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TMI Blog2002 (4) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... goods for payment of duty from one unit to the other of the same company was required to be adopted on the basis of the prices available for delivery of the comparable goods to the independent buyers in terms of Rule 4(1)(b) of the Central Excise (Valuation) Rules, 1975. Accordingly, the appellants were issued a show cause notice dated 18-7-95 by the Commissioner of Central Excise, Kolkata-II in which it was averred that they were liable to pay a differential central excise duty amounting to Rs. 49,38,660/- for the aforesaid period and were also liable to penal action. 2.In the same show cause notice, it was further observed that certain quantity of goods manufactured by them was rejected on the ground of non-conformity and for this purpose, a non-conformity report was also issued. It was averred that the Vacuum Interrupter Tubes (VIT) were rejected after manufacture and the noticees did not account for the production and disposal of the rejected goods in their RG 1 Register. The authorised Representative of the assessee in his statement dated 7-3-95 and the Communication dated 26-4-95 submitted that all such rejected goods were broken into pieces and the copper content obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide his order dated 7-7-2000 with regard to the V.I. Tubes supplied to their sister concerns at A.E.I. Unit and Naini Unit - observed that there is no sale of these goods and the goods are merely stock transferred to the same entity i.e., M/s. G.E.C. Relying on the decision of the Tribunal in Savita Chemicals v. C.C.E., Bombay reported in 2000 (119) E.L.T. 394 (Tribunal) = 1999 (34) RLT 573 (T), he observed that when the price at which the sale is made to independent buyer is available, that price becomes the basis for determination of the assessable value of the sale to the said buyers and also for stock transfers to the depot; that in this case the assessee has not produced any evidence regarding the status of their buyers as to which class they belong to, though they have claimed that they could adopt different prices for different OE manufacturers since OEMs were a class of buyers under the proviso to Section 4(1)(a), but they are not adopting same price to all their OEMs. For their goods transfered to sister units, they have claimed them to be OEMs and but they have not submitted any evidence that their sister units are purely OEMs. It is observed that the goods which are tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-94 and 1994-95 which indicated the batch-wise data as to the quantity loaded, rejection at the seal off stage, receipt at inspection, rejections at inspection stage, production and total rejections. They submitted that all this analysis would show that rejections are inevitable and arise in the course of manufacture and it is these rejected tubes which are scraped by breaking the ceramic and other portions and the copper content is sold as scrap. All these submissions of the noticee party are rejected by the adjudicating authority in his order with the observation that the manufacture of V.I. Tubes is not disputed; that as per the papers submitted by them, such rejected tubes are reconditioned/repaired but less than 50% of the tubes could successfully be resealed and the seal off failure and that there is no independent corroboration of the fact of destruction of the goods. The Commissioner in his order has relied on the decision of the Tribunal in the case of G.T.C. Industries v. C.C.E., Bombay reported in 2000 (119) 699 (Tribunal) = 2000 (37) RLT 493, in which, it is held that in the absence of following the procedure under Rule 196A, the duty demand and the imposition of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly filing RT 12 returns with which they had enclosed both the types of invoices i.e., those relating to the sale to their own units and other external invoices relating to the sales to independent buyers; that the department has not found any additional evidence for demanding duty besides the evidence which is available in their RT 12 returns. As such, it is argued that it is not a case of suppression of facts and the extended period for the demand under the proviso to Section 11A(1) is not invocable. In support of this contention, the reliance is placed on the following decisions : (a) M/s. Chandilya Chemicals v. C.C.E., Chennai - 1999 (114) E.L.T. 695 (T), (b) M/s. Pushpam Pharmaceuticals Company v. C.C.E., Bombay - 1995 (78) E.L.T. 401 (S.C), and (c) M/s. Tamil Nadu Housing Board v. C.C.E., Madras - 1994 (74) E.L.T. 9 (S.C.). 10.Regarding the above plea of the party against the demand of duty on limitation, the Commissioner has recorded the findings in his order that in terms of the provisions of Rule 173C, it is the responsibility of the assessee to file the price declaration and assess the goods himself; that he is also required to give a further d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted for comparison is in respect of the sales made by them to independent buyers in January, 1995 and the period of demand is for the earlier period. The Commissioner in respect of these two types of tubes has recorded the findings that 12 Nos. units of VIT-807 had been sold to independent buyers @ Rs. 49,500/- per piece, whereas the value on which the duty has been paid is Rs. 28,000/- per unit. He has accordingly ordered the assessment to be made at the value of Rs. 49,500/- per unit. Similarly, the VIT-807G Tube is found to be sold to independent buyers @ Rs. 60,000/- per unit. The appellants are not disputing that the sale prices for the independent buyers in respect of these two types of tubes adopted by the Commissioner are available. Whether an independent buyer/user bought the goods as an OEM or otherwise is not the relevant factor for adopting the value of the comparable goods under Rule 6(b)(i). The expression used in this sub-rule is that it should be based on the value of the comparable goods produced or manufactured by the assessee or by any other assessee. The contention of the appellants is that their sister units are using the VI Tubes as OEM items and hence the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king the rejected interrupters. The Commissioner in his order has however observed that the assessee did not bring to the notice of the department, that they were having any goods unfit for consumption/marketing; that they did not obtain any permission from the Commissioner to destroy the so-called sub-standard goods; that in the absence of any independent corroboration witnessing the destruction of the alleged defective tubes, the reasonable conclusion is that they have been removed. It is also observed that the party did not follow the provisions of Rule 49(1) in respect of the claim of remission of duty for the goods which are not proved to be fit for consumption/marketing; that in the absence of fulfilment of the conditions under Rule 49 which would include precautions against fraud and evasion, the plea for remission cannot be accepted and this by itself is sufficient to confirm the duty liability. On over all appreciation of the facts, it appears to us that the goods in question in respect of which the duty is demanded by the department for alleged clearance without payment of duty are broken/destroyed before subjecting them to test or when they are found not coming up to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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