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TMI Blog2002 (12) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have the facility to cut coils into sheets or strips in their factory premises. While the invoices issued by the registered dealers showed their despatch in a particular truck, such trucks were in fact used for transport of these coils. The coils were not in fact loaded on them. The notices further alleged that the manufacturers could have produced proof of transportation of the coils in the form of vouchers and trade vouchers, etc. and failed to identify the owners of the vehicles. The notices proposed to recover of the credit wrongly taken from the manufacturers and penalties on the dealers for abatement of the wrong taking credit by not informing the department of the fact that they arranged for cutting of the coils into sheets. The manufacturers and others made their submissions in their replies. In the two orders which came to be passed, the Commissioner confirmed the liability to duty and penalties. Hence these appeals. 2.Various contentions were raised by the manufacturers and the dealers before us. It was contended on behalf of many of the dealers that they had only sent the goods that were described in the invoices and had not engaged in any cutting operations. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority of India Ltd, Tata Iron Steel Co Ltd. It is also not in dispute that the manufacturers received considerable quantities of sheets or strips, of course the charge will fail to the extent that the manufacturer actually received the coils. It is not in dispute that the manufacturers in fact did not receive coils. They in fact received sheets or strips. It is also not in question that cutting of rolls into sheets or strips amounts to manufacture. It is not the department's case that the identity of the goods has changed. The department's case is simply that the sheets or strips which the manufacturers received are not shown to have been paid duty. Implicit in this case is the view that the sheets or strips did not arise out of the coils which were consigned by the dealers to these two manufacturers. This is the case made out in the show cause notices. The Commissioner's orders however take a different view. The common case of the manufacturers and the dealers essentially is that the dealers received from their manufacturers were sent to the cutters for decoiling i.e. cutting into sheets or strips and thereafter sent on to the buyers. The record has not brought out clearly, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no correlation has been established between the coils that went into the cutters and the sheets that went to the manufacturers. 6.The trade notice 52 of 6-10-1999 of the Commissioner of Mumbai-I dealt with this issue, of dealers who sells the goods after decoiling and cutting the coils into sheets in the cutters premises under cover of invoices issued under Rule 57G or 57T. The circular said. "The matter has been examined and it is clarified that the Registered Dealers will maintain proper account for outgoing goods i.e. coils and incoming goods (i.e. sheets) and transaction will take place under the cover of challans mentioning description of goods, quantity, value and relevant Bills of Entry No./Invoice Nos. under which the metal coils have been purchased. Further it will have to be ensured that the cutting is done in such a way so that it does not result in the change in Tariff classification of the resultant product. The registered dealers shall mention the No. of sheets along with details of original description as well as quality of the goods in the body of invoices under Rule 57G." 7.As we understand it, this circular requires that correlation be established be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for cases where the inputs bear a specific identification mark, such as a serial number, specific physical correlation between that input and its use in the manufacture of finished product. To take a case of a motor vehicle which contains a large number of parts, such as gear wheels, rotary engine blocks, axial, steering assembly, control, etc., none of these components presence in a motor vehicle can physically be correlated with the stock received by the manufacturer of that motor vehicle. This was in fact emphasised by the Tribunal in its decision in Standard Industries v. CCE, 2001 (136) E.L.T. 124 with regard to goods received in bulk. The Tribunal emphasised therein that in case of such bulk cargo correlation by means of physical identity is impossible to establish. No hard and fast rule can therefore be laid down as to the criteria for establishing the correlation between the inputs and finished products. Thus the criteria to be adopted would depend on the facts of a particular case. 9.For the goods under consideration by us we would say that as long as weight of the sheets received by the manufacturer, adopting the approval contains in the trade notice, that as long as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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