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Issues Involved:
1. Admissibility of the exemption under Notification No. 105/80-C.E., dated 19-6-1980. 2. Valuation of the goods. Detailed Analysis: 1. Admissibility of Exemption under Notification No. 105/80-C.E. The appellants manufactured 3-3' Diamino Diphenyl Sulphone (DADS) from Dinitro Diphenyl Sulphone (DNDS) supplied by Hindustan Organic Chemicals Ltd. (HOC). They supplied 93% of the DADS to HOC and sold the remaining 7% in the market. They claimed exemption under Notification No. 105/80-C.E. for the years 1981-82 and 1982-83, without applying for a central excise license. The Superintendent of Central Excise issued a show cause notice, alleging incorrect valuation for the DADS supplied to HOC, asserting that the correct assessable value should be Rs. 63/- per Kg., as in the case of DADS sold in the market. This would make the total value of clearances exceed Rs. 30 lakhs, thereby disqualifying them from the exemption under Notification No. 105/80-C.E. The Assistant Collector initially dropped the charges, holding that HOC were the manufacturers and the goods supplied to HOC were meant for export, thus should not be included in the value of clearances for the exemption purpose. However, the Collector (Appeals) overturned this decision, holding that the appellants were the manufacturers and the value of goods supplied to HOC should be included in the clearances for determining eligibility for exemption. The Collector (Appeals) also held that the appellants suppressed facts and filed wrong declarations, justifying the extended time limit of 5 years for demanding duty. The Tribunal observed that Notification No. 105/80-C.E. exempts goods cleared for home consumption up to Rs. 30 lakhs. Goods cleared for export should not be included in this value. The Tribunal relied on its decision in the case of M/s. International Minelmech P. Ltd. v. Collector of Central Excise, Meerut, holding that goods meant for export should not be included in the computation of clearance value, even if not directly exported from the factory. The Tribunal remanded the case to the Assistant Collector for re-determination of the value of clearances, excluding the value of goods actually exported by HOC, based on documentary evidence. 2. Valuation of the Goods The appellants adopted an assessable value of Rs. 30.48 per Kg. for DADS supplied to HOC and Rs. 63.00 per Kg. for DADS sold in the market. The Collector (Appeals) held that the value for goods supplied to HOC should be the same as for those sold in the market, i.e., Rs. 63.00 per Kg., as there was no sale to HOC in the ordinary course, and HOC cannot be considered a separate class of buyers. The Tribunal agreed with this valuation, stating that 7% of the goods sold in the market at Rs. 63.00 per Kg. should set the assessable value for the 93% supplied to HOC. The Tribunal dismissed the appellants' reliance on decisions reported in 1987 (29) E.L.T. 167 (Tribunal) and 1987 (12) ECR 421 (App. Collector), as the facts in those cases were not similar to the present case. The Tribunal also rejected the appellants' argument for adopting the invoice value under Notification No. 120/75-C.E., as there was no sale to HOC, and the conditions of the notification were not fulfilled. Conclusion The Tribunal upheld the Collector (Appeals) decision on the valuation of goods and the applicability of the extended time limit for demanding duty due to suppression of facts. The case was remanded to the Assistant Collector to re-determine the value of clearances after excluding the value of goods supplied to HOC and actually exported by them, based on documentary evidence. The appellants were to be given an opportunity to produce evidence and a personal hearing before the re-determination.
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