1985 (4) TMI 298 - AT - Central Excise

Summary

Issues Involved:
1. Exceeding the total clearance value limit for exemption.
2. Clubbing of clearances for job work.
3. Validity and rate of excise duty demanded.
4. Legitimacy of penalty imposed.
5. Confiscation of plant and machinery.

Detailed Analysis:

1. Exceeding the Total Clearance Value Limit for Exemption:
The appellants, M/s. Bliss Pack, were required to pay excise duty and a penalty due to exceeding the Rs. 30 lakh clearance limit as per the Central Excise Tariff. The Collector of Central Excise determined that the appellants had exceeded this limit on 22-1-1979. The Tribunal found that the appellants had indeed crossed the limit and should have discharged the duty liability from that date onwards.

2. Clubbing of Clearances for Job Work:
The appellants argued that the clearances of corrugated boxes manufactured on behalf of M/s. Bliss Enterprises should not be added to their total clearances. However, the Tribunal held that the appellants were the actual manufacturers of the corrugated boxes and not merely job workers. The Tribunal relied on various precedents, including the Allahabad High Court and the Tribunal's own decisions, to conclude that the appellants were responsible for the entire value of the manufactured goods.

3. Validity and Rate of Excise Duty Demanded:
The appellants contested the rate of duty, arguing it should be 5% instead of 8%. The Tribunal found that the appellants had not maintained proper accounts and had removed goods without completing excise formalities. Therefore, Rule 9A(5) of the Central Excise Rules applied, making the applicable duty rate 8%. The Tribunal upheld the demand of Rs. 1,17,281.85 as valid.

4. Legitimacy of Penalty Imposed:
The Tribunal reviewed the penalty of Rs. 25,000 imposed under Rule 173Q read with Rule 9(2) of the Central Excise Rules. The Tribunal found that the appellants had adopted a dubious method to evade duty, justifying the penalty. The Tribunal referenced the statement of Shri Harish Keshavlal Shah and other evidence to support this conclusion.

5. Confiscation of Plant and Machinery:
The Tribunal upheld the confiscation of the plant and machinery under Rule 173Q(2)(a) due to the appellants' evasion of duty. However, the Tribunal reduced the redemption fine from Rs. 10,000 to Rs. 1,000, considering that a penalty of Rs. 25,000 had already been imposed.

Conclusion:
The Tribunal confirmed the order of the lower authority with a modification in the redemption fine, reducing it to Rs. 1,000. The appeal was partly allowed only to this extent.