2003 (7) TMI 640 - Commission - Central Excise

Issues Involved:
1. Suppression of production and clearance of goods.
2. Mis-declaration of dutiable goods as exempted goods.
3. Mis-declaration of the value of dutiable goods.
4. Fabrication of documents and fragmentation of production.
5. Utilization of common inputs for dutiable and exempted goods without maintaining separate accounts.
6. Dispute over the classification and excisability of goods (wrappers supplied to AVT).

Detailed Analysis:

Suppression of Production and Clearance of Goods:
The SCN alleges that the main applicant suppressed production and clearance of goods, evident from various private documents maintained by them, to wrongfully avail benefits of SSI exemption, thereby evading duty. The notice proposes to demand duty of Rs. 23,59,099/- for the period 1996-97 to 1999-2000 under the Proviso to Section 11A(1) of the CEA.

Mis-declaration of Dutiable Goods as Exempted Goods:
It was alleged that the main applicant mis-declared dutiable goods as exempted goods, thus evading payment of duty. The main applicant admitted to these allegations and conceded the manufacture and supply of excisable goods without recording clearance and production in statutory records.

Mis-declaration of the Value of Dutiable Goods:
The SCN also accused the main applicant of mis-declaring the value of dutiable goods to certain customers and adopting different modes of documents for the realization of sale proceeds, leading to short payment of duty. The main applicant admitted these charges but pointed out certain calculation errors in duty quantification and sought the value realized to be deemed as cum-duty value with the benefit of abatement under Sec. 4(4)(d)(ii) of the CEA.

Fabrication of Documents and Fragmentation of Production:
The SCN alleged that the main applicant fabricated documents by fragmenting production that took place at its premises and cleared the goods under the documents of M/s. Aditya Packaging, a proprietary company floated with the wife of the Managing Director as Proprietrix, without any production facility or infrastructure. The main applicant conceded to these charges.

Utilization of Common Inputs for Dutiable and Exempted Goods:
The SCN alleged that the main applicant utilized common inputs for both dutiable goods and goods attracting nil rate of duty without maintaining separate accounts and failed to pay 8% of the price for the final products cleared under nil rate of duty as per Rule 57CC of the erstwhile CER. The applicant relied on Circular No. 591/28/2001-CX and pleaded that the amount to be reversed should only be the quantum of Modvat credit availed on such inputs utilized in the manufacture of exempted goods.

Dispute Over the Classification and Excisability of Goods:
The main applicant disputed the differential duty liability of Rs. 4,96,106/- concerning wrappers supplied to AVT, arguing that the supplied items were slit wrappers, not excisable under 4819.19 of CETA, 1985. The Revenue contended that the applicant had classified the goods as printed cartons under sub-heading 4819.19 and had discharged duty only on labor charges without including the value of materials received from customers. The Bench found force in the applicant's contention that the issue was about the dutiability of the product obtained by slitting wrappers, not a classification dispute. The Bench decided that a more detailed examination was necessary to determine whether the slitted wrapper was excisable or part of an unassembled carton.

Conclusion:
The Bench found the main applicant's application admissible and allowed the applications of the co-applicants to proceed. The main applicant was ordered to pay the balance amount of Rs. 13,36,816/- from the admitted duty liability of Rs. 17,36,816/- within 30 days and report compliance. The Bench of the Commission shall have exclusive jurisdiction to exercise powers and perform functions of any central excise officer under this Act for this case.

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