9911796707
TMI Blog1998 (7) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... ferential duty on Air-conditioners manufactured and cleared by the assessee during the period March, 1981 to May, 1985 and imposing penalty on the manufacturer. 2. Assessee, engaged in the manufacture of Air-conditioners and Refrigerators was till 1980 selling around 98% of the manufactured goods to M/s. Lloyds Sales Corporation (in short, Lloyds) stated to be a sister concern and related person and selling 2% to hospitals and factories which were covered by exemption Notification No. 56/78. It appears that there were some factory gate sales to two or three dealers. Lloyds was selling the goods directly to consumers at prices much higher than the wholesale price charged to Lloyds and to other buyers at the factory gate. At the instance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the retail price charged by Lloyds to consumers without any adjustment or deduction. Assessee resisted the notice on merits and on limitation and also contended that if retail price charged by Lloyds is to be taken into consideration, various expenses incurred by Lloyds in marketing the goods to retail consumers should be deducted. 4. In regard to the demand proposed for Refrigerators, the Collector dropped the demand on merits. In regard to the demand on Air-conditioners, the Collector overruled the assessee s contentions on merits and limitation, gave deduction for some items of expenses incurred by Lloyds in marketing the goods to retailers and arrived at the assessable value afresh and demanded duty on such value less the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The matter will have to go back for this purpose subject to our finding on the aspect of limitation. 7. The basic facts are not in dispute. Around 98% of the sales of air-conditioners were made to Lloyds, found to be a related person . Of the remaining 2% sales, bulk were to hospitals and factories which sales invited the benefit of lesser rate of duty under Notification 56/78. There were only one or two wholesale buyers who purchased some air-conditioners at the factory gate. The Collector was not prepared to act on the price charged in the few cases of sales at the factory gate and since Lloyds was held to be related, decided to go by the prices charged by Lloyds to their customers. If Lloyds had effected sales to wholesale dealers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee filed price lists in Part-V. In December, 1977 the Assistant Collector approved the price lists in Part V subject to deduction of 4.5% from the retail price of Lloyds to consumers. This order was also passed on the basis that Lloyds was related person and Part-I price would not apply. Appeal against this order was rejected on merits but the Collector (Appeals) gave deduction of 15% from Lloyds retail price to arrive at the wholesale price. 9. On 2-3-1979 assessee wrote to the Superintendent stating that its pattern of sale of air-conditioners has changed and therefore price lists would be submitted only in Part-I. Within a few days the assessee informed the Assistant Collector that there will be sales to independent wholes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in the show cause notice as crucial, namely, that the sales to independent dealers at the factory gate were negligible that around 98% of the sales were to Lloyds and Lloyds was a sister concern which would fall under the category of related person . It is true that for the said period, namely, 1981 to 1985 going by the relationship existing between the assessee and Lloyds, the assessee should have filed price lists in Part-V but instead filed price lists in Part-I. Since the assessee has no case that any particular disclosure had been made in the price lists in Part-I, it could perhaps be said that the appellant did not disclose these facts. But then as the history from 1975 onwards indicates the department was all along aware of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r invoking the larger period of limitation are not tenable. The entire period covered by show cause notice being more than 6 months prior to the date of service of the show cause notice, the entire claim must be held to be barred by limitation. 12. The department has filed an appeal contending that in any view of the case, extra amount collected by Lloyds from the ultimate buyers should have been included in the assessable value and duty should have been demanded on that basis. 13. Perhaps two courses were open to the proper officer while preparing the show cause notice; one was to go by the price charged by Lloyds to the buyers and convert the same into wholesale price by suitable adjustment and this was what was done in the show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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