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TMI Blog2002 (5) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... omponent in the assessable value of the processed fabric, had been underdeclared. This allegation was supported by statement of various persons who handed over the grey fabrics to the appellant for processing, accepting that the prices that they declared to the processor were lower than the actual prices than they paid for the fabrics. In reply to the show cause notice, the processor did not dispute that the value of fabrics was underdeclared but contended that it was not liable to pay duty and that liability fell upon the supplier of the grey fabric. 2.The adjudicating authority accepted this argument to some extent. He said that the "merchant manufacturer", the owner of the fabric is in fact the manufacturer of the goods in terms of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. It had declared to the department the values along with the price list and there is no suppression or misdeclaration by it. Case law is cited in support. 4.The Departmental Representative contends that the Asst. Commissioner noticed that in some case the appellant did not declare the goods at all and it therefore cannot be said that it had declared the value. 5.No appeals have been filed before us by the supplier of the fabric. Subsisting case law supports the proposition made by the appellant with regard to its liability to pay duty. In its decision in ITC Ltd. v. Collector 1998 (104) E.L.T. 151, the Tribunal had held that the job worker is not liable to pay duty on account of incorrect statement as to the value by the supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at price lists in fact had not been filed for each lot. If, in point of fact, the processor does not file the declaration that he is required to file under Rule 173C, the processee being the manufacturer has not filed the declaration under Rule 173C and does not furnish acceptable reasons for not doing so, it would be difficult to say, in a situation where the value declared was admitted lower than what it ought to have been, that there was no intent to evade duty. However, this point appears to us to be clearly beyond the notices and the orders of the Additional Commissioner. None of the notices, which are identically worded, alleges failure by the processor to file the declaration. Each of them in terms says that the processor "accepted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has referred to the supplier of the fabric as principal or principal manufacturer and the processor as his agent. He says further on that either the "merchant manufacturer" or "independent processor" has to be absolved on liability to penalty under Section 11AC, quoting the provisions of the Section to say that it requires intent to evade payment of duty to be established. Thereafter he says "... it is abundantly clear from the statements recorded under Section 14 of the Central Excise Act, 1944 (as reproduced in the SCN) that it was the merchant manufacturer who had tried to defraud the department." He concludes that the processor has not committed an act with intent to evade duty but in the absence of mens rea penalty can be imposed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the appellant to claim damages or initiate action against the person who initially process the fabric but it is the responsibility of the processor to pay the correct duty. 11.This however does not answer the question as to the applicability of the extended period of limitation. The show cause notice does allege misdeclaration by the assessee of the blend of the fabric. If however, the declaration of the fabric of the blend by the processor was based on the declaration given to it by the supplier of the grey fabric and in the absence of anything to say that the processor colluded with the wrong declaration or was aware that it was wrong, the extended period of limitation will not be available. There is nothing in the order or the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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