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TMI Blog1994 (5) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... in all the five appeals are common, they were heard together and are being disposed of by this common order. 2. BTPL and VEC the merchant manufacturers of man-made fabrics. They got their grey (unprocessed) man-made fabrics processed on job work basis from the processors RPIL and BPL. Additional excise duty under the provisions of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) (hereinafter referred to as the `Act of 1957 ), were levied on man-made fabrics at specific rates, and the specific rates of additional excise duty were related to the value range of the processed fabrics. The value of the processed fabrics was declared by the processors on the basis of the information supplied to them by the merchant manufacturers, on whose behalf the unprocessed fabrics were being processed by such processors, in terms of the authorisation filed by the merchant manufacturers, and accepted by the processors, under notification dated 5-11-1977. In the two show cause notices issued by the Collector of Central Excise, Jaipur, Under (1) No. V(55)15-64/Off./89 dated 15-2-1990 and (2) No. V(22) 15/9/Off./89 dated 1-8-1990, it was alleged that the processors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the merchant manufacturer, on whose behalf the fabrics were being processed by such processor. The processors were doing job work for a number of traders and they were required to file declaration only on the basis of the information supplied to them by the traders. The price lists as submitted by the processors in these cases have been approved by the department and their RT-12 returns have also been assessed. As what was happening in the factory of the supplier was no concern of the processor. Their records have been duly checked by the department from time to time. In this connection the learned Advocate relied upon the decision of the Hon. Supreme Court in the case of Ujagar Prints v. Union of India, reported at 1988 (38) E.L.T. 535 (S.C.), and the clarificatory decision reported at 1989 (39) E.L.T. 493 (S.C.). Reliance was also placed on the Supreme Court decision in the case of Empire Industries Ltd. v. Union of India reported at 1985 (20) E.L.T. 179 (S.C.). He submitted that the excise duty could only be levied on the basis of the declared prices, and in any case the trader s profit was not includible while arriving at the assessable value of processed fabrics. In suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while the goods were being marketed at higher value, and this fact was not disclosed to the department. There was thus a deliberate and mala fide attempt to remain within the lower value range to evade payment of appropriate duty chargeable on appropriate value range. The goods were being sold at much higher value than declared. The contraventions of the law have been admitted by the responsible officers of the appellant s company and none of those state- ments have been retracted. The adjudicating Collector of C. Excise, taking note of the various facts in the case, has not imposed any penalty on the processors. As regards VEC they were a merchant manufacturer. They were issuing set of invoices with the same serial number. Certain varieties of fabrics were cleared without filing price lists. Similarly BTPL had only shown yellow colour invoices to the department. The learned SDR referred to the contention (e) (para 26) of the Ujagar Prints case 1988 (38) E.L.T. 535 (SC), and paras 28 and 31 of the Empire Industries case 1985 (20) E.L.T. 179 (SC), and stated that the intrinsic value of the fabrics had to be taken. She stated that in the various citations referred to by the learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar value per square metre, a given specific rate of additional excise duty was attracted; if the value exceeded the above but did not exceed the next higher specified value, a higher rate of duty was attracted and if the value further exceeded but did not exceed the further higher value, the next higher rate of duty was to be levied, and so on. Thus the levy of duty depended upon the correct declaration of the value of the fabric. 10. BTPL and VEC were engaged in the manufacture of grey (unprocessed) man-made fabrics woven on their power looms. The unprocessed man-made fabrics manufactured on their power looms were sent by them for processing/further manufacturing on their behalf and return, on job work basis, to RPIL and BPL. Processing of fabric is a process of manufacture and as the fabrics of BTPL and VEC were processed/manufactured on their behalf on job work basis by RPIL and BPL, BTPL and VEC were required to take out a central excise licence under provisions of Rule 174 of the Rules, and were obliged to follow the prescribed procedure, observe requisite formalities and pay proper excise duty. Under Rule 174A of the Rules, exemption to any class of manufacturers who get t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shown while their original copies were in white colour and showed higher prices. The higher of the two prices were the prices at which the processed man-made fabrics were actually sold while excise duty was calculated on the lower of the two prices. Some of the invoices were found to be forged. They were having two set of invoices bearing same serial number, date and name of the party, one yellow coloured and another pink coloured with which packing slips were attached. Entry in their sales Registers was made from pink coloured copies of invoices while yellow coloured invoices in which lower prices were shown, were according to the prices declared to the department. At the time of the investigation the Director of the Company, BTPL had admitted that there were two type of invoices - one yellow coloured and another pink coloured. In yellow coloured copies of invoices sale price of some qualities differed with the sale price shown in pink coloured copies of invoices. Yellow coloured invoices were according to the prices declared to the department, which they had been presenting to central excise officers at the time of price verification. He stated that the quality, quantity and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the processed fabrics were returned back to the merchant manufacturers. The additional excise duty was paid by the processors after applying the specific rate of duty on the value as declared to them by the merchant manufacturers. The principles for the determination of the value are laid down under Section 4 of the Act. With regard to processed fabrics, the Hon. Supreme Court in the case of Ujagar Prints v. Union of India - 1988 (38) E.L.T. 535 (S.C.) have held in para 37 of their judgment that the value for the assessment under Section 4 of the Act will be the intrinsic value of the processed fabrics which is the price at which the fabrics are sold for the first time in the wholesale market. Earlier in the case of Empire Industries Ltd. v. Union of India - 1985 (20) E.L.T. 179 (S.C.) the Hon. Supreme Court in para 47 of their judgment have observed as under : When the textile fabrics are subjected to the processes like bleaching, dyeing and printing etc. by independent processors, whether on their own account or on job charges basis, the value for the purposes of assessment under Section 4 of the Central Excise Act will not be the processing charges alone, but the intrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes of arriving at the correct value of the processed fabrics, the trader s profit included in such value has to be excluded. It is seen from the authorisation filed by the merchant manufacturers and as accepted by the processors, that at the time of filing the authorisation no claim was made for exclusion of any trader s profit. To repeat, the break-up of the value has been declared under the following heads : (1)Grey fabric cost (including weaving charges) (2)Shrinkage (3)Processing charges (4)Selling and other expenses (5)alue loss (6)Cost of sales (7)Profit 19. Nowhere it has been explained that the profit shown at Sl. No. 7 above was the trader s profit. In the matter before us the value of the processed fabric is relevant to identify the value slab/the value range under which the fabric under assessment falls so that a particular specific rate of duty per square metre of the fabric could be applied thereon. Even if it is assumed that the profit shown at Sl. No. 7 above was the trader s profit, we find that it will make no difference to the value slab or the value range in view of the fact that the differential between the declared prices and the selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Galaxy Rs. 24.94 Rs. 38/- to 46/- 15. New Look Rs. 37.08 Rs. 60/- to 65/- 20. While we agree that from the value the traders profit if it is already included therein has to be excluded before the particular rate of duty is applied on such value, we do not find that in the particular circumstances of this case this exclusion (to the extent of the amount as shown against Sl. No. 7 of the heads of the value) from the higher selling prices as culled out from their private records will make any difference to the conclusions drawn and the duty liability arrived at. 21. Although we have come to a finding that even if it is assumed that the profit as shown in the authorisation was really the trader s profit its exclusion from the selling price (as per private records of merchant manufacturers) will have no effect on the duty liability (in view of the fact that differential was much more than such a profit), we consider that in the interest of justice, if the appellants in any particular case could prove to the satisfaction of the jurisdictional Asstt. Collector of Central Excise that after deducting from the higher invoice value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in such definition . In Heeral Enterprises, Bombay v. Collector of Customs, Bombay - 1986 (25) E.L.T. 269 (Tribunal), the Tribunal observed that the word `including not only enlarges the scope of a term/expression but also what comes after it cannot be read in isolation from what comes before it. In Collector of Central Excise v. Indian Petrochemicals Corporation Ltd. 1990 (46) E.L.T. 173 (Tribunal), the Tribunal (relying upon the Supreme Court decision in the case of State of Bombay v. Hospital Majdoor Sabha - AIR 1960 S.C. 610), had observed in para 32 of their decision that the word `including used in an inclusive definition denote extension and cannot be treated as restricted in any sense. 26. Levy and collection of duties of excise are not an act in isolation. They are related to the mechanism of imposition of levy and the mode of and manner of collection. By necessary implication any infraction with regard to the levy and collection had to invite appropriate measures for enforcing the levy and collection. In the case of C.A. Abraham Uppottil Kottayam v. Income Tax Officer, Kottayam 1961 (2) SCR 765 the Hon. Supreme Court have held that a penalty is imposed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty has not been discharged. 29. During the relevant period no basic excise duty was leviable on the fabrics in question. The tariff rate itself for basic excise duty was nil. Only additional excise duty as effective in terms of exemption notification [issued in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Rules read with sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act 1957], was leviable. The goods in question were excisable goods and the manufacturers both who were engaged in the processing of the fabrics and those on whose behalf the processing activities were undertaken, were obliged to comply with the procedure and to fulfil the requirements as laid down in the central excise rules, and thus for contravention of the specific provisions of the central excise rules, independently if the provisions of the Additional Duties Act, appropriate penalty under relevant rules could be imposed thereon. In this connection reference may be made to the Madras High Court decision in the case of Tamilnadu (Madras State) Handloom Weavers Cooperative Society Ltd. v. Asstt. Collector of Central Excise, Erode 1978 (2) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable is not so recovered he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such persons resides or conducts his business and the said Collector, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrears of land revenue." Provisions of Chapter X of Indian Penal Code, especially Sections 176 and 177 (Omission to give notice or information to public servant by person legally bound to give it and furnishing false information) falling therein can also be made use of by the Revenue. When penalty is additional law, constitutional mandate requires a clear autho- rity of law for imposition thereof. If long drawn arguments are needed to ex- plain if the Act by referential legislation or legislation by incorporation levies penalty or not, it is better for the Court to lean in favour of the tax payer. There is no room for presumption in such a case. The mere fact that all these years the Additional Duty Act has not been challenged on this ground is of no conse- quence if authority of law as mandated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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