SIMPSON AND CO. LTD. Vs. CCE

JUDGEMENT

(1.) THIS appeal by M/s Simpson and Co, Ltd is against the Order No. 25/99 dt. 24.12.99, passed by the Commissioner of Central Excise (Adjudication), Chennai. As per the order, the Commissioner demanded differential duty of Rs. 58,81,393/ - from the appellants and imposed a penalty of Rs. 300000/ - on them for violation of various statutory provisions.

(2.) M /s Simpson and Co, Ltd (hereinafter referred also as assessee, appellant or Simpson) are manufacturers of mainly diesel engines suitable for use in tractors, with manufacturing units at Sembium and Anna Salai at Chennai and at Kumbakonam. The impugned order concerns the units at Chennai. Following the investigation conducted by the Directorate General of Anti Evasion, ADG, Anti Evasion, Chennai, issued a Show Cause Notice alleging that the assessee was holding company and a 'related person' of M/s Tractors And Farm Equipments Ltd, Chennai (henceforth referred as TAFE) who sourced all its requirement of OE engines for tractors from Simpson and that the value adopted by the assessee for payment of duty on clearances of OE engines and Trade Engines (for spare market) to TAFE had not reflected the correct assessable value (value, henceforth) for the purposes of Section 4 of the Central Excise Act, 1944 ( Act). It was proposed to redetermine the value of OE engines under Section 4(1)(a)(iii) of the Act invoking Central Excise Valuation Rules, 1975, and particularly Rules 6(c)(ii) and 6(b)(ii). As regards replacement engines sold by TAFE, it was proposed to adopt the sale price of TAFE to their buyers as basis of value. The impugned clearances had been made during August 1998 to January 1999 and the proposed demand was for Rs. 2,02,37,753/ -.

(3.) THE Show Cause Notice had cited the following allegations to arrive at the tentative finding that Simpson and TAFE had interest in the business of each other and they were related: