1987 (10) TMI 162 - AT - Central Excise

Summary

Issues Involved:
1. Validity of the new partnership deed executed for RR&PM.
2. Whether RRI and RR&PM can be considered distinct entities for excise purposes.
3. Time-barred nature of the demand.
4. Computation of value under Section 4 in terms of Notification No. 71/78.
5. Justification for the penalty imposed.
6. Correct calculation of the duty demand.

Detailed Analysis:

1. Validity of the New Partnership Deed Executed for RR&PM:
The appellant argued that the new partnership deed for RR&PM effective from 1-12-1978 should be accepted despite not being registered. The Tribunal rejected this plea, stating, "The appellant has not submitted any evidence as to when they made the application for registration of their firm to the Sales Tax Officer for registering it w.e.f. 1-12-1978." The Tribunal emphasized that under Central Excise Law, the partnership deed must be registered to be recognized, and the appellant failed to prove the existence of the new partnership deed from 1-12-1978.

2. Whether RRI and RR&PM Can Be Considered Distinct Entities for Excise Purposes:
The appellant contended that RRI and RR&PM are distinct entities based on a Tribunal decision in M/s. G.D. Industrial Engineers. However, the Tribunal noted, "the facts in this case are different from the facts in the case of G.D. Industrial Engineers." The Tribunal concluded that since both units had identical partners, they should be treated as the same person under the General Clauses Act, thus their clearances must be clubbed for excise purposes.

3. Time-Barred Nature of the Demand:
The appellant claimed that the demand was time-barred as the show cause notice was issued beyond six months. The Tribunal dismissed this argument, noting, "the charge of wilful suppression of facts is borne out from the records of the case and the larger time limit of 5 years has been rightly invoked." The Tribunal found that the appellant had not declared the identical partnership and had delayed submitting invoices, justifying the extended time limit for demand under Section 11A of the Central Excises and Salt Act.

4. Computation of Value Under Section 4 in Terms of Notification No. 71/78:
The appellant argued that duty charged separately should not be included in the computation of value. The Tribunal rejected this plea, stating, "An amendment of Section 4 by the Finance Act, 1982 inserted an explanation to the effect that the duty actually payable by an assessee to the department alone would be deductible from the price of the goods charged by it from its customers." This amendment, given retrospective effect from 1-10-1975, overruled the Orissa High Court judgment cited by the appellant.

5. Justification for the Penalty Imposed:
The appellant argued that the penalty was unwarranted. The Tribunal disagreed, stating, "the offence of the appellant here does not merely relate to the amendment to Section 4 of the Central Excises and Salt Act; but also to other factors such as suppression of facts about correct valuation of goods and the two units being under the identical partnership." The Tribunal upheld the penalty, finding sufficient grounds for its imposition.

6. Correct Calculation of the Duty Demand:
The appellant contended that the duty demand was wrongly calculated as it included the element of duty in the total values. The Tribunal agreed with this plea, stating, "before arriving at an assessable value, after giving allowance of exemption limit of Rs. 5 lakhs, duty element should be deducted from the values (total realisation)."

Conclusion:
Subject to the modification in determining the amount of demand as per the appellant's plea in Serial No. (vi), the Tribunal found no merit in the various pleas of the appellant and rejected the appeal. The separate judgment by another member concurred with the conclusions, particularly emphasizing the lack of proper proof regarding the new partnership deed and the correctness of clubbing clearances for excise purposes.