9911796707
TMI Blog1997 (9) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of Rs. 5 lakhs. 2. Appellant was manufacturing electric motors, transferring the same to a job worker M/s. Bluemount Switchgears who by adopting certain processes was converting them into monoblock pumps and returning the pumps to the appellant by sending the same to the depots of the appellant. At the relevant time, by virtue of Notification No. 57/78, dated 1-3-1978, monoblock pumps were exempt from payment of Central Excise duty. Appellant was paying duty on electric motors. Originally, appellant submitted price list in Part I showing the assessable value and claiming deduction of discount. Subsequently, appellant filed fresh price list in Part VIB under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 which was approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit accruing to the business house, since the captively consumed monoblock motors do not suffer any such overheads. This has resulted in short collection of duty on monoblock motors. In other words, show cause notice proceeded on the basis that the sale price of the monoblock motors furnished in the documents referred to should be the basis of the assessable value and there was deliberate undervaluation and deliberate suppression of facts. A similar show cause notice dated 10-12-1987 in respect of the period from 28-8-1985 to 31-5-1987 was issued. The show cause notices proposed demand of amount of duty said to have been short paid. 3. The appellant resisted the notices on merits as well as on the ground of limitation taking the stand th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is very essential to know the various components of the assessable value, viz., cost of production or manufacturing including profits, etc. 5. Learned Counsel for the appellant contended that if the Department takes the stand on Rule 6(b)(ii) of the Rules, the only basis for valuation is the formula contained in the Rule, namely, the sum total of cost of raw materials, manufacturing cost and profit margin and these particulars were correctly furnished in the price list and were approved and the show cause notices do not point out any error or mistake or underestimation in any of the three elements. On the other hand, it is pointed out, that the Department has gone entirely on the basis of the breakup of net sale price provided in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars had been declared in the price list and accepted by the Department. Neither the show cause notice nor the impugned order specifically point out any error or underestimation in any of the three elements in respect of any of the price lists. The entire argument of the Department is based on the private statement of the appellant. A copy of the statement can be seen at page 1 of the paper book. 7. The heading of the statement is GEC/AET/Monoblock pump sets, TP and sales price breakup. The statement is divided into four columns. First column indicates HP/Pole, the second column indicates size, the third column indicates TP, which, according to the appellant is the estimated cost price and the fourth column indicates NSP value whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant are not sold. Therefore, the net sale price of electric motor shown in the private statement of the appellant is a theoretical or imaginary price. It has nothing to do with the actual business of the appellant. The explanation offered by the appellant is that the appellant has several divisions and for accounting and other purposes it is necessary to show the notional sale price and the notional profit and it is only for this purpose that the statement was prepared. When the notional sale price of electric motor is to be estimated, it could only be done on the basis of the actual sale price of the pump set, by apportioning the sale price between the motor and pump. That is the exercise reflected in the statement. It has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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