PROGRESSIVE THERMAL CONTROLS Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) THE appellant M/s. Progressive Thermal Control is a Pvt. Ltd. company, which manufactures 'Water Meters'. The entire production of these water meters is sold at an agreed price to M/s. Schlumberger Industries India Ltd. The purchaser is a subsidiary of M/s. Schlumberger Measurements and System, a French company. The water meters produced by the appellants were liable to pay Central Excise duty on the basis of their value. The appellants were discharging duty treating their sale price to M/s. Schlumberger Industries India Ltd. as the assessable value. Under the impugned order, Commissioner, Central Excise, Delhi -II has held that the appellant manufacturer and their buyer are related persons and therefore, duty should have been assessed on the sale price of the appellants' related buyer to their unrelated buyers. It is the finding in the impugned order that on account of adopting the lower sale price to the related buyer as the assessable value, there was a short -payment of duty of about Rs. 60 lakhs. The order has confirmed this duty demand for the period January, 1996 to June, 2001. Further, a short levy demand of about Rs. 31,000/ - has been confirmed on the ground that there was clandestine removal of 552 water meters during 1998 -99. In addition to the duty demands, the impugned order has imposed a penalty of about Rs. 59 lakhs on M/s. Progressive Thermal Controls Pvt. Ltd. and a further penalty of Rs. 2 lakhs has been imposed on Shri G.C. Narang, Managing Director of M/s. Progressive Thermal Controls Pvt. Ltd. on the ground that "he had the knowledge and was responsible for the evasion of Central Excise duty". Further, duty demand of about Rs. 53,000/ - has been imposed on the scrap arising out of manufacture. The present appeals contest the duty demands and penalties except for the duty demand of Rs. 53,000/ - on the scrap.

(2.) THE main duty demand has been made in view of the definition of related person contained in Section 4(4)(c) of the Central Excise Act, 1944 as a person who is so associated with the assessee that they have interest, directly or indirectly in the business of each other. It may also be noted that Section 4(1)(a)(iii) stipulates a separate provision as under for the valuation of goods sold to or through a related person :

(3.) THE findings that the appellant manufacturer and their buyers are related persons have been rendered for the following reasons :