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TMI Blog1985 (2) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... lso that of ₹ 4 lakhs for the period 1-4-77 to 17-6-77, and that of ₹ 24 lakhs during the period 18-6-77 to 31-3-78. As a result, duty on clearances in excess of ₹ 24 lakhs during 18-6-77 to 31-3-78, was held payable, as also on whole of the clearances effected in 1978-79. This duty amount was determined at a total of ₹ 2,52,959/-, without specifying the details for reaching the conclusion as to value of clearances. This notice was followed by three corrigenda, from time to time, and culminated in a revised show cause notice bearing the original date of 16-12-80 but, apparently, sometime after 6-6-81 inasmuch as the last corrigendum preceding it was of the aforesaid date. The cumulative result of all these corrections was that the duty amount alleged to be payable was determined at ₹ 11,281.00 for 1977-78 and ₹ 2,41,678.00 for 1978-79 making the aggregate of ₹ 2,52,959.00. 2. The appellants repudiated the charge by means of reply dated 18-4-81, claiming that their clearances at all material times remained within the ceiling contemplated in the Notification No. 176/77, and offered their detailed explanation, to the effect that certain hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after expiry of six months, was barred by time. He further opined that the rate of duty for the goods, found to be liable to pay excise duty, had to be, in this case, not with reference to the date on which removals were effected but as provided under Rule 9A(5) of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ), namely, the rate in force on the date on which the duty is paid. He, therefore, called upon the appellants to show cause as to why said order of the Assistant Collector be not reviewed. 7. This Review Notice was disposed off by order dated 10-6-83, after considering all the submissions made by the party by means of their reply filed before him, as also the submissions made during personal hearing. The Collector held, by means of this order, that the plea of the party for exclusion of value of the bought out items (Rs. 83,144.00), erection and supervision charges (Rs. 76,000/-), and conversion charges (Rs. 40,500/-), was not sustain-able and that, since after taking into account these heads, the value of clearances exceeded ₹ 30,00,000/- during 1977-78, duty was payable on the amount in excess of the exempted limit during that period, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants, at the outset, wanted to raise objection as to the Review Notice itself being barred by time but did not press the objection when the dates of the Assistant Collector s order and that of the Review Notice were put to him. He then argued on merits, briefly pointing out that after a show cause notice having been issued on 16-12-80, there were corrigenda issued subsequently and again a final notice, and that after considering all their submissions made in reply, the Assistant Collector had felt satisfied that the appellants had rightly availed of the benefit of Excise Notification No. 176/77, dated 18-6-77. According to Shri Koruthu, the Collector had committed a basic error in founding his conclusions on the basis of invoice value, although it was very clear that the appellants had never opted for application of Notification No. 120/75 and, as such, the assessable value had to be determined in terms of the principles contained in Section 4 of the Act. He argued that the bought out parts were brought from different dealers after payment of duty and were supplied separately, in original packing, to the customers under a separate invoice and the amount covering these bought out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery, Bukaro Pvt. Ltd. v. C.C.E., Patna in 1984 (17) E.L.T. page 127. This decision he also cited to support the Collector s view that value of conversion charges will form part of the manufacturing cost in terms of the First Proviso to Notification No. 176/77. He relied in support of this contention on another CEGAT decision, being Order No. 626/84-B, dated 21-8-84 [M/s. Hanuman Metal Industries, Jagadhri v. C.C.E., Delhi]. 11. Shri V. Lakshmikumaran vehemently defended the impugned order of the Collector for inclusion of bought out items in the assessable value on the contention that these parts were acquired for completion of the machines which the appellants were manufacturing and supplying to the customers and that the bare fact that they were brought duty-paid by the appellants would not make any difference. He conceded, however, that appellants, having not opted for invoice value, assessable value within terms of Section 4 of the Act shall have to be taken into consideration. He quoted judgment of High Court of Madras in favour of inclusion of bought out items arguing that the Madras High Court had held in case : reported as Ms. T.R. Cycles of India v. Union of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 83,144.00, having been claimed by the party in reply to show cause notice and that of ₹ 76,000/- on account of supervision and erection charges. This Review Notice further reveals that party s claim for conversion charges to the tune of ₹ 40,500/- was dissallowed even by the Assistant Collector. This shows that the issue of packing charges was neither considered by the Assistant Collector nor raised by the Collector while issuing Review Notice. The review order passed by the Collector, which is subject-matter of this appeal, also does not advert to the question of inclusion of packing charges. In view of the fact that the appellants had, in their supplementary reply sent to the original show cause notice on 11-12-1981, explained in detail that the equipment manufactured by them did not require any packing to cover it during transport, and that whatever they described as packing was in the nature of wooden planks or logs used as supports to hold the machinery during transport, and since the Assistant Collector has not passed any comments in respect to this head nor did the Collector, while issuing Review Notice, rake up this issue as indicated in the Audit obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installed in the premises of certain textile factories. 17. For the same reason, the ratio of other CEGAT decisions relied upon by the learned Consultant; namely, in the case of M/s. Carbon Industries Pvt. Ltd. and the Maharashtra Agro-Industries Corporation Pvt. Ltd., would not apply because in both the cases, it was found as a fact that the concerned parties were not manufacturing complete units as manufactured goods. We find, on the other hand, that it was held by Calcutta High Court in U.O.I. v. Free India Dry Accumulators (supra) and Madras High Court in T.R. Cycles of India v. U.O.I., (supra) that once completely manufactured goods are supplied to the customer, the simple fact that some parts by way of raw material were supplied even by the customers or where the manufactured articles were supplied not after assembly, but in CKD condition, would not make any different to the question and that the value of entire raw material, or all parts which go into the making of a manufactured article, shall have to be taken into account. We also find observation in another CEGAT decision (Structural Machinery Bukaro Pvt. Ltd.) (supra) that in given situation, even work carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not tantamount to manufacture/production of new goods, but we do not find any light being thrown on this aspect during arguments and, in view of the plea taken at initial stages that this value was not to be included for the reason that the steel pipes, even after conversion, remained as such and, thus, entitled to exemption from excise duty; we take this as the ground, for exclusion of the value of conversion charges from the assessable value. We find, however, on the clear wording of First Proviso to Notification No. 176/77 that to earn benefit of exemption under this Notification, the total value of all excisable goods during the relevant period ought not to exceed ₹ 30 lakhs. The view is well-settled by now that by virtue of being exempted under a notification, the given class of goods does not go out of the category of excisable goods , once they find a place in or under an item of the CET. [M/s. Vishalandhra Industries v. Union of India - 1983 E.L.T. 2265 (Del.) = 1983 ECR 1559D, Delhi (DB)]. We are, therefore, of the view that claim of the appellants for exclusion of conversion charges is not tenable. 21. In view of the undisputed position that while filing dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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