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TMI Blog2005 (2) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... g toys, water storage tanks, desks, tables etc. On enquiry, the process revealed that the moulding machine accepted the plastic input only and since the inputs, consisting of LDPE and plastic colouring material, were procured in the granular form, the same was first required to be intermixed in specified proportion and then pulverized to produce the moulding powder. This was done with extruders and pulverizers. After receiving the two inputs, the extruder through hoopers melted and mixed them in the melting and mixing chambers to produce filaments which after being cooled were chipped into small pieces. These small pieces produced with the extruder were later placed in the pulverizers which grinded them into powder. 3.Accordingly, two show cause notices dated 1-5-1997 demanding duty for the period October, 1996 to March, 1997 and dated 4-11-1997 for the period May, 1993 to September, 1996 were issued to the assessee calling upon them to show cause as to why the above process was not "manufacture" in view of Note 6(b) to Chapter 39 of the Central Excise Tariff Act, 1985 (hereinafter referred to for the sake of brevity as "the 1985 Act"). According to the show cause notices, the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form-IV register that the assessee has been buying the moulding powder at times from the market. 6.By the impugned judgment the Tribunal has upheld the orders of the Commissioner (Adjudication). 7.Mr. S. Ganesh, learned senior counsel appearing on behalf of the assessee, submitted that the process of pulverizing moulded powder did not Constitute "manufacture". He contended that powdering of LDPE and HDPE granules into moulding powder did not amount to "manufacture". He submitted that the assessee is a manufacturer of plastic water storage tanks, toys, chairs for children etc; that one of the raw materials was LDPE and HDPE granules; which in turn were mixed with colouring agents/additives; that the moulding powder was made depending upon specifications of the end product and that no other manufacturer could use the moulding powder prepared by the assessee and, therefore, it was not a marketable product and hence cannot be considered as "excisable goods" in terms of Section 2(d) of the 1944 Act. It was urged that since the said powder was not a marketable product, there could be no manufacture under Section 2(f) of the said 1944 Act. It was further contended that no evidence wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1944 Act read with Note 6(b) of Chapter 39 of the 1985 Act and whether the said powder was an "excisable, product" in terms of Section 2(d) of the 1944 Act? Secondly, whether on the facts and circumstances of this case, the department was right in invoking the extended period of limitation vide show cause notice dated 4-11-1997? 10.In order to answer the first question, we quote Sections 2(d) and 2(f) of the 1944 Act, which read as under : "2.Definitions. — In this Act unless there is anything repugnant in the subject or context, - "excisable goods" means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt; "manufacture" includes any process - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture. and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch circumstance by itself indicates that moulding powder is a marketable commodity and, therefore, excisable in terms of Section 2(d) of the 1944 Act. The Tribunal was, therefore, right in holding that the said powder was classifiable under Heading 39.01 of the 1985 Act. 15.Now on the question of valuation of the moulding powder, the Commissioner (Adjudication) found that the manufacturing expenses of the assessee did not include the profit margins and accordingly, the Adjudicating Authority worked out the profit margins on the basis of the ratio of gross profit : Sales for the year ending 31-3-1996. According to the assessee, the Commissioner (Adjudication) had erred in taking into account the gross profit of the previous year while calculating the profit margin. In this connection, reliance was placed by the assessee on Circular No. 258/92/96-CX., dated 30-10-1996 issued by Central Board of Excise Customs, New Delhi, which prescribes the formulae for calculating the value of the captively consumed goods under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975. 16.The short point which arises for determination is - whether calculation of the profit margin, includibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 demanding duty for the period October, 1996 to March, 1997, it was urged on behalf of the assessee that the impugned show cause notice was issued on 1-5-1997; that it was issued prior to the Amending Act 10 of 2000; that the law as it stood on 1-5-1997 authorized the department to demand duty only for six months which period now stands increased to one year in view of the Amending Act 10 of 2000 with effect from 12-5-2000; hence, it was submitted that the department was not entitled to demand duty for the entire period commencing from October, 1996 to March, 1997 vide show cause notice dated 1-5-1997. Relying on the judgment of this Court in the case of ITW Signode India Ltd v. Collector of Central Excise reported in [(2004) 3 SCC 48], it was submitted that the object of the Amending Act 10 of 2000 was to eliminate the basis of the judgment of this Court in the case of Collector of Central Excise, Baroda v. Cotspun Limited reported in [1999 (113) E.L.T. 353] and, therefore, the said amendment did not extend the period beyond six months for notices given prior to 12-5-2000. 19.On behalf of the department, it was submitted that in view of the Amending Act 10 of 2000, the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable goods by any Central Excise Officer under any other provision of the Central Excise Act or the Rules made thereunder. Sub-section (2) of the said section also provides that any action taken anything done under Section 11A at any time during the said period shall be deemed to be and to have always been, for all purposes, as validly and effectively taken or done as if sub-section (1) had been in force in all material times, notwithstanding anything contained in any judgment decree or order of any court, tribunal or other authority. 2.Thus, it can be seen from Section 110 of the Finance Act, 2000 that the section seeks to grant legitimacy to all the action taken for the recovery of the duty from the period 17-11-1980 and that any action initiated in respect of any case after such date shall be deemed to have been validly taken and any judgment, decree or order of any court, tribunal or other authority shall not be an impediment to such an action. In this background, my opinion is sought on the following3. queries :- (1) Whether it is correct to hold that the amendments would only cover demands for a period of six months prior to issue of SCN? (2) Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... un itself where the judgment of the Supreme Court was rendered, in view of the validating provisions, recovery could be made notwithstanding the Cotspun judgment. Under these circumstances, if the SCNs have been issued then even in respect of past proceedings which even judgments have been rendered it will be open to the Department to make recoveries. Query No. 4 : Recoveries can be made in such cases for the period subsequent to 17th November, 1980 when the retrospective operation of the amended provisions has come into play. However, this is subject to the SCNs having been issued in time. It is also worth noting that if SCNs have not been issued so far, now it will not be open to issue SCNs for the past period unless it is within the period of limitation as prescribed under the amended provisions. Query No. 5 : The time limit for initiating proceedings under the amended provisions would be one year for issuance of fresh notices. However, as far as recoveries pursuant to notices already issued or subject matter of pending proceedings are concerned the same are covered by answer to the previous queries. Query No. 6 : In respect of matters which have received finality, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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