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TMI Blog2004 (10) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bavistin on job work basis for M/s. BASF Ltd., Mumbai. The supplier of the goods viz. M/s. BASF sold the goods to the appellants in bulk packing of 25 Kgs in drum, on payment of duty. In terms of an agreement entered into by the appellants with the supplier of the goods, the appellants repacked the goods in smaller packs of 500 gms each and placed them in 25 Kg fibre board drum. Thereafter, the appellants sold the repacked goods to M/s. BASF from whom they have purchased the same, on payment of appropriate duty adopting the same assessable value per Kg at which the bulk goods viz. Bavistin 50%, was sold by M/s. BASF. While clearing the goods on payment of duty, appellants took credit of duty paid by M/s. BASF. On verification of their records, it was found that the appellants have undervalued the goods in respect of sales made to M/s. BASF Ltd, after repacking in smaller packets of 500 gms as noted above as they have not been including the cost of repacking. It was in these circumstances show cause notice bearing No. 17/2001, dated 30-4-2001 was issued to the appellants proposing to demand duty of Rs. 2,61,860/- being the differential duty, involved during the period from 4/96 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is based on the records of the supplier of the goods viz. M/s. BASF. It was further argued that the certificate from the Cost Accountant's produced by the appellants is not supported by any details hence the certificate cannot be accepted. They have also invited our attention to para 6 of the letter of the Additional Collector (Legal) of the Pondicherry Commissionerate, dated 26-7-2004, a copy of which is placed in the file, wherein it is stated that the CA certificate does not contain any verifiable data with reference to the cost adopted by M/s. BASF for offering any comments. It was, therefore, submitted that in the absence such details, basic records such as profit and loss account and balance sheet and the methodology adopted for apportionment of variable cost elements to the range of products sold by them, the certificate should not be accepted. Therefore, the department has rightly demanded differential duty. 5. In counter, the learned Counsel for the appellants submitted that the period involved is April, 1996 to March, 2000. Show cause notice was issued on 30th April, 2004 and reply to the show cause notice was furnished on 3rd September, 2004. He has submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certified so. Further, the certificate does not disclose as to what are the relevant documents they have verified to support the certificate. It simply says "after a careful scrutiny of all the relevant documents, we certify....." The certificate further states, "That we are informed that for ease of simplicity of operations, BASF India paid duty on the value of Rs. 314.55 per Kg to the department to its sale price. Therefore, the basis for giving such certificate was the information provided by the supplier of the goods and not on the basis of any verification done by them. Further, it is also not known whether the said Cost Accountants are the Regular Accountants of the supplier of the goods to the appellants. The certificate also states that in terms of the Agreement entered into by the supplier of the goods and the appellants, the supplier of the goods had agreed to pay the repacking charges. We have gone through the agreement referred to and we do not find any such clause in the agreement whereby the supplier has agreed to bear the cost of repacking, after the goods were sold to the appellants on payment of duty. Therefore, the said certificate cannot be given any credence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplier to the appellants and the cost of repacking claimed to have been already included at the time of sale of the goods in bulk, for various periods : Period Price at which supplier sold Bavistin 50% in bulk, (25 Kgs) Drum which is said to be inclusive of re-packing charges Cost of repacking (claimed to have been included in the bulk price) Original manufacturing cost incurred by supplier (i.e. b - c price of bulk goods minus cost of repacking) (a) (b) (c) (d) 1996-97 314.55/Kg 6.91 307.64 1997-98 315.00/Kg 15.30 299.70 1998-99 340.00/Kg 16.82 323.18 A comparison of the above table would show that the manufacturing cost excluding the repacking charges by manufacturer/supplier of the goods has come down from Rs. 307.64 to Rs. 299.70 during the period 1997-98 while at the same time the cost of repacking has shown an upward jump from Rs. 6.91 per Kg to 13.30 per Kg. Likewise when the manufacturing cost including the repacking charges by the supplier has increased from Rs. 315.00 per kg in 1997-98 to Rs. 340 per kg in 1998-99, the cost of repacking has increased only by Rs. 1.52 per kg. No reason for such inconsistency in the cost of manufacturing vis-a-vis cost ..... X X X X Extracts X X X X X X X X Extracts X X X X
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