1992 (7) TMI 203 - AT - Central Excise

Summary

Issues Involved:

1. Legality of the second show cause notice.
2. Effective date of the amendment to Notification 38/83 by Notification 133/83.
3. Clubbing of the value of clearances of Nail Polish manufactured by M/s. Shingar Cosmetics with Topiwala Trust.
4. Basis for determining the value of clearances.
5. Imposition of penalty.

Summary:

1. Legality of the Second Show Cause Notice:
The Tribunal rejected the contention that the second show cause notice was bad in law. It was observed that the first show cause notice was issued by the Range Superintendent, Vapi, while the second was issued by the Superintendent (Technical & Legal), Vadodara. The second notice included allegations of wilful suppression of facts and was broader in scope. The authorities had kept the first notice in abeyance, and no conflict of jurisdiction arose. Hence, the second notice was deemed permissible.

2. Effective Date of the Amendment to Notification 38/83 by Notification 133/83:
The Tribunal held that the amendment to Notification 38/83 by Notification 133/83, dated 27-4-1983, took effect from the date of the amendment and not from 1st April 1983. Exemption limits were thus Rs. 2.5 lakhs from 1st April to 26th April 1983 and Rs. 5 lakhs from 27th April 1983 onwards.

3. Clubbing of the Value of Clearances of Nail Polish Manufactured by M/s. Shingar Cosmetics with Topiwala Trust:
The Tribunal found no evidence to support the allegation that Topiwala Trust was getting Nail Polishes manufactured on a loan licence basis by M/s. Shingar Cosmetics. It was held that the value of clearances of Nail Polishes should not be clubbed with Topiwala Trust. Once excluded, the aggregate value of clearances during 1982-83 was Rs. 4,78,305.27, making them ineligible for exemption from 1-4-1983 to 26-4-1983.

4. Basis for Determining the Value of Clearances:
The Tribunal determined that the price at which the Lipsticks were sold by M/s. Ideal Cosmetics Corporation should be the basis for determining the value of clearances. The relationship between M/s. Creative Cosmetics, M/s. Ideal Cosmetics Corporation, and M/s. Sharp Distributors indicated that the first price charged by the manufacturing unit could not be accepted. The valuation adopted in the impugned order was upheld, and the adjudicating authority was directed to allow deductions for sales tax upon satisfactory evidence.

5. Imposition of Penalty:
The Tribunal observed that the appellants had suppressed material facts and contravened Rule 173Q(1). The plea of bona fide belief was rejected. However, the penalty was reduced from Rs. 50,000/- to Rs. 10,000/-, considering all the facts. The appeal was otherwise rejected.