9911796707
TMI Blog2000 (7) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... , Rajasthan, M/s. Krishnan Associated Engineers (KAE), New Delhi and M/s. G.S. Enterprises (GSE), Bhiwadi, Rajasthan. M/s. KAE had been in the manufacturing business even before the Appellant commenced its activities in India. M/s. GME is a part of Ruchika group of companies specializing in plastic products, M/s. GSE is a sole proprietary concern of one Mr. Govind Singh who used to manufacture shaving brushes before this. These job works are independent firms with their own investment, sales tax, income-tax, excise and ESI/PF registrations and are not in any way related or connected with ISP. In terms of the agreement entered into the job workers were required to assemble and pack shaving products like razors, cartridges containing blades, etc., in their factories, conforming strictly to the drawings/specifications and instructions provided by ISP. For this purpose ISP was required to supply packaging and materials like labels, cartons, boxes, etc. It was specified in the agreement that ownership of these materials given to the job workers would remain with ISP and the job workers were required to submit to them inventory statements relating to stock of materials regularly. ISP w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he components parts and packaging materials supplied by the ISP/vendors plus job charges including profit margin of the job workers. (d) M/s. GSE has been doing job work for the Appellant from July, 1995 and still continues to be a job worker. All the assessments till date with respect to the clearances made by M/s. GSE are provisional show cause notices dated 4-9-1997, 4-11-1997 and 1-5-1998 were issued to M/s. GSE seeking to revise the values and demand differential duty alleged to be payable on the basis of such revision. The show cause notices also sought to invoke the penal provisions of the Rules for the alleged violations of Section 4 of the Act relating to value. The show cause notices dated 4-9-1997 and 4-11-1997 covered the period from February, 1997 to March, 1997 and April, 1997 to June, 1997 and sought to demand sum of Rs. 3,71,111 and Rs. 27,77,227/- respectively. These two show cause notices, while acknowledging the fact that M/s. GSE was a job worker, sought to include Central Excise Duty, Sales Tax, freight forwarding charges, etc., to the cost of raw material for working out the assessable value in terms of Rule 6(b)(ii) of the Central Excise Valuation Rules, si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notices issued to M/s. GME, M/s. KAE and M/s. GSE two further show cause notices were issued to ISP on 2-1-1998 and 3-4-1998 respectively by the Superintendent of Central Excise Bhiwadi, Rajasthan alleging that the components and parts cleared by the Appellant to the job workers have the essential character of complete or finished goods and hence such components and parts should be assessed at the prices at which these complete/finished products are being sold by the Appellant in the wholesale trade. These two show cause notices cover the clearances made during the period June, 1997 to October, 1997 and they seek to demand differential duty of Rs. 1,31,78,978/-. These two show cause notices also cover the same goods which are the subject matter of the impugned order. (g) While this issue of determination of assessable value of the finished goods manufactured on job basis by M/s. GME, M/s. KAE and M/s. GSE was pending adjudication and appeal before various statutory authorities, it appears that an investigation was commenced by the officers of the Directorate General of Anti Evasion, New Delhi. A number of statements were taken from the officers of the Appellant as also the job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the distributors. (xii) The CPA's are also an extended arm of the ISP as they are maintaining records on behalf of the ISP but are neither producing nor selling the goods. (xiii) The goods are sold by the CFA's as per the directions of ISP. (xiv) ISP has permitted the job workers to hire additional premises for storage of raw materials finished goods and expenses incurred thereon were reimbursed by ISP apart from the job charges. (xv) ISP had provided finances to the job workers to enable them to effect necessary changes in the infrastructure and these amounts have not been adjusted against job charges and no interest has been charged by ISP. Hence the job worker is only hired labour. (xvi) ISP was always aware that duty was payable at the price at which they are sold from the depot/CFAs to distributors since they were paying duty in respect of goods cleared by Neel Kamal Enterprises (NKE), Cosmic Shave Pack Pvt. Ltd. (CSPPI) to CSP on the basis of price charged at the depot/CFS's claiming admissible deductions during the period covered by the present show cause notice. (xvii) ISP had incurred expenses of Rs. 46 crores on advertisement, sale promotion, etc., to facilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on their own and were entitled to only the labour charges. It thus easily be said that the facts and circumstances of the Pawan Biscuits case and the subject case were almost identical. Thereafter he concluded that as in the case of Pawan Biscuits the relationship between the appellants and other noticee to the show cause notice was not on principal to principal basis made in the usual course of business and the above job workers were created as a facade to camouflage, the extended manufacturing activities of ISP. Therefore he did not apply the ratio of the Supreme Court's decision in the case of Ujagar Prints (supra) and or the other case relied upon by the appellants and proceeded to determine the valuation and calculated the duty differential at the values and the sale prices of ISP and confirmed duty demand of Rs. 5,56,54,032/- and appropriated amount of Rs. 2.5 crores paid by the appellants and demanded the remaining net amount payable Rs. 3,06,54,032 and imposed penalties under Rule 173Q read with Section 11AC and under Rules 9(2), 52A(8) and 226 and ordered the recovery of interest at 20% per annum under Section 11AB and imposed a penalty of Rs. 15 lakhs each on Shri Puneet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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