2003 (6) TMI 445 - Commission - Central Excise

Summary

Issues Involved:
1. Duty liability on Silver Nitrate used in the manufacture of torpedo batteries.
2. Abatement of processing loss in the duty calculation.
3. Determination of assessable value based on the margin of profit.
4. Immunities from penalty, interest, and prosecution.

Detailed Analysis:

1. Duty Liability on Silver Nitrate:
The main applicant, a manufacturer of various types of batteries, including torpedo batteries supplied to the Navy, sought settlement for duty liability on Silver Nitrate used in their manufacturing process. The SCN demanded Rs. 43,08,829/- as duty, but the applicant admitted only Rs. 31,76,884/- and had already deposited Rs. 15,00,000/-. The remaining balance of Rs. 16,76,884/- was directed to be deposited, which the applicant complied with.

2. Abatement of Processing Loss:
The applicant claimed a 7% abatement for wastage occurring during the conversion of Silver Nitrate into silver powder and its subsequent use in manufacturing batteries. The Revenue opposed this claim, arguing that the waste arises after receipt of Silver Nitrate from the job worker and is not eligible for abatement. The Commission found the applicant's plea for abatement unconvincing, as the duty is chargeable on the quantity and value of Silver Nitrate removed from the job worker's premises. The claim for abatement was thus rejected.

3. Determination of Assessable Value:
The applicant contended that the assessable value of Silver Nitrate should be based on the job worker's margin of profit, not the main applicant's. The Revenue conceded this point, in line with the Apex Court's decision in the Ujagar Prints case. The revised duty liability, calculated on this basis, amounted to Rs. 36,20,074.29.

4. Immunities from Penalty, Interest, and Prosecution:
The applicant sought immunity from penalties, interest, and prosecution. The Commission granted immunity from penalties and prosecution, noting the applicant's cooperation and admission of increased duty liability. However, interest was to be charged at 10% per annum on the duty liability of Rs. 36,20,074.29 from the due date until payment. Immunity from interest was granted only in excess of this rate.

Conclusion:
The applications were settled with the following terms:
1. Duty liability settled at Rs. 36,20,074.29, with the applicant to pay the balance amount of Rs. 4,43,190.29 within 30 days.
2. Simple interest at 10% per annum to be paid from the due date until the duty is paid.
3. Immunity from penalties and prosecution granted to the main applicant and the co-applicants.
4. Immunity from interest granted in excess of 10%.

These immunities are conditional and may be withdrawn if it is found that any material particulars were withheld or fraudulent means were employed in obtaining the settlement.