2002 (4) TMI 414 - AT - Central Excise

Summary

Issues: Valuation of printing cylinders in the assessable value of aluminium foils, method of computing short levy, imposition of penalties

Valuation of Printing Cylinders:
The appellant manufactures printed aluminium foils subject to Central Excise duty under Heading 7607. The foils are sold to pharmaceutical companies for packaging medicines, with specific details printed on them using custom-designed cylinders. The cost of each cylinder ranges from Rs. 800 to Rs. 1500, recovered separately from customers. A show cause notice was issued for duty short paid during 1993-1996. The impugned order demanded over Rs. 8 lakhs in duty and imposed penalties. The appellant does not contest the principle of including cylinder value in assessable value but argues for a proportionate addition based on amortization principles, citing a Tribunal decision. The appellant contends the duty payable should be Rs. 63,000, already deposited.

Method of Computing Short Levy:
The appellant disputes the method used in the impugned order to calculate the short levy, arguing for a proportionate addition towards cylinder costs based on amortization principles. The Tribunal's decision in Flex Industries Ltd. case supports this principle. The appellant asserts that the total duty payable should be Rs. 63,000, deposited with the department. The Tribunal agrees that the short levy should be calculated based on the amortization principle, setting aside the rest of the duty demand.

Imposition of Penalties:
The appellants claim that the omission of cylinder costs from the assessable value was not intentional but due to uncertainty, settled by the Flex Industries Ltd. case. They argue against penalty imposition, stating it was unjustified as there was no intent to evade duty. The penalty on the appellant is reduced to Rs. 10,000 due to factors including the amount of duty short levied. The penalty imposed on Shri Surinder Mehra is set aside as there was no specific reason mentioned in the impugned order other than his role in excise matters. The Tribunal finds this insufficient grounds for penalty imposition.

Conclusion:
The appeal of M/s. Protech Engg. Inds. Pvt. Ltd. is partially allowed, modifying the duty demand and penalties. Shri Surinder Mehra's appeal is allowed, with the penalties set aside.