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TMI Blog2001 (9) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... .20 of Central Excise Tariff Act, 1985 (CETA 1985 for short), in 40 kgs/50 kgs packing, on their own account, as also on job work basis for their four related trading concerns (the co-applicants in the instant case), without bringing the fact to the knowledge of the department, without taking out registration, without following Central Excise procedures, and without payment of duty, in contravention of Rules 52A, 173B, 173C, 173F, 173G and 174 of the erstwhile Central Excise Rules, 1944 (CER, 1944) read with Section 6 of CEA, 1944. Accordingly, a SCN dated 24-8-2000 was issued proposing to demand from the main applicant duty of Rs. 21,77,591/-on the dextrin/modified starch manufactured and cleared during 1996-97 to 1999-2000 on the basis of the price charged by the main applicant on the goods manufactured and cleared on his own account, and the price charged for their customers by the co-noticees on the goods cleared by the main applicant on account of the co-noticees under Sec. 11A invoking extended period. The said SCN also proposes to impose a penalty under Rule 173Q of the erstwhile CER, 1944 and Sec. 11AC of the Act, and to confiscate 1464 bags of dextrin/modified starch value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-3-2001 had granted permission to pay Rs. 9,33,078/- in 3 instalments (the net admitted duty liability, out of the total admitted liability of Rs. 14,33,078/- after deducting Rs. 5,00,000/- already paid on 15-3-2000), the main applicant paid the entire amount even before the expiry of the three instalments. 5.1 As for the total duty liability not disclosed earlier, and additional duty liable to be paid now, the Counsel contended that while the department has adopted the price at which the main applicant cleared the goods manufactured on their own account and the price at which the co-applicants sold the dextrin/modified starches (manufactured and cleared by the main applicant as job worker on their behalf) as ex-duty price, and worked out the duty liability, in the light of CEGAT decision in the case of Sri Chakra Tyres v. CCE [1999 (108) E.L.T. 361] and also the practice adopted in other orders, such invoice prices will have to considered as cum-duty prices from which assessable values will have to be worked out after abating the duty leviable. Accordingly, even if these prices are to be adopted for demanding duty, the duty involved will work out to Rs. 18,76,907/- as indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment from the price for determination of value under the erstwhile Section 4(iv)(d)(ii) will arise, and has contested the claim for treating the price charged by the applicants as the cum-duty price. He has also relied on a Circular No. 251/85/96-CX, dated 14-10-96 of the Central Board of Excise and Customs (CBEC) issued after the amendment of the erstwhile Section 4 with effect from 28-9-96. The Commissioner has pointed out that the said circular clarified that However, instead of returning the goods to the suppliers of raw materials, if the goods are removed/sold by the independent processors themselves, then the assessable value of such goods would depend upon the sale price at the place of removal from where the goods are sold . It has been urged that the position of the main applicant is covered by the above instructions and that it is the admitted position of all applicants that dextrin was packed and delivered from the factory premises of the main applicant in the transport vehicle arranged by the traders (co-applicants) under their respective invoices. Accordingly, the Commissioner has sought for the adoption of actual sale price realised by the co-applicants under their i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price in terms of erstwhile Section 4(4)(d)(ii) ibid, on the basis of CEGAT decision in the case of M/s. Sri Chakra Tyres v. CCE referred to above. 9.2 However, in so far as goods manufactured and cleared by the main applicant on account of the co-applicants is concerned, the 3 worksheets indicate different duty liabilities depending upon the assessable value to be fastened on the said clearances. Worksheet I calculates the duty liability adopting the price at which the co-applicant had sold the goods to their customers (after taking suitable abatement towards duty liability from the said price) to whom the impugned goods were directly dispatched by the main applicant from his factory on the advice of the co-applicants. Worksheet II adopts the cost of raw materials/inputs (received from the co-applicants)/and job charges/labour charges (received from the co-applicants), as assessable value to determine the total value of clearances and duty due thereon. Worksheet III, on the other hand, abates the duty element from the value adopted in worksheet II to arrive at the assessable value and consequential value of clearances and duty due thereon. 