MALOUT COOPERATIVE SPG. MILLS Vs. CCE

JUDGEMENT

(1.) 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.