1994 (5) TMI 122 - AT - Central Excise

Summary

Issues Involved:
1. Evasion of Additional Excise Duty
2. Responsibility for Declaring Correct Value
3. Maintenance of Duplicate Accounts
4. Inclusion of Trader's Profit
5. Imposition of Penalty

Detailed Analysis:

1. Evasion of Additional Excise Duty
The judgment addresses the demand for additional excise duty levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Act of 1957) and the Central Excises and Salt Act, 1944 (Act of 1944). It was alleged that the processors RPIL and BPL, along with merchant manufacturers BTPL and VEC, evaded additional excise duty by declaring incorrect descriptions and values of processed man-made fabrics. The Collector of Central Excise, Jaipur, found these allegations to be true, leading to a demand for unpaid duties and imposition of penalties.

2. Responsibility for Declaring Correct Value
The processors argued that under Notification No. 305/77-C.E., dated 5-11-1977, they were only required to declare the value as intimated by the merchant manufacturers. The processors relied on the information provided by the merchant manufacturers and filed declarations accordingly. However, the Tribunal held that the merchant manufacturers (BTPL and VEC) did not correctly declare the value of the fabrics, resulting in duty evasion. They did not fulfill their obligations under the notification, violating the conditions for exemption from Rule 174 of the Central Excise Rules, 1944.

3. Maintenance of Duplicate Accounts
It was admitted that BTPL and VEC maintained duplicate accounts, showing lower prices in the invoices presented to the Central Excise Department while selling the fabrics at higher prices. This was confirmed through the investigation, where it was found that the declared value was not the actual value. The Tribunal noted that this deliberate misrepresentation aimed to evade the appropriate duty chargeable on the correct value range of the fabrics.

4. Inclusion of Trader's Profit
The appellants contended that the trader's profit included in the value should be excluded when determining the assessable value. The Tribunal referenced the Supreme Court's decisions in Ujagar Prints v. Union of India and Empire Industries Ltd. v. Union of India, which clarified that the assessable value should include the processor's expenses, costs, charges, and profit, but not the trader's profit. However, the Tribunal found that the differential between the declared and actual prices was significant enough that excluding the trader's profit would not change the duty liability.

5. Imposition of Penalty
The Tribunal discussed the imposition of penalties under Rule 209A and Rule 173Q of the Central Excise Rules, 1944. The appellants argued that no penalty could be imposed for contraventions under the Act of 1957, citing the Delhi High Court's decision in Pioneer Silk Mills Pvt. Ltd. v. Union of India. The Tribunal agreed, referencing Section 3(3) of the Act of 1957, which does not explicitly provide for penalties. Consequently, the penalties imposed on BTPL and VEC were set aside, but the demand for duty was upheld.

Conclusion
The Tribunal confirmed the duty liabilities based on the higher values derived from the duplicate invoices but set aside the penalties imposed on BTPL and VEC. The appeals filed by M/s. Rajasthan Processors (India) Ltd. and M/s. Bhilwara Processors Ltd. were rejected, while the appeals by M/s. Bhilwara Textiles (P) Ltd. and M/s. Venus Engineering Corporation were accepted concerning the penalties.