2001 (9) TMI 1074 - Commission - Central Excise

Issues Involved:
1. Duty liability for the period 1996-97 to 1999-2000.
2. Classification and valuation of dextrin/modified starch.
3. Compliance with Central Excise procedures.
4. Penalty and prosecution under the Central Excise Act, 1944 and the erstwhile Central Excise Rules, 1944.
5. Immunity from interest and penalties.
6. Determination of assessable value for job-worked goods.
7. Adoption of cum-duty price for duty calculation.
8. Immunity for co-applicants from penalties and prosecution.

Detailed Analysis:

1. Duty Liability for the Period 1996-97 to 1999-2000:
The main applicant, M/s. Southern Starch Products, and the co-applicants filed applications under Section 32E(1) of the Central Excise Act, 1944 against proceedings covered by SCN No. 3505/15/173/2000-Cx.(Adj.) dated 24-8-2000. The SCN proposed to demand a duty of Rs. 21,77,591/- for the period 1996-97 to 1999-2000, invoking the extended period under Section 11A. The main applicant admitted to a duty liability of Rs. 2,17,664/- for 1999-2000, later increased to Rs. 14,33,078/- during the hearing.

2. Classification and Valuation of Dextrin/Modified Starch:
The main applicant manufactured and cleared dextrin/modified starch under Chapter 3505.20 of CETA 1985 without registration or payment of duty. The SCN proposed to impose duty based on the price charged by the main applicant and the co-applicants.

3. Compliance with Central Excise Procedures:
The main applicant failed to follow Central Excise procedures, including registration and payment of duty, in contravention of Rules 52A, 173B, 173C, 173F, 173G, and 174 of CER, 1944. They claimed exemption as a small-scale unit but exceeded the exemption limit.

4. Penalty and Prosecution under the Central Excise Act, 1944 and the Erstwhile Central Excise Rules, 1944:
The SCN proposed penalties under Rule 173Q and Section 11AC, confiscation of seized goods, and appropriation of Rs. 5,00,000/- already paid. The co-applicants faced penalties under Rule 209A for abetting the offense.

5. Immunity from Interest and Penalties:
The main applicant sought waiver of penalties, interest, and prosecution. The Commission granted immunity from penalties and prosecution under the Central Excise Act, 1944, but refrained from passing orders on immunity under unspecified Central enactments. Immunity from interest was also granted as there was no evidence of duty collection from customers.

6. Determination of Assessable Value for Job-Worked Goods:
The assessable value for job-worked goods was to be determined based on the cost of raw materials and job charges, as per the principles laid down in Ujagar Prints v. UOI. The Commission rejected the plea to treat the aggregate cost as cum-duty price, aligning with the Supreme Court's decision in AC v. Bata India Ltd.

7. Adoption of Cum-Duty Price for Duty Calculation:
The Commission rejected the adoption of cum-duty prices for determining duty liability, as the main applicant did not include duty in the sale price. The assessable value was based on actual costs and charges without abatement of duty.

8. Immunity for Co-Applicants from Penalties and Prosecution:
The co-applicants sought immunity from penalties and prosecution. The Commission granted immunity from penalties under Rule 209A and prosecution under the Central Excise Act, 1944, but refrained from passing orders on immunity under unspecified Central enactments.

Conclusion:
The Commission settled the case by determining the duty payable as Rs. 16,42,347/-. The main applicant was ordered to pay the balance of Rs. 2,09,269/- within 30 days. All applicants were granted immunity from penalties, fine, and prosecution under the Central Excise Act, 1944. Immunity from interest was also granted to the main applicant.

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