9911796707
TMI Blog1999 (11) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 15-3-1990. This demand was in relation to manufacture of a jack-up rig cleared to M/s. ONGC, Bombay and delivered against gate pass No. 15, dated 13-4-1988. The adjudicating authority further imposed a penalty of Rs. 25 lakhs on the appellant under Rule 173Q of the Central Excise Rules, 1944 as well. 2. The short facts necessary for the disposal of this appeal are as follows :- 3. Oil and Natural Gas Commission placed orders with the appellant firm for the manufacture of two jack-up rigs. Terms and conditions of the transaction were contained in contract executed in February, 1983 clause 25.2 of the contract provided for the price of the rigs. Rupee content was Rs. 21.32 crores per rig and foreign exchange content came to Rs. 20.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the price fixed in the contract entered into between ONGC and the appellant did not bring out the actual price of the jack-up rigs manufactured. Consequently, show cause notice dated 15-3-1990 was issued calling upon the appellant to pay the differential duty. 4. Appellant raised all possible contentions before the adjudicating authority. They were that the contract between the appellant and the ONGC brought out the actual price of the rigs manufactured, that no other consideration flowed to the appellant from ONGC, that the subsidy given by the Central Government cannot be taken to increase the price of the rigs manufactured, that no facts were suppressed from the knowledge of the excise department to invoke the extended period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove the international parity price towards partial cost of import substitution. This payment was adopted because the normal cost of construction of ships in Indian yards was much higher than the foreign offers made by ship builders elsewhere. ONGC claimed damages from the appellant on account of the delay caused in the supply of jack-up rigs. This claim for liquidated damages was considered by a Committee constituted by the Government of India. In the report of that Committee, it was found that the price in the contract was fixed without any reference to the subsidy that the appellant will be getting from the Government of India. It further opined that the representative of Ministry of Petroleum conceded that the subsidy at the rate of 20% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Supreme Court in Collector of Central Excise, Baroda v. Cotspun Ltd. - 1999 (113) E.L.T. 353. 8. As per Rule 5 of the Central Excise (Valuation) Rules, 1975, where the excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of Section 4 of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate of such price and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. The contract concluded between the appellant and ONGC in February, 1983 gave the price of the jack-up rigs. There is nothing in that contract to show that over and above the price fixed in the contract a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. That payment effected by ONGC on behalf of the Govt. of India at its dictates cannot be considered as augmenting price of the jack-up rig manufactured by the appellant. So, the said payment cannot be taken as a consideration for the jack-up rig. Further, after its clearance pursuant to an approved price list, after about two years therefrom any payment made by ONGC at the dictates of Central Govt. cannot be taken as consideration for the rigs manufactured. Show cause notice was not issued on the basis of this payment. The reason for the issue of show cause notice was some entry in the Balance-sheet. Department has failed to substantiate those allegations. Central Govt. directed ONGC to pay amounts to appellant in furtherance of their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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