9911796707
TMI Blog1999 (8) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... ture and supply of microphones with the brand name of AKG. The purchase of the microphones, according to the appellants, is on outright price at mutually agreed upon prices. Versat placed a bulk order for purchase of more than 10,000 pieces of microphone capsules from AKG at a negotiated price including 10% profit margin. AKG accordingly, filed a price list in Part II for the sale of microphone capsules to Versat along with the purchase order. The price list indicated Versat as industrial consumer under the column Class of buyers . The price list was approved by the Department. Versat thereafter sold microphones manufactured by them back to AKG. AKG were also concurrently transferring microphone capsules manufactured by them to their Spare Parts Division for catering to the Spare Parts/Replacement market. In respect of such sales AKG filed price list under Part I and paid excise duty on the basis of ex-depot price to the distributors. The ex-depot price meant for such dealers/distributors was at a much higher rate than the rate at which the microphone capsules were sold to Versat. 4. By show cause notice dated 2-5-1997, the Department alleged that the microphone capsules sold to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, penalty under Rule 173Q was also not imposable on the appellant, according to the ld. Counsel. Ld. Counsel relied on the Supreme Court decision in Metal Box case [1995 (75) E.L.T. 449] as well as the Final Order of the Tribunal Nos. 473-478/99-NB, dated 21-6-1999 [1999 (112) E.L.T. 646 (T)] in support of his contentions on merits. 6. Shri P.K. Jain, ld. SDR opposing the above contentions submitted that AKG were manufacturing microphone capsules which was an essential component for microphones. They were getting microphones manufactured by Versat by supplying the microphone capsules to them. Price arrived at between AKG and Versat were indicated in the price list submitted in Part II. The microphones manufactured by Versat were, under the agreement between the parties, not to be sold outside and were subject to quality control as also control on production by AKG. In fact the goods manufactured by Versat were the goods which were manufactured by Versat on behalf of AKG. It was not disputed by the appellants that there was a huge difference in the price of microphone capsules which they were selling to their dealers/distributors and the microphone capsules sold to Versat. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be considered as an industrial consumer of Original Equipment (OE). They would, in these circumstances, form a class of buyers different from buyers of goods in retail. However, we note that unlike in the case of the earlier cases relied on by the appellants, Versat were also selling microphones exclusively to AKG from the microphone capsules sold by AKG to Versat. The Department had argued that Versat was in fact actually manufacturing microphones for and on behalf of AKG. From the evidence on record, it is not possible to say that they were related persons and on that ground the price at which AKG sold microphone capsules to Versat, was not normal price. We are also not in a position to accept the contention of the Departmental Representative that the price at which microphones were sold to M/s. Pieco ELectronics (who according to Department were also industrial consumers) would be a comparable price. Ld. Counsel had drawn our attention in this connection to the fact that the sales to Pieco Electronics were only 10 pieces of microphone capsules when compared to 9155 pieces sold to Versat Electronics. In view of this factual position, sale price to Pieco Electronics and sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom stray buyers of the said goods from the retail market since the two sales were at different commercial levels. The other allegation against the appellants was that since the appellants had undervalued the microphones sold to AKG, the selling price at which AKG sold the microphones to other customers would form the basis for arriving at the assessable value in respect of sales made by Appellants to AKG. Appellant s contention is that the method adopted by the Department for enhancing the value of the microphones sold by them to AKG had to be restricted, if at all, to the extent of the amount by which the value of the capsules were depressed by AKG. As per Show Cause Notice issued to AKG, the price of the two types of capsules sold by AKG to appellants was Rs. 255/-. However, appellants were purchasing one type of capsules at Rs. 55/- (Model DKC 29/02) and another at Rs. 64/- (Model DKC 29/04). This apart, the microphones manufactured by the appellants out of capsules purchased from AKG were inputs eligible for Modvat Credit. If the duty demand on AKG is confirmed and paid by AKG the said amount will be available for the appellants as Modvat credit. No duty demand can, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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