HARYANA STEEL AND ALLOYS LTD. Vs. CCE

JUDGEMENT

(1.) The appellants were served with a demand of Rs. 90,47,172 which was confirmed against the appellants under Section 11A of the Act, by invoking the extended period. Penalty of equivalent amount was imposed and also interest was demanded by the Commissioner in the adjudication order which is impugned before us.

(2.) The appellants manufacture stainless steel flats (SS flats). The appellants cleared the said product viz. SS flats to several independent customers as well as to 8 declared consignment agents (C.As.). The duty has been paid on the basis of normal price, declared under Rule 173C of the Central Excise Rules, 1944 (Central Excise Rules). Out of the 8 consignments agents located at three different places in respect of certain consignments cleared to one C.A., namely, Ram Kumar, Kishan Kumar (RK KK) during the period of 5 months (Feb. 1997 to June 1997)", it was revealed, that the appellants realised additional consideration over and above the declared price, covering the sale of 4841.495 MTs of SS flats. During the scrutiny by the Audit, it was revealed, that the appellants had received Rs. 6,03,14,478.00 as additional consideration from the said consignment agent over and above the assessable value declared to the Department covering the sale of the said quantity of 4841.495 MTs. Accordingly, the demand of Rs. 90,47,172 was confirmed.

(3.) In their defence, the appellants have stated that, the said quantity of 4841.495 MTs of SS flats which were transferred to RK KK was converted by the said C.A., through various job workers, into stainless steel patta pattis. The payment that was received from (RK KK) relates to sale proceeds of the patta patti and not the flats. The appellants have pleaded that, the product S.S. flat, which is sold by them to various customers including that sold through the consignment agent in question, is sold at the price declared to the Department in the price declarations. The product is not an exclusive one so as to command such a high price exclusively in respect of a small percentage of the production sold through RK KK. The average price of the product is about Rs. 29 to 30 per kg. whereas in respect of the quantities under dispute, the sale realisation is around to Rs. 60 per kg. No buyer will pay such exorbitant price for the product, which is freely available at half the price. There is no allegation regarding the declared price being not true in respect of sales effected to other parties and even to the said consignment agent during the period outside the period covered in the demand notice. It is their defence that, the quantity of S.S, flats, transferred to RK KK, was subsequently sent by the said M/s. RK KK to independent job workers, for their conversion into patta pattis and the sale proceeds of patta pattis was repatriated by RK KK to the appellant, which happened to be at the rate of Rs. 60 per kg. (approx.) The sale proceeds relate to the sale of patta pattis and the allegation that the S.S. flats were sold at a price of around Rs. 60 per kg. is not correct.