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TMI Blog2013 (5) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... der Chapter 73 of the Central Excise Tariff and are holding the Excise Registration No. AAACM/CM/2675/G XM 001. During investigation, it was found that the appellants had received order for supply of CTE Coated Pipes from M/s Indian Oil Corporation Ltd (IOCL) in respect of Tender No. PLM/PRE XPL/02/11 dated 30.12.2002and the entire activity in respect of manufacturing of CTE Coated Pipes was carried out in SAW type Division and SPEC Division of the appellant. These two Divisions are different Divisions in the factory premises of appellant situated at 257-258/B, Sector I, Industrial Area, Pithampur District, Dhar and it is registered as a single factory with the Central Excise authorities. 3. During investigation, it was found that the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout shifting the bare pipes from the factory premises and the fact that bare pipes had never left the factory and it was only after CTE coating pipes were cleared from the factory was suppressed by the appellant from the department. Accordingly a show cause notice was issued to the appellants demanding duty of Rs. 1,49,13,861/- payable on the coating charges of Rs. 9,32,11,630/- along with interest and also proposing imposition of penalty on the appellant under Rule 25 of the Central Excise Rules read with Section 11AC of the Central Excise Act, 1944. The show cause notice was contested by the appellant and Commissioner has adjudicated and confirmed the duty of Rs. 1,28,56,776/- under Section 11A of Central Excise Act and also demanded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is hit by limitation. He also submits that if in this case the duty is demanded, they will also be entitled to cenvat credit on inputs used in the manufacture of coated pipes. As there cannot be any levy of duty on the process of coating, there cannot be any charge of interest and imposition of penalty on the appellant. 6. Learned DR appearing for the Revenue submits that duty on bare pipes was paid on shifting the bare pipes to coating Division. The Vice President in his statement recorded on 27.9.04 stated that these pipes were not removed from the factory. He further submits that irrespective of ownership of the goods, it is a fact that the goods which were cleared from the factory premises of appellant were coated pipes and at no poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y paid the duty on the bare pipes which were never cleared outside the factory and moved from SAW Division to SPEC Division. Since the goods finally cleared were coated pipes, as per the Revenue duty is required to be paid on the coating charges also. 8. On going through the record, we find that M/s IOCL had floated a tender dated 30th December, 2002 for supply of total of 74,350 meters of SAW Line pipes of sixe 28 x 0.438 WT-API 5 LX 65. Two letters of intent No. PLM/PREXPL/02/11/1 dated 28.8.2003 and No. PLM/PREXPL/02/11/2 dated 28.8.03 were issued by M/s IOCL which show that tender has been split into two parts - one for supply of 74350 meters of bare pipes and other for CTE coating on 73,750 meters and CPE coating on 600 meters pipes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pipes are removed from the factory, the movement of pipes will be available in the records of the security office situated near the gate of the factory premises. Shri M. Mantri had categorically stated before the panches that security office does not keep any record of movement of such goods to the coating plant for coating as these movements were within the factory premises. 9. We also note that in the invoices of bare pipes, no details of transport are shown which means the goods did not move outside the factory premises. On the other hand, the goods which were cleared from the factory were coated pipes and in the invoices issued by the appellant for coated pipes, transport vehicle numbers were clearly mentioned. From these observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner that the process of galvanization has taken place before the product is cleared from the place of removal, as defined under Section 4(4)b). Further, on facts, the Commissioner has found that galvanization has added to the quality of the product. It has increased the value of the pipes. Hence the costs incurred by the assesse for galvanization had to be loaded on to the sale price of the pipes. Therefore, the cost had to be included in the assessable value of m.s. galvanized pipes. We do not find any error in the reasoning of the adjudicating authority. Para 11 -In the present case, we find that the product cleared from the factory was m.s galvanized pipes. Galvanization had given value addition to the m.s. pipes. The proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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