9911796707
TMI Blog2005 (10) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... 96,320/- has been confirmed as differential duty on differential escalation charges received by the assessee. There is confirmation of interest besides confirmation of penalty of Rs. 24,21,280/-. There is a penalty of Rs. 2 lakhs on the Company in terms of 173Q of the CE Rules besides a personal penalty of Rs. 1 lakh on the Managing Partner. The land, building, etc. have been confiscated and the same have been granted redemption on payment of fine of Rs. 3 lakhs. The impugned order has been challenged by the appellants on various grounds. The charge for clandestine removal is based on the figures shown in the Balance Sheet. There is no direct or indirect evidence of purchase of excess raw material and manufacture and clearance without payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the then Section 4 of the CE Act read with Rule 6(b)(ii) of the CE Valuation Rules 1975 since the removal from the factory was otherwise than sale. The appellants were awarded the contract on turnkey basis. It was their submission that since the year 1991-1992, they cleared Pipes from the factory on the basis of cost of production + normal profits of 9%, 8.75%; during the years 1990-1991 and 1991-1992. They contended that on the instructions from the department, they had increased the profit to 10% and differential duty was paid. It was their contention that since the assessable value during the relevant period was on the basis of cost plus profit, which the department accepted as correct, therefore, the question of paying the differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RG-12. The Commissioner has proceeded to confirm the demands on the pipes based on the figures shown in the Balance Sheet. There is no other evidence on record to show that there was excess production of pipes. Further all the supplies are being made to the Government of Karnataka and Government Agencies. The plea that such supplies cannot be made without accompanying invoices and that there is no evidence of flow back of funds is a very strong indication that the figures shown in the Balance Sheet is not correct figure. The explanation given is that it pertains to incomplete figures which also pertain to those pipes which did not undergo the tests required by the company. They had given sufficient corroboration and explanation with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roof by the Revenue to uphold the charge of clandestine removal. As there is lack of evidence, the demands on the clearances of pipes shown in the Balance Sheet is required to be set aside including the penalty imposed thereon. 5. As regards the inclusion of escalation charges are concerned, the appellants contended that during the relevant period, the appellants' case was covered by the then Section 4 of the CE Act read with Rule 6(b)(ii) of the Central Excise Valuation Rules. On perusal of Rule 6 (b)(ii), one will not find any provision which gives exemption from including the escalation charges. It is well settled position that escalation charges are part of the duty and it has to be added in the assessable value. The alternate prayer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscation of the land, building, etc. of the assessee. As the demands on clandestine removal has been set aside and we have given a finding that there was no cause for imposing penalty on the duty element to be paid on escalation charges, we set aside the order of confiscation and imposition of fine. The appeal of the Managing Partner is also allowed and the penalty imposed on him is set aside. The matter is remitted back to the original authority to re-work out the escalation charges based on the amounts received by them treating it as cum duty. The assessee shall be heard in the matter. The appeal is disposed of in the above terms by setting aside the demands on clandestine removal, penalties and RF in the matter and remanding the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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