9-1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociated in business with him: Provided further that a manufacturer shall be entitled to withdraw his option referred to in clause (i) of the preceding proviso after giving to the Superintendent of Central Excise having jurisdiction a prior notice in writing of at least 7 days and where the manufacturer has withdrawn his option he shall, unless otherwise directed by the Central Board of Excise Customs, be precluded from availing of the aforesaid exemption during the remaining period of the relevant financial year. 16. Notification No. 120/75-C.E. was issued by the Central Govt. in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. Sub-rule (1) of Rule 8 provided exemption to the excisable goods from the whole or any part of the duty leviable on such goods subject to such conditions as may be specified in the notification. The rule stipulated that the whole or part of the duty otherwise leviable could be exempted under a notification, issued under that Rule 8 of the Rules. 17. Item No. 68 of the Tariff was introduced in the Central Excise Tariff as a part of the 1975 budget. It covered all other goods not elsewhere specified. It ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious house-hold products they had already an elaborate sale net work. M/s. Simac and M/s. Singer had entered into an agreement on 9-8-1963 for the purchase and sale of these machines manufactured by Simac, by Singer in India and Afganistan. Exports were made directly by Simac without any intervention by Singer. The prices charged by Singer from their customers were higher than the prices paid by them, to Simac. Some advance was also collected by Singer from their customers at the time of booking of the order. As Singer had to make arrangements for transport, distribution, storage and sale of machines in different parts of the country, they had imposed some conditions on the direct disposal of goods within the country by Simac. They also involved themselves in other respects/aspects of the manufacturing such as colour scheme, packing, finishing, import, quality control, inspection etc. The distributorship agreement with Singer was said to have been terminated w.e.f. 3-1-1975, but it appears that informal arrangements for selling their machines through Singer remained till 1-10-1979 when Simac started marketing their machines directly through their own dealers. Thus when Simac filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks. 24. We have seen that the involvement of Singer in the activities of Simac was more than that of a normal buyer. For the purposes of Section 4 of the Act it could amount to a favoured buyer, but for Notification No. 120/75-C.E., the same criteria could not apply. 25. Clause (IV) of the proviso to Notification No. 120/75-C.E. imported the requirements that the invoice price should reflect a transaction at arm s length. The very purpose of the exemption notification was to relieve the manufacturer from bearing the burden of the duty on such part of the assessable value as did not reflect the value of his services. 26. Reliance has been placed by the Collector in paras 7, 8 and 9 of his order in review on the statement of Shri L.N. Gupta to conclude that Simac and Singer were related persons, and the transactions were not at arm s length. It has been noted that: (1) the goods were packed in cartons sealed with Singer seals. (2) quality control inspectors of Singer were permanently posted in the factory of Simac. (3) Orders received by Simac were directed to Singer. (4) Goods were manufactured according to the directions and specifications of Singer. (5) Singer had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observed as under : On a consideration of the matter we are afraid the Tribunal fell into an error in its understanding of the notification. The Notification posits and predicates the possibility that the invoice value" could be lesser than the assessable value and, taking into account the need to mitigate the hardship on the manufacturer of being called upon to pay duty on the value in excess of the invoice value, seeks to exempt the manufacturer from payment of duty in excess of the duty calculated on the basis of the invoice price". There is no dispute in this case that the invoice price represented the value of the wagons, less the value of the wheel-sets supplied by the Railways. The invoice price could not be required to include the value of the wheel-sets . But the assessable value would take into account the full commercial value including that of the wheel-sets . It is in order to mitigate the hardship that may arise by requiring the manufacturer to pay duty on this difference in such cases that the Notification No. 120/75 came to be promulgated. There is nothing in Cl. (iv) which enjoins upon the appellant to include the value of the wheel-sets . The cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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