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TMI Blog2002 (8) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... Export (Bond) 42 5509 6 6857 Under CT - 3 135 74 149 258 Such paper reels are also cut and packed into reams at the factory and cleared on payment of duty on the wholesale price. 2. Nine show cause-cum-demand notices were issued for differential duty, on the rate difference between the reel form and ream form of paper. The first SCN was issued invoking proviso to Section 11A(i) alleging suppression of the facts with the intent of two evident duty for the period April, 1993- December, 1997 demanding Rs. 20,14,612.00 and was served on 3-3-1998. Rs. 8 lakhs were paid under protest. The total demand of duties in these SCNs worked out to Rs. 46,34,509/- including cess. 3. The Commissioner after considering the appellant's submissions came to the conclusion that the invocation to the proviso to Section 11(a)(I) could be made in the facts of this case and there was justification in demanding differential duty as proposed and penalty under Rules 9(2) and 173Q of the Central Excise Rules, 1944 for contravention provision of the Rules 9(1), 173B, 173C and 173F was called for. He ordered that an amount of Rs. 46,34,50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. 813]. Bulk oil cleared to depot - cost of repacking not to be included as repacking does not amount to manufacture. III. IN APPLICABILITY OF TAPARIA TOOLS CASE: The ld. Senior DR relied on the decision of the Larger Bench in CCE v. Taparia Tools Ltd. [2001 (131) E.L.T. 306]. It was held as follows : (a) Wholesale buyers at factory gate and wholesale buyers at Depot constitute separate class of buyers. The issue in this case was stated in Para 1 by the Hon ble President: Whether there can be different values for the same goods manufactured when they are sold in the factory gate and at the Depot to different class of buyers? (The dispute was before the amendment with regard to the Depot sale came into force in 1996). (b) In Taparia case, identical goods were sold at the factory gate and at the depot. There was no conversion outside the factory gate. The Tribunal mainly observed when there was no factory gate price for a particular class of wholesale buyers, therefore, duty cannot be levied on that class on the basis of wholesale price applicable to another class of buyers. Therefore, the issue in the Taparia case was completely different and the ratio laid down therein will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hna District. The permission subsequently withdrawn on 11-5-2000 vide Page 132. 7. Details of correspondence : Included in Annexure I to the Notes on submission. The tabulation shows that the Department has been consistently aware of the slitting activity from 1991 onwards. Hence, larger period of limitation cannot be invoked. 8. The show cause notice alleges suppression of slitting of jumbo rolls into reams at Page 57 of the typeset of documents, but the impugned order confirms the demand on larger period on the ground of suppression of recovery of differential duty. Thus the impugned order cannot go beyond the show cause notice on this issue. 9. Penalty : Section 11AC : Since larger period cannot be invoked, penalty under Section 11AC is also not leviable. There is no contumacious conduct on the part of the appellant. Even otherwise, penalty cannot be 100% as this is only the maximum permissible. The impugned order does not give any reasons for levy of penalty. (a) (ii) The submissions made by ld. SDR are : - Period of demand : April, 1993 to March, 2000 (nine show cause notices). The period is partly before and partly after the amendment to Section 4 that made depot a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aparia Tools cited above. For this class of buyers the goods have to be rendered marketable by cutting into reams. In terms of the Supreme Court decision cited above, the expenses of rendering the goods marketable thus are not deductible from the assessable value. Limitation : It was argued that the department was aware that conversion into reams was taking place at the depot and that therefore the larger period cannot be invoked. In fact the larger period was invoked in only one notice, i.e. notice dated 27-3-98 for the period April, 93 to December, 97 (Rs. 20,14,612). In this connection it is seen that while the assessee informed the department about the activity of cutting at the depot, there was a conspicuous silence as regards the collection of amounts over and above the value at which duty was paid at the factory gate. This, despite the fact that they collected excise duty on the differential value. Thus, any outside agency that came across the invoices would gather the impression that duty had been paid on the full value, while the assessing officer was kept in the dark. (Page 12 of the impugned order deals with the limitation issue.) Comments on written submissions fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessable values. (ii) The reliance of the ld. SDR on the case of Taparia Tools has been fairly differentiated by the ld. Senior Advocate in his submissions made. As regards the reliance on the case of Siddharth Tubes Ltd. [2000 (115) E.L.T. 32], the ld. Senior Advocate has relied on the Board s instructions on the subject vide CBEC s F. No. 139/08/2000-CX. 4, dt. 3-1-2001. These instructions containing the Law Ministry's advise are to the effect that the judgment in the case of Siddharth Tubes does not enable the Department to charge duty on costs of activities outside the factory on account of certain processes not amounting to manufacture. We find that Siddharth Tubes permits addition elimination of the cost of galvanisation (as in that case) to form a part of the assessable value, when such assessable value is to be calculated on galvanised block pipes. In the case before us, the assessable value to be determined is of the entity on paper in reel form not paper in ream form since what is removed from the factory is paper in reel form. Therefore, the cost of slitting reel form into ream form cannot be added even if depot premises are considered not outside the factory. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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