SOUTHERN PETROCHEMICAL INDUS. Vs. CCE

JUDGEMENT

(1.) DURING the period of dispute [December 2000 to March 2002] the appellants were supplying carbon -dioxide to M/s. TAC Ltd., Tuticorin at the rate of Rs. 1,200/ - per MT. At the same time, they were selling the goods to M/s. SICGI Ltd. at the rate of Rs. 1,500/ - per MT. In respect of the clearances made to M/s. TACL, the appellants paid duty on the assessable value based on Rs. 1,200/ - per MT. The department wanted the assessable value to be determined on the basis of Rs. 1,500/ - per MT, the price at which identical goods was sold contemporaneously to M/s. SICGIL. Accordingly, a demand of differential duty was raised on the party. The original authority dropped this demand. The appeal filed by the department with the Commissioner (Appeals) was allowed. Accordingly, the enhancement of the value of the goods from Rs. 1,200/ - per MT to Rs. 1,500/ - per MT stands affirmed in relation to the clearances made by the assessee to M/s. TACL, during the aforesaid period. The present applications seek waiver of predeposit and stay of recovery in respect of the total amount of duty of over Rs. 36.00 lakhs demanded by the lower appellate authority.

(2.) AFTER examining the records and hearing both sides, we note that the lower appellate authority found the assessee's buyer (M/s. TACL) to be their subsidiary company and thereby to be 'related' to them within the meaning of the expression 'related person' under Section 4 of the Central Excise Act. It was on this basis that the price of Rs. 1,200/ - per MT was rejected and that of Rs. 1,500/ - per MT which was charged to independent buyer was adopted as the basis for determination of assessable value of the goods cleared to M/s. TACL. Learned Counsel has questioned this valuation made under Rule 11 of the Valuation Rules 2000. According to him, the valuation should have been done under Rule 10(b) of the Valuation Rules as the assessee and M/s. TACL were only 'interconnected parties' within the meaning of this expression under Section 4(3)(b)(i) of the Central Excise Act. Learned Counsel pointed out that, though M/s. TACL were mentioned as one of the 'associates' of the appellant -company in the latter's annual report for the year ended 31.3.2003, the Commissioner (Appeals) wrongly treated them as a 'subsidiary' of the appellants. Learned SDR countered these submissions by pointing out that it had never been pleaded earlier by the assessee that they and their buyer were 'interconnected parties'. At this juncture, it was conceded by learned Counsel that no such plea was raised in the reply to the show -cause notice. It was, however, submitted by learned Counsel that, though the show -cause notice had treated the transaction between the assessee and M/s. TACL as 'sale' of goods, learned Commissioner (Appeals) did not choose to treat it as sale. Prima facie, this submission of the counsel is factually correct. Nevertheless, a prima facie case has not been made out against the enhancement of value of the subject goods to Rs. 1,500/ - per MT as charged to independent (unrelated) buyer (M/s. SICGIL). The assessee's annual report describing M/s. TACL as their associate is, seemingly, a crucial evidence against them in the context of valuation of the subject goods.

(3.) PRIMA facie, the sale price (Rs. 1,500/ - per MT) charged to M/s. SICGIL in wholesale trade was the normal price to be adopted under Section 4(1)(a) of the Central Excise Act in respect of the goods sold to M/s. TACL, in terms of the Supreme Court's ruling in Ashok Leyland Ltd. v. Collector . Learned Counsel has relied on Stay Order No. 54/2004 dated 19.1.2004 passed by this Bench in an earlier appeal of the assessee. We find that the defence set up by learned SDR in the present case was not available to the Bench in the earlier case. Hence the stay order cited by learned Counsel has no persuasive effect on us.