2005 (12) TMI 135 - AT - Central Excise

Valuation of signboards - Demand and penalty - Manufacture of glow signs - Natural justice - HELD THAT -The Commissioner rightly observed that these different ways of supply of the finished goods did not make a difference to the issue. What the appellants appear to be doing is that they make one part of the glow sign and out source other part/parts and supply all the parts after fitting them. The Commissioner relied upon Narne Tuleman 1988 (9) TMI 51 - SUPREME COURT as the situation and the facts are identical. An issue was also made on the valuation. It was argued that the Commissioner arrived at the revised value behind the appellants back. This does not appear to be so. The appellant raised disputes in regard to valuation before the Commissioner during the course of hearing. To verify the veracity of the issues raised, the Commissioner asked the investigating Officers to re-scrutinize the figures mentioned in the various annexures to the show cause notice. On the basis of such scrutiny the Commissioner quantified the demand. The appellants' claim that the Commissioner did some thing behind their back is not correct. The appellants' attempt to raise fresh issues on valuation are rejected. The appellant argued that extended period of limitation is not invocable. We do not see why not. The appellant was receiving orders for glow signs and was supplying the same. He kept this fact to himself. He never disclosed to the Department that he was either installing the glow signs himself or was supplying fully manufactured glow signs. The plea of bona fide belief is neither here nor there. A blind belief that what one is doing is right does not make it a bona fide belief. The Commissioner imposed an equal amount of penalty u/s 11A. It was pleaded that this was not a case where a maximum penalty should have been imposed. We are inclined to accept this plea and accordingly pass the following order - Demand for duty is confirmed. Extended period is invocable. Penalty is reduced to Rs. 50,000/- (Rupees Fifty thousand only). Subject to the above modification the order of the Commissioner is upheld. The appeal is partly allowed on the above terms.

Summary

Issues involved:
Manufacture of glow signs under Chapter Heading 94.05, valuation of glow signs, extended period of limitation, imposition of penalty under Section 11A.

Manufacture of glow signs under Chapter Heading 94.05:
The case involved the accusation against the appellant of manufacturing glow signs falling under Chapter Heading 94.05 and clearing them without payment of duty. The Commissioner concluded that the appellant manufactured glow signs based on statements from customers and the assembly of various parts to create the finished product. The Commissioner relied on precedents where assembly of items at the site amounted to manufacturing, rejecting the appellant's argument that they did not manufacture the Tin/Aluminium box. The Tribunal upheld the Commissioner's decision, stating that the appellant's activity constituted the manufacture of glow signs under Chapter Heading 94.05.

Valuation of glow signs:
The appellant disputed the valuation arrived at by the Commissioner, claiming a lower payable amount. The Commissioner quantified the demand after re-scrutinizing figures mentioned in the show cause notice annexures. The Tribunal rejected the appellant's argument that the Commissioner acted behind their back and raised fresh issues on valuation, upholding the Commissioner's valuation determination.

Extended period of limitation:
The appellant argued that the extended period of limitation was not applicable as they acted with a bona fide belief and did not disclose certain facts to the Department. The Tribunal disagreed, stating that the appellant's failure to disclose the manufacturing and supply of glow signs warranted the invocability of the extended period of limitation, emphasizing that a blind belief does not constitute a bona fide belief.

Imposition of penalty under Section 11A:
The Commissioner imposed an equal amount of penalty under Section 11A, which the appellant argued against, stating it was not a case for a maximum penalty. The Tribunal agreed and reduced the penalty amount to Rs. 50,000, upholding the Commissioner's decision with this modification. The appeal was partly allowed on these terms.