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TMI Blog1997 (7) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... on payment of an amount of Rs. 600/-; confiscating one generating set found unaccounted in the appellants records with redemption fine of Rs. 500/-; confirming duty of Rs. 1,441/- on two generating sets under the provisions of Rule 9(2); imposing personal penalty of Rs. 4 lakhs on the appellant company and also confiscating the land, plant and machinery etc. with an option to the Company to redeem the same on payment of fine of Rs. 1 lakh. 2. Briefly stated, the facts of the case are as under :- The appellants were engaged during the relevant period, in the manufacture of alternators, base frame, control panels, choke coils in their factory. The appellants were purchasing diesel engines from the other manufacturers like Kirloskar, Ashok Leyland etc. Engines were being cleared by them either as trading item or after coupling engines with the alternators along with other components of alternators in the form of gen sets. 3. A surprise visit was paid to the appellants factory premises on 18-9-1979 by the Officers of the Centralised Preventive Organisation, Calcutta who intercepted one tempo van with two complete generating sets packed in wooden cases. The said consignment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the appellants had removed one control panel during the years 1975-76 and removed two alternators totally valued at Rs. 77,604/-. During the year 1976-77, the allegation is that on matching alternator serial numbers in the Central Excise gate passes, sales invoice and other records maintained by the appellants, some intermediate serial numbers in respect of certain type of alternators are missing. Those alternator numbers which are missing are alleged to be clandestinely removed. The value of such clandestinely removed alternators is to the tune of Rs.1.13 lakhs approximately. Further, the department had added the value of the engines either supplied by the customers or purchased by the appellants themselves and coupled with the alternators and has valued with the value of gen sets has to be taken for the purpose of computation of clearances. During the year 1976-77, the differential value of gen sets is to the tune of Rs. 2.17 lakhs. Thus, the department s contention is after coupling and dismantling the value of alternators alone should not be taken on the entire value-including that of the engines etc. as gen sets has to be taken into account. Another allegation against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aid of power was exempted under Notification No. 179/77-C.E., dated 18-6-1977 and as such there was no warrant for adding their value of clearances of gen sets in the total clearances so as to oust the appellants from S.S.I. exemption. He submitted that even though the alternators are made with the aid of power, the benefit of Notification No. 179/77 was still available to the gen sets as no power was used during the assembling of the generator sets. For the above proposition, he relied upon the Tribunal s decision in the case of M/s. Kumar Brothers and Others given vide Order No. 114/96, dated 6-12-1996 [1996 (84) E.L.T. 299 (Tri.)] wherein it was held based upon a circular of the Board that even if power was used in the process of manufacture of raw materials, the same will not have any effect on the exemption of the final products if the final product itself was made without the aid of power. He further submitted that the said order is based upon the Board s Circular No. 13/1/87-CX 1, dated 19-6-1987 and submitted that as already held by the Supreme Court in the case of Ranade Micro Nutrients v. Collector of Central Excise reported in 1996 (87) E.L.T. 19 (S.C.) and in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant company. It has been further found by the adjudicating authority that these two firms were having interest in the business of the appellants and the 71 alternators were cleared to the said firms which are grossly undervalued, though the words rejected and defective material was described on the G.P.1s but the same was not an export reject as the word export was not written on the gate pass. From this, an inference has been drawn by the adjudicating authority that these alternators have been cleared for home consumption and were marketed as the same were found to be marketable on final test. On the above basis, the value of these alternators have been rightly taken as equivalent to the value charged by the appellants in respect of the other alternators cleared for home consumption. As regards the appellants contention that the increase in clearance by Rs. 2.16 lakhs in the year 1976-77 on the ground that the correct value should be the value of notified items viz. engine and alternators even though Notification No.119/75 was extended to the applicants has no legal ground inasmuch as the value of the complete gen set was required to be taken for computing the cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponent parts by themselves are not excisable irrespective of the premises on which these parts are manufactured. Latest Supreme Court decisions in the case of Ranade Micronutrients and Kores (I) Limited have laid down that the Board s clarifications and circulars are binding on the departmental authorities and they cannot deviate from the same. We find that in the instant case though power has been used in the manufacture of alternators, this fact will not have any bearing while considering the exemption benefit to gen sets under Notification No. 179/77 inasmuch as the alternators are independent excisable goods on which duty is leviable under the excise law. We also find that the Hon ble Supreme Court in the case of Rajasthan State Chemical Works, [1991 (55) E.L.T. 444 (S.C.)] has interpreted the use of power in paras 20 to 22 of their judgment. It has been laid down in the said judgment in the concluding paragraphs that if any portion in the course of manufacture is so integrally connected with the further portion which results in the emergence of manufactured goods and such portion is carried on with the aid of power, the process in or in relation to the manufacture must be dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants without reflecting the same in their statutory records and without proper payment of duty leviable thereon. 13. Notification 119/75-C.E., dated 30-4-1975 is a notification issued under Rule 8 of the Central Excise Rules exempting goods falling under Item No. 68 manufactured in a factory as a job work from so much of duty of excise leviable thereon as in excess of duty calculated on the basis of this amount charged for the job work. There is no warrant or justification in accepting the appellants plea that only the value of the notified items should be taken into account for computing the value of the clearances for a particular year. The appellants are the manufacturers of the gen sets even when they are working on job work basis and some of the items are supplied by their customers. Merely because the duty has been calculated by extending the benefit Notification No. 119/75, the appellants does not cease to become manufacturer of the final product. That being so, the entire value of the final product having been manufactured by the appellants, may be on job work basis, is required to be taken into consideration for the purpose of computation of total clearances in a fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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