9911796707
TMI Blog1990 (3) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/182/75 dated 5th October, 1975, under which the appellants were to be paid Rs. 3.50 for gross as labour charges. The contract is subject to renewal. After the manufacture, the colour pencils were sent back to M/s. Lions Pencils (P) Ltd., Bombay. While so a Show Cause Notice dated 26th Aug., 1980 was issued on 5th September, 1980 proposing to recover duty on the pencils manufactured by them for the period 18th June, 1977 to 28th Feb., 1978; 1st March 1978 to 28th Feb., 1979; 1st March 1979 to 31st March 1980; 1st April 1980 to 15th April 1980 on various grounds inter alia that they are manufacturing pencils on behalf of M/s. Lions Pencils (P) Ltd. On receipt of reply the Collector confirmed the demand. The appeal to the Board was rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. In support of their contentions that they are independent manufacturers they relied on Ujagar Prints, etc. v. Union of India -1988 (38) E.L.T. P 535 (SC); Hindustan Everest Tools Ltd. v. Collector of Central Excise -1989 (39) E.L.T. P 662 (T); C.C.E., Madras v. Modoplast Pvt. Ltd., Coimbatore -1985 (21) E.L.T. 187 (T), Metal Box India Ltd. v. C.C.E., Calcutta -1986 (23) E.L.T. P 187 (T). 3. The second contention raised by the appellants is that the Show Cause Notice is barred by limitation. It is submitted that pencils fall under T.I. 68. Excise duty was first levied under T.I. 68 in the year 1975. Under Notification No. 54/75 dated 1st March 1975 and 10th May 1976 the pencils are exempt from payment of duty as they employed less th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that they have ignored this letter as the other officers opined differently. Therefore, it is submitted that there is no suppression of facts, fraud, collusion etc. and the Show Cause Notice is barred by limitation. At any rate it is submitted that the notice is barred for the period 18th June 1977 to 15th April 1980. 4. In reply Shri Arora submitted that the appellants are manufacturing on behalf of the manufacturer, the value should be clubbed with the value of the supplier of the raw material. His further submission is that even if the department is posted with the knowledge of the manufacture of the pencils by the appellants it is the responsibility of the appellants to correctly calculate the duty and pay. In support of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant is an agent of M/s. Lions Pencils Pvt. Ltd. [Metal Box India Ltd. v. C.C.E. -1986 (23, E.L.T. P 187]. Therefore, we are of the view that the appellants are independent manufacturers and they are liable to pay duty on the pencils manufactured by them. 7. In Ujagar Prints etc. v. Union of India [1988 (38) E.L.T. P 535] it was held that Excise Duty is imposed on production or manufacture of goods. This is quite independent of the ownership of goods. Therefore, the value and goods produced on job work basis, for the assessment under Sec. 4 of the Excise Act will not be the processing charge alone but the intrinsic value of processed fabrics which is the price at which the fabrics are sold for the first time in the wholesale market. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in H.S. Guru Instruments Ltd. is not relevant. 10. We, therefore, are of the view that the appellants are independent manufacturers and the duty is payable on the assessable value to be determined in accordance with principle laid down in Ujagar Prints case (supra). 11. The next question to be determined is whether the Show Cause Notice is barred by limitation. 12. The Show Cause Notice dated 26th Aug. 1980 issued on 5th Sep., 1980. The contention of the appellant is that from 1st March 1975 to 10th May 1976, the pencils are exempt from payment of duty as they employed less than 49 to 50 workers. Therefore, the remaining period is from 18th June to 15th April 1980. The liability to pay duty depends on whether production of appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X
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