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TMI Blog2006 (8) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... al along with Appeal No. E/262/1999 of the assessee. 2. The impugned order was passed by the Commissioner in adjudication of two show-cause notices, one dated 8-5-1998 issued by the Commissioner and the other dated 20-8-1998 issued by the Superintendent. The first show-cause notice had demanded differential duty of Rs. 56,46,705/- from the assessee on the 'transfer charges' collected by them from their customer, M/s. Tamil Nadu Petroleum Products Ltd. (TPL, for short) but not included in the assessable value of "Superior Kerosene" (feed stock for Linear Alkyl Benzene) supplied to them from 1-3-1994 to 28-2-1998. The second show-cause notice demanded differential duty of Rs. 8,66,267/- from the assessee on similar 'transfer charges' fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the period from 1-3-1994 to 2-7-1996, and from 1-3-1998 to 31-7-1998, learned Commissioner confirmed demand of duty of Rs. 28,11,630/- on the transfer charges collected by M/s. MRL from M/s. TPL. Having found deliberate suppression of facts on the part of the company, he imposed a penalty of Rs. 25 lakhs on them under Rule 173 Q of the Central Excise Rules, 1944, but dropped the proposal for imposing penalty under Section 11AC of the Central Excise Act. 4. In the Department's appeal, one of the grievances is against the dropping of demand of duty on the clearances effected during the normal period upto 8-5-1998 (date of issue of show-cause notice by Commissioner) and the other grievance is against non-imposition of penalty on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedstock was includible in the assessable value of the product in terms of Section 4 of the Central Excise Act, They cannot have a different case in respect of the storage tanks and pipelines which are also fixed assets like the machinery. We, therefore, hold that the transfer charges have been rightly included in the assessable value of LAB feedstock supplied by M/s. MRL to M/s. TPL during the period of dispute. Learned Counsel for the assessee submitted that they did not suppress anything before the Department with intent to evade payment of duty. The manufacture of the product and its delivery to the buyer were under physical control of the Department and all the relevant facts were known to the Department. Moreover, a copy of the agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not shown to our satisfaction that "physical control" by Department during the period of dispute extended to scrutiny of financial transactions such as payment of transfer charges to the assessee by the buyer. Learned Counsel has conceded that the physical control regime ended in July, 1996. M/s. MRL were conscious of the fact that the cost of their fixed assets must form a part of the 'normal value' of the products in terms of Section 4 of the Central Excise Act and that storage tanks and pipelines in question were also their fixed assets. Nevertheless, they excluded the transfer charges, which represented cost on the storage tanks and pipelines, from the assessable value of the product supplied to M/s. TPL, even after having received s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their appeal is accordingly disposed of. 7. The show-cause notice dated 8-5-1998 demanded differential duty of Rs. 56,46,705/- from the assessee for the period from 1-3-1994 to 28-2-1998. In the impugned order, the Commissioner confirmed demand of duty of only Rs. 19,45,363/- out of the above amount, and the rest of the demand for the period from August, 1996 to February, 1998 was held to be time-barred inasmuch as the assessee had given details of their agreement with M/s. TPL to the Department in July, 1996. In other words, for the period from August, 1996 to February, 1998, no suppression of fact was found against the assessee. According to the Department, the adjudicating authority should have demanded duty for the normal period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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