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TMI Blog1976 (7) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... n business inter alia in the manufacture of textiles, having a composite mills both for spinning and weaving. Among the various kinds of fabrics manufactured by the petitioners, cotton nylon duck is also one. It is made out of nylon and cotton and is used in the manufacture of T.V.C. belting which in turn is used as a conveyor belt by the Neyveli Lignite Corporation and in coal mines. This product is manufactured in accordance with the specifications and requirements of a few customers among whom Dunlop India Ltd. (hereinafter referred to as Dunlop) and National Rubber Manufacturers Ltd. (hereinafter referred to as N.R.M.) are the principal purchasers. The said companies used to enter into contracts with the petitioners for the supply of ny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d permission to the petitioners. The petitioners also filed the relevant contract with and orders by Dunlop and N.R.M. They were scrutinised, checked and signed by the Superintendent, Central Excise. Since 2-12-1970, the petitioners were adopting the procedure and accordingly assessments were made and completed till 30-6-1974. 3. On 2-7-1974, the Superintendent of Central Excise sent a letter to the petitioner calling for the price list and the petitioners replied on the same day. However, on 4-7-1974, the Superintendent wrote a letter temporarily withdrawing the approvals accorded to the petitioners with reference to the above said notification. A show cause notice was issued on 28-9-1974, which is the subject matter of the present with pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm of supply of cotton and conversion charges is the sole price to be considered for the supply of the belting duck and therefore it is incorrect to state that there is any violation of the conditions adumbrated in the notification. The price of nylon supplied by Dunlop and N.R.M. cannot be included in the price, since the petitioners are not the owners. 7. A common counter affidavit has been filed by the Assistant Collector (the 2nd respondent) stating that with reference to the supply of nylon, it is incorrect to state that it was not the property of the petitioners. The petitioners became the owner of the goods in terms of Rule 3, since it is manufacture that is relevant, and they are naturally responsible for the discharge of Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers were entitled to charge for the value of nylon supplied by Dunlop which did not belong to the petitioners at all. Therefore, whatever was incurred by them towards the manufacture of cotton nylon duck, namely, the actual value of cotton plus the conversion charges and other incidental charges were shown as prices. Nor could it be said that there is a violation of condition 5, in that there was no other understandings except to manufacture these goods in accordance with the specifications. In any event, there is a prejudging of the matter in so far as the concession was withdrawn even as early as 2-12-1974, before the petitioners could file their reply to the show cause notice which was done on 7-12-1974. Further, the show cause notice da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nylon could ever be included by the petitioners. Nylon was actually imported by Dunlop as against actual users licence, while N.R.M. was able to get indigenous nylon which was supplied to the petitioners mills for the purpose of manufacturing cotton nylon duck. What they would be entitled to charge as a sale consideration, would be, as correctly pointed out by them, the value of cotton which went into the manufacture and the actual charges of conversion of nylon and any other incidental charges relating thereto. It is admitted that these were reflected in the price list which alone form the consideration for the sale. Therefore, there is absolutely no violation of conditions 3, 4 and 5 of the notification. Merely because the attorney of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... originally short levied. But the fact required to be noticed in the instant case, as laid down by the Supreme Court in the above decision, is that there has not been any clandestine removal at all. At every point of time, the removal was checked and countersigned by the authorities. All of a sudden to say as if there was a clandestine removal in that the value of the price of nylon had not been included is not only unreasonable, but seems to be without any justification whatsoever. 13. A faint argument was urged on behalf of the department that the freight charges and the handling charges have been charged from buyers in addition to the price mentioned in the contract, but the same had not been included in the contract price taken as an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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