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TMI Blog1997 (4) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... cept for the period March, 1994 to September, 1995. 3. The learned Senior Advocate for the appellant Shri Natarajan pleaded that the considerations which weighed with the lower authority for dropping the demand for the period October, 1995 to March, 1996 would equally apply in respect of the demand for the period in question. He has pleaded that the appellants are consuming about 90% of the goods in question themselves and they were selling a small percentage i.e. 2 to 3% of their production to the industrial consumers and the balance 5 to 6% quantum produced was sold to 3rd parties including Reliance Yarn Corporation, Asian Enterprises and Top Quality Yarn Corporation. He has pleaded that they had paid duty in respect of the goods captively consumed at the highest of the price at which the same were sold to the third parties. He has pleaded that the learned Collector in para 107 of his order has held as under : From the records, it is clear that there was no sale to the three dummy units after September 1995. M/s. SSM have stopped their sales through the fictious and related persons right from October 1995 and effected sales to third parties/Industrial consumers and there had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants to the third parties before adopting the cost construction method for assessment purposes in terms of Valuation Rules 6(b)(ii). 4. He has pleaded that apart from the above, the learned lower authority s order suffers from a number of infirmities. He has pleaded that the learned lower authority has held that three firms viz., M/s. Reliance Yarn Corporation, Asian Enterprises and Top Quality Yarn Corporation were dummy units set up by the appellants to channel the sales by showing lesser sale price to them. He has pleaded, while the lower authority has held them to be dummy units, at the same time as seen from para 83 of the order, he has also called them related persons. The said para 83 for convenience of reference is reproduced below : In as much as the three dummy firms were not actually in existence but existed only on paper, Shri K. Paramasivam and his family members were the common Directors in three companies and the companies were managed by Sri K. Paramasivam and his family members, I find that the companies have the same managerial control with mutual interest among themselves. Hence, those units have to be treated as related persons only. I do not therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned Collector on the ground that countwise position regarding sales made was not available. He has pleaded that the three firms had been maintaining their private records and which had been submitted to the learned Collector and in this connection he has pleaded that the plea was taken before the learned Collector. In this connection, he drew our attention to the reply to the show cause notice filed by the appellant at page 138 in Para 15, wherein they have stated that they had identified 110 Nos. computer sheets of the three firms in which sales details with each count of yarn were available for the period in question. He has pleaded that the learned lower authority has not adverted to the same and proceeded to adopt the cost construction method. He has also pleaded that the three firms had also replied to the show cause notices and also stated that their sale price included the element of 60 days credit and also credit charges. He has pleaded that the learned lower authority has not considered any abatement for the purpose of arriving at the assessable value on cost construction basis taking into consideration these factors. 7. He has pleaded, there has also been a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -charge of the three firms as to their claim of being independent firms. He also fairly concedes that in case there was sales to the industrial consumers during the relevant period, the rationale which has been adopted for dropping the demand for the period from October, 1995 onwards would equally apply to the previous period also. As regard to the remand of the matter, he has no specific plea to make. 9. We have considered the pleas made by both the sides. At the outset, we are of the view that the lower appellate authority has mis-directed himself while computing the assessable value based on cost construction, which basis as it is under challenge by ignoring the ratio of the decision of the Larger Bench in the case of Daiichi Karkaria v. C.C.E., Pune, reported in 1996 (81) E.L.T. 676 (Tribunal). The Tribunal has held in that the duty element in respect of the inputs taken as Modvat credit is not to be taken into reckoning for the purpose of arriving at the assessable value on cost construction basis. The learned lower authority might have his own reservations about this decision, but being a subordinate forum to the Tribunal, the learned lower authority was bound by this deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ummy units while he has at the same time held that they are related persons. By holding these as related persons he has accepted their sale price to their customers for the assessment purposes. There is an apparent contradiction in terms as the firms could not have been dummy units as also related persons. Further, it is seen that the appellants had filed a detailed computer print out as to the various sales made during the relevant period and the learned lower authority has not looked into all those sales to ascertain whether some sales were made to the industrial customers and, if so, whether on the basis of the principle accepted by him the appellants sales price to the industrial consumers the period of October, 1995 onwards could be accepted. 13. The appellants have also made a grievance that they had elicited during cross-examination the information from the persons who were concerned with these three firms as to the jurisdic nature of these firms to establish that these were independent firms and the learned lower authority has not entered any findings in regard to the information elicited from them. We observe the issue as to whether these were independent firms in thei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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