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TMI Blog1996 (11) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... unt. Later, the same was modified and M/s. Engg. Services was required to pay 90%, 82.5% 85% of labour/conversion charges and the process cost on the sale bills for the period from 1-6-1986 to 14-12-1987, 15-12-1987 to 14-3-1988 and 15-3-1988 to 30-3-1989 respectively. It is the case of the department that appellant would have done the job of heat fusion, slitting, etc. instead of entrusting the same to M/s. Engg. Services. Therefore, it is the case of the department that the labour conversion [charges] for the job work done by M/s. Engg. Services and the process cost collected from the above distributors are subjected to duty and since the appellant has not included the same in the assessable value, the duty in this regard is to be paid. 4. Shri Sikander, Proprietor of M/s. Engg. Services, has given a statement that he has been using the building machineries, electricity and water belonging to M/s. LL for carrying out the job work of expanded polyethylene sheets and he had paid the service charges or use on charge at Rs. 50,000/- per month from 15-4-1986 to 31-5-1986, at 90% from 1-6-1986 to 14-12-1987, at 82.5% from 15-12-1987 to 14-3-1988 and at 85% from 15-3-1988 to 30-3-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the laminations. Job charges were agreed to by them only and the company had no interest in the matter except collecting the lease amount. Therefore, it was stated that the lease amount obtained has no relation to the value of the goods. 8. After personal hearing was granted, the impugned order was passed wherein the duty demand was confirm and a penalty of Rs. 10,000/- was imposed on the appellant. 9. The learned Counsel contended before us that the facts in this case would reveal the leasing out of the heat fusion plant and the agreement with M/s. Engg. Services. Therefore, he stated that moment the goods are sent to M/s. Engg. Services they have been delivered from the factory of the appellant. Therefore, M/s. Engg. Services is only a job worker who laminates the goods. The job work charges paid to them are not includible in the assessable value in view of the fact that the job work was done by M/s. Engg. Services in view of the instructions given by the customers. In such circumstances, he pointed out that the value inclusion as proposed is not in accordance with law. Even otherwise, he stated that all the facts are put before the authorities. There was no material for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to pay a monthly service charge of Rs. 50,000/-. Further, a deposit of Rs. 50,000/- was also collected from M/s. Engg. Services. The service charges of Rs. 50,000/- covers the rentals in respect of the use of the factory building and service equipment. The appellant was also required to supply the electricity in this regard. This agreement was again modified on 15-4-1986. Even in that agreement, M/s. Engg. Services had to make a deposit of Rs. 50,000/-. But instead of paying the service charge of Rs. 50,000/- per month this agreement modified with a condition that M/s. Engg. Services shall pay to the appellant service charges at 90% on the labour charges bill and on the process cost of the sale bills raised by the appellants which covers the rentals in respect of use of the factory building and service equipments. Therefore, what was modified was that instead of paying the rentals at Rs. 50,000/- M/s. Engg. Services was required to pay 90% of the labour charges bills and the process cost. This was again modified by making the service charges at 82.5% and again it was modified to 85% and for another period it was further modified to the monthly service charges at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to be included in the assessable value of the goods. Any effort taken to avoid inclusion of the conversion charges in the assessable value, through impressed as legally correct, cannot be maintained as proper and justifiable, since there is a mala fide intention of evasion. In the instant case M/s. Engg. Services have unlawfully cooperated with M/s. LL, Hosur, to enable them to evade payment of duty due on M/s. LL expanded polyethylene which had gone under the process of heat fusion treatment and abetted in the commission of offence under Rule 173C of CER read with Section 4 of CEA. In the circumstances, I propose to take penal action against M/s. Engg. Services, Hosur besides the confirmation of duty demanded from M/s. LL, Hosur. M/s. LL, Hosur, are also liable for penal action under the provisions of Rule 173Q of CER. It is thus seen that it is not the case of the department that they have manufactured excisable goods and cleared without payment of duty. But it is the case of the department that the charges acquired by them are liable to be included in the assessable value of the goods. From this, no conclusion can be drawn that M/s. Engg. Services is only a dummy of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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