1984 (5) TMI 250 - AT - Central Excise

Summary

Issues Involved:
1. Classification of M/s. Revathi Agencies as a manufacturer or wholesale dealer.
2. Inclusion of the value of bulbs sold under the brand names 'Bijlite' and 'Revlite' in the exemption limit.
3. Compliance with procedural formalities under the Central Excises and Salt Act, 1944.
4. Invocation of the extended time limit for demanding duty under Rule 9(2).
5. Imposition of penalty under Rule 173Q.

Issue-wise Detailed Analysis:

1. Classification of M/s. Revathi Agencies as a Manufacturer or Wholesale Dealer:
The Additional Collector concluded that M/s. Revathi Agencies should be treated as a wholesale dealer and not a manufacturer of 'Bijlite' and 'Revlite' bulbs. The appellants contended that M/s. Revathi Agencies acted as a loan licensee and that the bulbs were manufactured on their behalf. However, the Additional Collector found that M/s. Revathi Agencies did not supply raw materials or technical know-how, nor did they inspect the manufactured goods, which are essential criteria for being considered a manufacturer under the Central Excise Law.

2. Inclusion of the Value of Bulbs Sold Under the Brand Names 'Bijlite' and 'Revlite' in the Exemption Limit:
The appellants argued that the value of the bulbs sold under the brand names 'Bijlite' and 'Revlite' should not be included in the exemption limit under Notification No. 71/78 and 80/80. They claimed that these bulbs were manufactured on behalf of M/s. Revathi Agencies, who were exempted from taking out a central excise license. However, the Additional Collector held that the appellants were the actual manufacturers and that the value of these bulbs should be included in the exemption limit, as M/s. Revathi Agencies were merely acting as wholesale dealers.

3. Compliance with Procedural Formalities Under the Central Excises and Salt Act, 1944:
The appellants were found to have failed to comply with the procedural formalities required under the Central Excises and Salt Act, 1944. They did not file the required price list for determining the assessable value under Section 4, nor did they enter the production/clearance of the bulbs in the statutory R.G. 1/E.B. 4 records. The bulbs were not cleared on gate passes as required by Rule 51A, nor were they shown in the R.T. 12 returns. This non-compliance led to the conclusion that the goods manufactured by the appellants on behalf of M/s. Revathi Agencies could not be deemed to be de jure the goods of the loan licensee.

4. Invocation of the Extended Time Limit for Demanding Duty Under Rule 9(2):
The Additional Collector invoked the extended time limit under Rule 9(2) for demanding duty, citing the suppression of facts with the intent to evade payment of duty. The appellants argued that there was no suppression of facts and that the departmental officers were aware of the manufacture on a loan license basis. However, the Tribunal upheld the invocation of the extended time limit, stating that there was wilful non-compliance with mandatory requirements and an attempt to evade payment of duty by availing of an unauthorised and inadmissible exemption.

5. Imposition of Penalty Under Rule 173Q:
The Additional Collector imposed a penalty of Rs. 5,000 on the appellants under Rule 173Q. The appellants argued that the penalty was imposed without discussing the various violations alleged and that it was illegal. The Tribunal acknowledged that the departmental officers had been informed regarding the manufacture on a loan license basis and that the appellants had declared the quantities in question. However, they found that the non-compliance with the rules justified the imposition of a penalty. Considering the circumstances, the Tribunal reduced the penalty to Rs. 500.

Conclusion:
The Tribunal upheld the order of the Additional Collector regarding the demand for duty but reduced the penalty imposed on the appellants to Rs. 500. The appeal was otherwise rejected.