2002 (10) TMI 152 - AT - Central Excise

Summary

Issues involved: Assessment of duty on repacked goods, valuation of repacked goods, applicability of Section 4(1)(b) of the Central Excise Act, 1944, imposition of penalty under Rule 173Q and Section 11AC, demand of interest under Section 11AB.

Assessment of Duty on Repacked Goods:
The appellant, a manufacturer of paints, cleared paints in containers of varying capacity from 500 ml to 200 litres. These 200 litre packs were sent to job workers to repack into smaller packs, which were then sold from depots. The Department alleged that the repacking made the goods marketable and demanded duty on the enhanced value of the repacked goods. The lower authority confirmed the demands based on the assessment of the goods in factual terms as the actual size of the containers to be repacked before reaching the depots. The Tribunal found that goods should be assessed in the form in which they are cleared from the factory, not the form in which they are sold from the depot after repacking, when such repacking does not amount to manufacture.

Valuation of Repacked Goods:
The Tribunal noted that the appellant had taken the price of a 20 litre pack as the basis for determining the assessable value of the repacked goods, which was not in accordance with the law. The Department argued that the actual price of the smaller containers should be taken for assessment, as they were ascertainable and sold from the depots. The Tribunal upheld the Additional Commissioner's order demanding duty and penalty, stating that the appellants had contravened Central Excise Rules with the intention to evade duty.

Applicability of Section 4(1)(b) of the Central Excise Act, 1944:
The Tribunal considered the application of Section 4(1)(b) for valuation of the repacked goods when the value could not be determined at the time and place of removal. It was held that the value additions through repacking were conducted outside the factory premises, and the valuation of the 200 litre pack was under consideration, not the smaller sized packs delivered from the depots.

Imposition of Penalty under Rule 173Q and Section 11AC:
The Tribunal upheld the penalty imposed on the appellants under Rule 173Q for clearances before 28-9-96 and under Rule 173Q read with Section 11AC for clearances after that date. The appellants were found to have suppressed information about repacking activities and misled the Department, leading to the imposition of penalty and interest under relevant provisions.

Demand of Interest under Section 11AB:
The Tribunal clarified that interest was payable by the appellants for clearances after 28-9-96 but not for clearances before that date. It emphasized that goods had to be assessed as cleared from the factory gate, and the depot could not be considered a place of removal for the purpose of valuation.

In conclusion, the Tribunal set aside the lower authority's order and allowed the appeals, emphasizing the assessment of goods in the form cleared from the factory and rejecting the argument that repacking made the goods marketable only after repacking.