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TMI Blog1985 (5) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... m payment of Central Excise Duty under Notification No. 176/77. This allegation was based on the alleged fact that the excisable goods cleared by the appellants during the financial years 1976-77 and 1977-78 exceeded Rs. 30 lakhs. They were threatened with duty liability of Rs. 1,43,383.55, confiscation of certain goods and imposition of penalty as well as other penal actions. After hearing the appellants and considering their reply to the show cause notice, the Collector held the charges against the appellants proved. Besides, including the value of goods exported in the value of clearances, the Collector took into consideration the value of cold rolled strips which the appellants got manufactured from flats and billets on payment of labour charges from other factories. .He dismissed the plea of the appellants that conversion of flats and billets into strips cannot be called a process of manufacture with reference to the wording of Tariff Item 26AA. He further held that there was suppression (presumably of facts) inasmuch as the appellants did not disclose the value of stainless steel strips which were got manufactured and cleared by the appellants on their account. He. therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso submitted that the value of goods exported should not be included in the value of clearances as only goods cleared for home consumption should be taken into consideration. Finally, the learned Counsel submitted that the Department wrongly took into consideration the average purchase value per kilogram of stainless steel flats and this led to erroneous working out of the duty demanded to the disadvantage of the appellants. 7. The learned representative for the Department opposing the arguments submitted that the show cause notice contained a charge of suppression and the Order-in-Original contained a finding that there was a suppression. Therefore, he submitted that the enlarged period of limitation was available to the Department. Besides, the appellants did not file the declaration under Notification No. 176/77. The learned representative argued that the manufacture and clearance of strips was done on behalf of the appellants and that the value of the same should, therefore be included in the value of the clearances of the appellants factory. Referring to the orders passed by the Tribunal in the matter of M/s Britannia Biscuits Co. Ltd., Madras v. CCE, Madras (No. 204 to 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -77 and 1977-78 exceeded Rs. 30 lakhs or not and (ii) whether the show cause notice was time-barred. 11. We considered the question of time bar of show cause notice. Though the learned representative for the respondent argued that the seizure took place on 12-10-1979 and show cause notice was issued on 7-4-1980, and hence there was no question of limitation, the limitation has to be examined with reference to the demand for duty also. If the normal period of limitation is applied, the show cause notice is clearly time barred in respect of earlier financial years. However, we note the arguments of the learned respondent that the show cause notice made substantial allegations of suppression of facts and that therefore, the enlarged period of limitation, viz., five years is available to the Department. We perused the show cause notice and find that it contains allegations of suppression of facts. It also impliedly alleges mis-declaration of value in respect of the goods cleared by the appellants in the financial years 1976-77 and 1977-78. Besides, the appellants have not shown that they brought the fact of manufacture of cold rolled stainless steel strips etc. by other parties at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 30 lakhs : Provided further that the exemption contained in this notification shall apply only to the first clearances for home consumption by, or on behalf of, the manufacturer referred to in this notification, from one or more factories, upto a value not exceeding rupees 30 lakhs during a financial year subsequent to 1977-78, and upto a value not exceeding rupees 24 lakhs during the period commencing on the 18th day of June, 1977 and ending on 31st day of March, 1978. Explanation. -For the purpose of determining the value of any capital investment, only the face value of such investment at the time when such investment was made shall be taken into account." 14. This Notification takes into consideration, for deciding the entitlement of exemption, the value of clearances for home consumption of goods by or on behalf of the manufacturer from one or more factories. In the instant case, the position is that the appellants buy flats/billets and get them rolled by the other factories ; the resultant products are then sold. It appears to be admitted that the resultant products do not enter the factory of the appellants. The appellants arguments which have been mentioned earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of the strips was done on behalf of the appellants and this fact is relevant for interpretation of the notification in question. In the circumstances we hold that neither of the judgments cited by the appellants cover the facts of the present matter. 15. We have also examined the argument that flats and billets when converted into strips do not involve any manufacture as both items fell under 26AA (3) of the CET. In support of this argument the appellants cited the Bombay High Court judgment in Empire Dyeing and Mfg. Co. Ltd. v. V.P. Bhide and Others (Reported in 1977 E.L.T. J 34). We have gone through this judgment carefully. We see therein that the High Court held that manufacture of cotton fabrics was complete when the goods were released and sold in the market after duty was levied and collected from the manufacturers. It was with reference to this situation that the question of liability to duty after processing fabrics was decided. The High Court also took into consideration the fact that cotton fabrics mentioned in Sub-item 5 of Item 19 of the First Schedule to the Central Excises and Salt Act, 1944 hereinafter referred to as the Act) have not been Sub-clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trips it cannot be said that there is no manufacture. 16. In these circumstances, there is no doubt there was manufacture and the appellants themselves during the course of hearing stated that duty was being paid on the strips by the other mills. The only question is whether the value of clearances should be included in the value of the clearances on behalf of the appellants. There is no dispute that the flats/billets were purchased by the appellants got rolled on payment of job charges and later sold to various parties, the proceeds accruing to the appellants themselves. 17. In this context, the learned representative relied upon the judgment of this Tribunal in the matter of Britannia Biscuits Co. Ltd., Madras v. Collector of Central Excise, Madras (Order No. 204 to 207/84-D, dated 19-4-1984). We have considered the ratio of this judgment. Whether the production of strips was on behalf of the appellants is essentially a question of fact and has to be decided with reference to the facts of the present case but we keep in mind the ratio of judgment in Britannia Biscuits Company s case. In this context we take note of the submission of the respondent who made a reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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