2004 (97) ECC 33 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Ms. Jyoti Balasundaram, Vice-President and Shri V.K. Agrawal, Member (T)

Malout Cooperative Spg. Mills Ltd.

Versus

CCE, Ludhiana

Appeal No. E-2421/04-NB(A)

[Arising out of Order-in-Appeal No. 572-CE/Appl/DLH/2003 dated 26.9.2003 passed by the Commissioner of Central Excise (Appeals), Meerut-I]

Final Order No. 1068/04, dated 27.9.2004, Certified on 14.10.2004

Duty Demand & Penalty (C. Excise)

Appellants were manufacturing man-made yarn on job work for GPL -- No evidence had also been produced on record that the yarn had been damaged so as to fetch minimum price -- Accordingly, the appellants had not succeeded in establishing the case that Rs. 3,476 paid by GPL, was not the price of yarn in question -- Demand duty and penalty was upheld -- Appeal rejected.

PRESENT :

Shri S.K. Dhanda, Consultant for the appellant.

Shri S.C. Pushkarna, JDR for the respondent.

Per : V.K. Agrawal

M/s. Malout Cooperative Spg. Mills Ltd., have filed this appeal against the Order-in-Appeal No. 572/03 dated 26.9.2003, by which the Commissioner (Appeals), has upheld the demand of Central Excise duty and penalty on the basis of assessable value determined by the Deputy Commissioner.

2. Shri S.K. Dhanda, learned Consultant, submitted that the appellants were manufacturing man-made yarn on job work for M/s. Ganesh Polytex Ltd.; that the appellants had incurred huge losses and had gone into liquidation in 1998 before completing the job work given to them by M/s. Ganesh Polytex Ltd; that certain disputes arose between the appellants and M/s. Ganesh Polytex Ltd. regarding payment of job work on account of which they did not return the goods to M/s. Ganesh Polytex Ltd., who issued a legal notice to them; that due to dispute, the appellants did not take goods care of the good, which were allowed to remain in the open due to which they got spoiled due to the vagaries of weather; that after some time, the agreement reached with M/s. Ganesh Polytex Ltd. and according to that agreement, amount payable by M/s. Ganesh Polytex Ltd. to them would be paid from the sale proceeds of the goods lying in their custody; that against the sale of each bundle, M/s. Ganesh Polytex Ltd. would pay an amount of Rs. 3,476 and the buyers for the goods would be found by M/s. Ganesh Polytex Ltd.; that, accordingly, M/s. Ganesh Polytex Ltd. sought quotations from different customers; that as the goods were damaged badly, they could get the highest price from one Jai Maa Industries @ Rs. 48 per kg. inclusive of duty; that as such the duty is payable by them on the said rate and not at the price determined by the Department. The learned Advocate emphasised that the amount received by them from M/s. Ganesh Polytex Ltd., in terms of the agreement, was not the sale price of the goods; that the sale price was the wholesale price of Rs. 48 per kg. In this regard, he referred to clause 7 of the agreement wherein it is mentioned that the yarn would be cleared on Excise invoices on the basis of highest quotations of price within 3-4 quotations provided by M/s. Ganesh Polytex Ltd. and contended that it is very apparent from this clause of the agreement that the yarn could be cleared on the basis of highest price quoted by the customer, which in the present matter, was Rs. 48 per kg.

3. Countering the arguments, Sh. S.C. Pushkarna, learned D.R. submitted that clause 8 of the agreement between the appellants and M/s. Ganesh Polytex Ltd. clearly mentions that the consignment will be cleared after the appellants get the amount of Rs. 3,467 per bag plus Central Excise duty involved; that, further, the enquiry regarding value of same goods was conducted by the Department and as per the enquiry, the value of impugned goods should be Rs. 83 per kg. to Rs. 84 per kg. He also emphasised that no proof has been brought on record in support of the appellants' contention that the yarn, in question, has got damaged badly on account of its being kept in the open.

4. We have considered the submissions of both the sides. The Commissioner (Appeals), in the impugned order, has given his findings that clause 8 of the agreement clearly states that the appellants would clear the consignment after getting an amount of Rs. 3,476 per bag plus Central Excise duty which has not been disputed by them. He has, further, held that if the appellants have cleared the goods on this payment, the same has to be taken as the assessable value. On the other hand, it has been contended by the appellants that M/s. Ganesh Polytex Ltd. were owning an amount of Rs. 14,00,650.58 and for recovery the said amount, they had retained the goods received from them for job work; that the dispute between the appellants and M/s. Ganesh Polytex Ltd. was resolved by entering into an agreement on 30.3.1999 by which it was agreed that the goods would be sold on the highest quoted price and M/s. Ganesh Polytex Ltd. would pay an amount of Rs. 3,476 per bag for clearing the money due to the appellants. We find that the appellants have not brought on record any material/evidence to establish that the payment of Rs. 3,476 per bag plus Central Excise duty was towards the payment of money owned by M/s. Ganesh Polytex Ltd. to the appellants. In absence of any material to establish this fact, it cannot be claimed by the appellants that amount of Rs. 3,476 per bag was not the sale price of the yarn in question. As rightly emphasised by the  learned D.R., no evidence has also been produced on record in support of their contention that the yarn had been damaged so as to fetch a minimum price. Accordingly, we hold that the appellants have not succeeded in establishing the case that Rs. 3,476 paid by M/s. Ganesh Polytex Ltd., was not the price of yarn in question. Accordingly, we up-hold the impugned order and reject the appeal.

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