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TMI Blog1986 (2) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... he structurals fabrication done on job work basis they would be entitled to the benefit of that Notification. The appellants have cleared the goods under appropriate gate passes and RT-12 returns have also been submitted every month. 3. While so a show cause notice was issued by the Supdt. on 5-6-1980 alleging that the appellants had contravened Rule 9(1) read with Rules 10 and 173F of the Central Excise Rules, 1944, inasmuch as they had cleared structurals fabrication and railway wagons during the period 1-3-1975 to 31-12-1978 from their factory on payment of central excise duty under T.I. 68 on conversion cost only without including the value of the raw-materials received by them from different parties. The appellants were required to show cause to the Asstt. Collector as to why central excise duty of Rs. 6,33,072.50 should not be realised from them and why a penalty should not be imposed. The appellants sent a reply inter alia stating that they have entered into job work contracts with various Government and/or semi-Government Institutions. The duty for the job work was payable on the job charges under Notification 119/75. Regarding the wagons they urged that the materials sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epers supplied by the petitioners to the railways for the purpose of levy of excise duty. 6. On the question of fabrication of structural Shri Narasimhan urged that it involved two aspects. The first was whether the party bought full duty paid materials and supplied the same to the customer. There is no dispute in respect of such structurals. The second category would be whether the customer supplied the materials and the appellants effected certain fabrication and returned the same to the customer. For the cases falling under the second category the appellants would be eligible for the benefit of the Notification No. 119/75. This Notification did not contemplate any option being exercised as a pre-condition. The levy of excise duty should be on the job work basis as there was no sale of the materials. The appellants had submitted the RL-12 returns periodically indicating therein the fabrication of structurals. The bills for the job charges were also enclosed. The assessment was not completed within the financial year by the Department. On 21-9-1983 to Supdt. determined the duty after orders of adjudication were passed by the Collector of Central Excise, Calcutta. Shri Narasimha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows :- The Notification No. 119/75 contemplates the need for levy and collection of excise duty from the person described as job worker and provides for computation thereof. Excise duty would be recoverable only when a manufacturing activity takes place and as a result a new and distinct product with a distinctive name, character and use comes into existence. Therefore, the mere fact that reason by of the activity of the job worker a new product (processed product) has come into existence than what was entrusted to him by the customer would not for that reason itself rule out the applicability of the notification. After considering the several decision on the point the Tribunal held that the interpretation of the Notification by the Madras High Court in 1982 - E.L.T. - 370 (Collector of Central Excise v. Madura Coats Ltd.) and the Gujarat High Court in 1978 E.L.T. J 533 (Anup Engineering Ltd., Ahmedabad and Others v. Union of India and Others) were to be adopted. In 1985 (22) E.L.T. 456 [Unik Springs (India), Faridabad v. Collector of Central Excise, New Delhi] the term that article was interpreted as the article entrusted for job work should after the application of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the short-levy or non-levy refers to the period when different period of limitation was available . In 1984 (15) E.L.T. 243 (Raymond Woollen Mills Ltd. v. Collector of Central Excise, Bombay) the Tribunal has held that in the absence of any such explicit or implied charge in the notice it was not open to the authorities to apply the period of five years on the basis of alleged mis-statement or wrong declaration: 9. At any rate, according to the learned counsel the imposition of penalty was unwarranted. For the fault of the Department in assessing the RT-12, the party cannot be penalised. 10. Shri A.K. Jain, the learned SDR, elaborately argued that there was no question of time bar. Rule 9 and Rule 10 alone were in force at the time of issuance of the show cause notice and it was not open to the appellants to rely on deleted provisions. It was open to the Department to reckon the period of limitation from the date of finalisation of the RT-12. Rule 173PP (10) did not fix any time limit for the finalisation of the assessment. The embargo was only against the completion of the assessment before the end of the financial year. The assessment could not be taken up earlier because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Rules, 1944. It is well settled that Rule 9(1) refers to removal of excisable goods except on payment of excise duty. The appellants have filed their classification list which was approved periodically by the Department. Till May 1980 the manner of evaluation and the duty paid have been accepted by the Department. It is significant to note that there is no allegation of clandestine removal or mis-declaration alleged in the show cause notice. The learned counsel for the appellants rightly relied on the ruling reported in 1984 (15) E.L.T. 211 (supra) for the proposition that the clearance must have been in contravention of Rule 9(1). Such a contravention can be presumed only when the removal and the clearance were made with the intention to prevent payment of duty. In other words there must be deliberate secrecy in the manner of removal or deception practiced by the assessee so that central excise authorities were kept totally in dark about the removal. On the present facts one cannot accept such a contention because the letter dated 17-3-1975 indicates that the appellants have informed the Superintendent that the fabrication of steel was carried on in the factory was