9.3 Therefore, in so far as clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the goods manufactured and cleared on sale by the main applicant on his own account, it is observed that no duty was paid at all at the time of clearance. Further, the said goods were eligible for total exemption up to a specified limit of clearances and hence in such cases the judgment of the Hon ble Supreme Court in the case of AC v. Bata India Ltd. [1996 (84) E.L.T. 164] will be more appropriate. In the said judgment, the Hon ble Supreme Court held, inter alia, that But if a manufacturer includes in the wholesale price any amount by the way of tax even where no such tax is payable, then he is really including something in the price which is not payable as duty at all. He is really increasing the profit element included in the wholesale price in another guise. In such a situation there cannot be any question of deduction of duty payable on the goods from the wholesale price because as a matter of fact, no duty has actually been included in the wholesale price. In this context, as can be inferred by Para 16 of the said judgment, Explanation under Section 4(4)(d)(ii) provides that duty of excise, if any, payable cannot form part of the assessable value. At the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as due on this account by the Commission. After deliberations, the representative of the Revenue had said that duty on packing would be around Rs. 7,000/- per annum. On the other hand, it is observed from the records that the correct value of the packing material of 40kg and 50 kg bags received from the co-applicants, and utilized by the main applicant for packing and clearance during the four years 1996-97 to 1999-2000 is Rs. 4,28,228.50, based on the actuals. The duty thereon works out to Rs. 51,327.67 for the said 4 years (worksheet attached). Therefore, the total duty liability works out to Rs. 16,42,346.67 i.e. Rs. 15,91,019 admitted in worksheet II plus Rs. 51,327.67 due on packing cost, rounded off to Rs. 16,42,347/-. 11.0 The Bench observes that the main applicant has made a full and true disclosure of the liability to duty on goods manufactured and cleared. He had also admitted to discharge additional duty of Rs. 14,33,078/-, whereas the Bench has come to the conclusion that the additional duty payable and, hence, to be recovered is Rs. 16,42,347/-, the difference having accrued only on account of interpretation of law. They have also extended full co-operation throughou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Central enactments. 14.0 Accordingly, in view of the findings stated above the case is ordered to be settled in accordance with the provisions of sub-section (7) of Section 32F of the CEA, 1944 as follows : 1. The Central Excise duty payable in the instant case is determined as Rs. 16,42,347/- (Rupees sixteen lakhs forty-two thousand three hundred and forty-seven only). 2. The main applicant (M/s. Southern Starch Products, Salem) shall have to pay the balance of Rs. 2,09,269/- (Rupees Two lakhs nine thousand two hundred and sixty-nine only) (after adjustment of Rs. 14,33,078/- already discharged) within 30 days from the date of receipt of this order and produce proof thereof. The attention of the main applicant is drawn to sub-section (10) of Section 32F of the CEA, 1994. 3. All the applicants (M/s. Southern Starch Products, M/s. Raj Starch Products, M/s. Raj Starch Chemicals, M/s. Indian Amyno Products and M/s. Raj Enterprises) are granted immunity from penalty and fine in lieu of confiscation of the seized goods already released provisionally, under CEA, 1944 and the erstwhile Central Excise Rules, 1944 as proposed in the SCN C.No. V/3505/50/173 2000-Cx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133814.40 10683.75 144498.15 26009.67 1998-99 RSP 964 48200 0 0 10218.40 0 10218.40 1839.31 Rate of duty @ 5% adv. is adopted as the aggregate value of clearances is with in Rs. 100 lakhs 0.00 0.00 0.00 IAP 1690 84500 1055 42200 17914.00 9231.25 27145.25 4886.15 0 0 0.00 0 0.00 0.00 RSC 2860 143000 0 0 30316.00 0 30316.00 5456.88 0 0 0.00 0 0.00 0.00 RE 2551 127550 13 520 27040.60 113.75 27154.35 4887.78 8065 1068 85489.00 9345 94834.00 4741.70 1999-2000 RSP 780 39000 0 0 8268.00 0 8268.00 1488.24 Rate of duty @ 5% adv. is adopted as the aggregate value of clearances is with in Rs. 100 lakhs 0.00 ..... 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