KRIPA CHEMICALS LTD. Vs. CCE

JUDGEMENT

(1.) THIS is an appeal at the instance of the assessee challenging the order passed by the Commissioner of Central Excise, Indore dated 30.10.2001. The issue raised for consideration is whether quantity discount availed by the appellant from the suppliers of raw materials is liable to be added to arrive at the assessable value of its product.

(2.) THE appellants are engaged in the manufacture of LINEAR ALKYL BENZENE SULPHONIC ACID (LABSA) falling under Chapter Heading 3402.90 of the Schedule to the Central Excise & Tarif Act, 1985 and Spent Sulphuric Acid falling under Heading 2807. In these appeals we are concerned only with the dispute relating to assessable value of LABSA. The main inputs for manufacture of LABSA are (1) LINER ALKYL BENZENE (LAB) and (2) Sulphuric Acid. The appellants are procuring LAB from three manufacturer suppliers, namely, M/s. Indian Petrochemicals Corporation Ltd. (IPCL), M/s. Tamil Nadu Petro Products Ltd. (TPPL) and M/s. Reliance Industries Ltd. (RIL). They were procuring Sulphuric Acid from M/s. Rama Phosphates, Indore and M/s. Khaitan Fertilizers Ltd. LABSA manufactured by the appellant are sold to M/s. Hindustan Lever Ltd. (HLL), M/s. Vikram Detergent Pvt. Ltd. (VDPL), M/s. Guljag Chemicals Pvt. Ltd. and M/s. Indira Poly Fab Pvt. Ltd., M/s. Varuna Detergents and M/s. Oriclean Pvt. Ltd. M/s. HLL is a bulk buyer of LAB from IPCL. They were therefore being granted bulk discount by IPCL. On the recommendation of HLL the appellants were granted such discount by IPCL.

(3.) THE second part of the demand covering Rs. 1,88,75,099 was on the basis on non -inclusion in the assessable value of LABSA the bulk quantity discount availed by the appellants from the suppliers of raw materials LAB. It was alleged that the appellant receives this discount on account of their buyers HLL. Therefore, the amount of discount is to be treated as additional consideration received by the appellant which is to be added to the assessable value of LABSA. The Commissioner passed a common order in respect of ten show cause notices and confirmed the duty demand of Rs. 2,32,84,360. Penalty of an equal amount was imposed under Section 11AC of the Central Excise Act read with Rule 173Q of the Central Excise Rules. Appellant was also held liable to pay interest under Section 11AB.