not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it clear that the provisions of Rules 10 and 11 would apply and for the words three months in Rule 10 or in Rule 11 the words one year from the close of the accounting year followed by the assessee should be substituted. It is manifest that the time limit prescribed under Sections 11A and 11B would apply to recover short-levy or excess refund of levy. The demand or refund on RT-12 assessment has necessarily to be finalised within the time limit laid down in Sections 11A and 11B of the Central Excises and Salt Act, 1944. Such an interpretation alone would be reasonable in the circumstances. If the argument of Shri Narasimhan is accepted, then there cannot be an assessment after the close of the accounting year at any time. Nor the contention of Shri A.K. Jain that the assessment could be made at any time could be approved. On the facts of the present case, the show cause notice would be barred by time. 16. The appellants claim that they are entitled to the benefit of Notification 119/75. Under this Notification, the expression job work means such items of work where an article intended to undergo the manufacturing process is supplied to the job worker and that article is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court against that decision. But in the course of this order we have referred to the several decisions cited by the learned counsel and also the view taken by the Larger Bench of the Tribunal wherein the primary considerations for the application of the Notification 119/75 have been explicitly \ set out. Considering all these aspects we are of the view that the appellants are entitled to the benefit of Notification 119/75. 17. The Revenue has sought to include the value of the wheel sets, coupler sets and axle boxes supplied by the railways for the manufacture of the wagons. Even the show cause notice shows that these items were received free of cost from the Government. We are of the view that the appellants have paid duty on the invoice value which does not include the value of the materials supplied by the railways free of cost. It was urged on behalf of the appellants that these parts were fitted to the wagons when they left the factory. The manufacture of the wagons was complete even without these fittings but these items were fixed with a view to afford greater efficiency to the manufactured product. There was no sale of these items by the appellants to the railways. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the show cause notice dated 5-6-1980 issued by the Superintendent, Central Excise Range-5/XII Division, we read that he demands duty under item 68 for the period 1-3-1975 to 31-12-1978 on structural fabrication and railway wagons, which he says, they cleared from their factory by paying duty only on the cost of conversion without including the value of raw materials received by them from different parties for conversion into other products. The value inclusive of the raw materials is given as Rs. 25748686.40 and Rs. 16528960.00 for structurals and wagons. The factory is stated to have evaded central excise duty totalling Rs. 633072.50, on the value of the raw material. 22. There is serious doubt about the validity of the proceedings before the lower authorities for reasons that I will narrate presently. But first I would like to record my dissatisfaction with the proceedings themselves. Neither the show cause notice nor the order of the Collector detail the job work done by M/s. Bridge Roof Company. It must be remembered that not all job works are the same; some are a simple matter of drilling holes or polishing plate or cutting a sheet to smaller size. But others involve mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they made bottom and top chord, end raker, gussets, cross girder, roof girder, trusses and so on and so forth. For the article to return as the same article, it would have to be an article that fell under Item 68 before the job work as well as after the job work. These steel products channel plates, joist etc. were not articles assessable under Item 68, but under Item 26AA as steel products and sections while the goods made from them were no doubt assessable under item 68. What went in were 26AA article and what came out were 68 goods. The article was not returned; another article made from it was returned. The job work concession which was apparently permitted by the central excise should not have been given to goods which, when they came to M/s. Bridge Roof Co., were assessable under Item 26AA, or at least not under item 68. Job work requires they should go back as the same article i.e. an article assessable under item 26AA, and Notification No. 119/75 is not available to 26AA, an anomaly, but one which we can do nothing about. 25. The clearances were permitted by the Assistant Collector under Notification No. 120/75, dated 30-4-1975. The assessee filed a declaration in Sept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from availing of the aforesaid exemption during the remaining period of the relevant financial year." Clearances were made under this notification and the dispute which arose was that the value on which the duty was paid by M/s. Bridge Roof Co. did not include the value of the materials they received from their customers and on which they did job work. The notification covers goods cleared from the factory on sale and it was the argument of M/s. Bridge Roof Co. s counsel that all they sold was only the job work on the structural and the wagons (without the wheels and bearings). The actual materials, the wheels bearings etc., which they received from the customers were not sold by them, and their clearances on sale from their factory under Notification No. 120/75-CE would not arise. 26. The concession is on what is in excess of the duty calculated on the basis of the invoice price charged by the manufacturer for sale of such goods . And the price charged for the sale in these cases can only be the price for the goods minus the materials they received from the customers, who for obvious reasons, will not agree to pay for materials that belong to themselves. 27. The noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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