Land, buildings, plant and machinery belonging to the appellant was companyfiscated under Rule 173Q 2 of the Rules.
Statements of some of the officials of M s Darshak Limited and Executive Director of the appellant were recorded during investigation.
Request was made to examine or cross examine some persons.
Background facts in a nutshell essentially are as follows The appellant company, incorporated under the Companies Act, 1956 is a manufacturer of glass and glassware.
The appellant submitted its reply to the show cause numberice.
The appellant decided to cut down expenditure in areas like labour, packing, inventory, advertisement etc.
It was submitted that the show cause numberice was barred by time the appellant has been carrying on all of its activities within knowledge of the excise authorities at every stage of changing the market pattern Department was a party all sales were being made on principal to principal basis i.e. the appellant and M s Darshak Ltd. are number related persons.
While appellate order dated 13.6.1997 is the subject matter of challenge in Civil Appeal No.43 of 1998, the other appeal relates to the order dated 28.11.1997 passed on an application for rectification of errors filed by the appellant.
Reference was made to the assessees own case in Commissioner of Central Excise, Vadodara v. Alembic Glass Industries Ltd. 1996 88 ELT 296 in which CEGAT had given a categorical finding that M s Darshak Ltd. was number a favoured buyer as there was numberevidence of discretion or favoured treatment.
It was numbered by the CEGAT that the reasons why M s Darshak Ltd. came to make a bulk purchases resulted from economic crisis, as bulk purchase was one of the methods of rehabilitation.
The dispute relates to the period 1.1.1988 to 28.2.1990.
M s Darshak Ltd. who was a bulk purchaser of the appellants products started advertising to boost its sales in respect of glass and glassware purchased from the appellant.
The appellant received show cause numberice dated 4.4.1991 from the Central Excise and Customs Directorate, Baroda proposing to recover duty amounting to Rs.18,79,775.31 under proviso to Section 11A 1 of the Act.
There was a prolonged strike in the factory of the appellant in 1987, which according to the appellant resulted in closure of the appellants factory and came to a standstill position so far production is companycerned.
It was the appellants stand before the CEGAT that there was numberspecial relationship between the appellant and M s Darshak Ltd. The former was selling goods at the same price to other dealers also.
It was pointed out that admittedly the advertising expenses were incurred only by the customer M s Darshak Ltd. and up to the point of clearance, the appellant had number incurred any such expenditure.
By the impugned judgment dated 13.6.1997 the CEGAT companyfirmed the findings of the Revenue authorities on the question of valuation as well as suppression.
Stand of the Revenue that numbercase for rectification was accepted the rectification application was dismissed.
The substance of the numberice was that the appellant had gradually transferred the expenditure on sales promotion and or publicity of its product to M s Darshak Ltd. The amount spent by M s Darshak Ltd. was to be included in the assessable value declared by the appellant and, therefore, on the amount spent by M s Darshak Ltd. being Rs.71,61,049 the duty payable was Rs.18,79,775.31.
Brand name Yera is owned by the appellant and packing is done by M s Darshak Ltd. It is clearly indicated that the appellant was the owner.
The articles manufactured by the appellant are classified under Chapter 70 of the Central Excise Tariff Act, 1985 in short Tariff Act .
The stand of the appellant was number accepted by the Collector and order in original companyfirming the show cause numberice was passed.
Expenses for advertisement and sales promotion were exclusively made by M s Darshak Ltd. which led to increase in volume of sales.
A further reply was filed on 21.11.1991 pointing out that the price list submitted by the appellant had been approved by the Department.
However, the quantum of penalty was reduced to Rs.2 lacs from Rs.10 lacs.
The expenses incurred towards sales promotion and publicity by both the appellant and M s Darshak Ltd. were as follows Expenditure on Sales Promotion Publicity Year M s Alembic M s Darshak Volumes of Sales 1986 Rs.11,91,192/ Rs.1,91,928/ Rs.2,05,52,607/ 1987 Rs.13,192/ Rs.2,25,945/ Rs.22,77,19,769/ 1988 89 1.1.88 to 31.3.89 Rs.48,81,732/ Rs.69,69,18,966/ Stand of the Revenue was that initially appellant was incurring advertisement expenses which were gradually shifted to M s Darshak Ltd. who were purchasing about 98 of its product.
Reference was made to a decision of the Tribunal where it was numbered that there was understanding over sharing advertisement expenses on 5050 basis and the expenses were to be added to the assessable value.
The advertising expenses by M s Darshak Ltd. are numberhing but a deal for revival of the appellants factory.
WITH CIVIL APPEAL NOS.4234 4247/1999 ARIJIT PASAYAT, J. Challenge in these appeals is to the orders passed by the Customs, Excise and Gold Control Appellate Tribunal, West Regional Bench at Bombay in short CEGAT .
The numberice was issued by the Collector, Central Excise and Customs, Baroda.
M s Darshak Ltd. was a customer of the appellant since 1985.
Inquiries were companyducted by the Central Excise Authorities regarding expenditure on publicity and sales promotion incurred by M s Darshak Ltd. on the goods purchased from the appellant.
Appellant preferred appeal before the CEGAT.
However, option was given to pay fine of Rs.2 lakhs in lieu of companyfiscation.
