1987 (2) TMI 174 - AT - Central Excise

Summary

Issues:
- Whether the excise duty not paid should be included in computing the value of clearances for exemption purposes.
- Whether the imposition of penalty is justified.

Analysis:
1. The case involves the appellants, manufacturers of Chromium Plating Sanitary Bath Room Fittings, who cleared goods without obtaining a Central Excise Licence and without paying Central Excise duty during a specific period. The dispute arose when the authorities demanded duty of Rs. 1,94,053 from the appellants for the said clearances exceeding the exemption limit. The Collector imposed a penalty of Rs. 1,00,000 alongside the duty demand.

2. The appellants appealed before the Central Board of Excise & Customs, where they admitted liability to pay duty for the clearances during the period in question. They argued their ignorance of the new criteria and continued to avail the exemption they were entitled to before the specified date. The Board confirmed the duty demand as the clearances exceeded the prescribed limit, but reduced the penalty to Rs. 10,000.

3. The main argument presented by the appellants was that the excise duty payable should be excluded while calculating the value of clearances to determine if they exceeded the exemption limit. The appellants contended that the term "value" under Section 4(4)(d) does not include excise duty payable on the goods. They argued that if the duty payable is deducted, the value of clearances would not surpass the exemption limit, thus justifying no penalty imposition.

4. The respondent argued that the excise duty, even if unpaid, should be considered in computing the value of clearances for exemption purposes. They cited a Calcutta High Court case to support their position that the actual value after duty payment should be considered for exemption eligibility, not the deemed value under Section 4 of the Act.

5. The Tribunal referred to various precedents, including decisions by the Karnataka High Court and earlier Tribunal rulings, to determine the scope of exclusion of excise duty in calculating the assessable value of goods. The Tribunal agreed that only the duty actually paid on the manufactured goods should be excluded to arrive at the assessable value.

6. Ultimately, the Tribunal held that the appellants were not entitled to exclude the excise duty that they had not paid. Consequently, the value of their clearances exceeded the prescribed limits under the Notification. Regarding the penalty, considering the circumstances and the reduced penalty already imposed by the Board, the Tribunal found no justification for further reducing the penalty.

7. Therefore, the appeal was dismissed, and the appellants were not granted relief in excluding the excise duty from the calculation of the value of clearances for exemption purposes. The penalty imposed by the Board was upheld, and no further reduction was deemed necessary.