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TMI Blog2005 (7) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture of finished goods i.e. printed plastic sheets, the cost of cylinders and a part recovery from the buyers, has already been considered by the Tribunal in Flex Industries Ltd. v. CCE - 1997 (91) E.L.T. 120. He says that the Commissioner has not considered the cost sheets duly attested by the cost accountant which was produced in support of its contention. We have seen copies of these cost sheets. While the Commissioner has concluded in his order that no evidence of amortization was furnished before him, it appears that he has not considered these cost sheets. We therefore propose to remand the matter to him for this purpose. In this process, the appellant shall be entitled to address the Commissioner on the issues raised in the notices and advance arguments in support. The department is also at liberty to advance submission before the Commissioner. The Commissioner shall thereafter pass orders on the issues raised in the notices in accordance with law". 3.In pursuance of the above order, the present order impugned has been passed. The Commissioner's finding is that the charges recovered separately were never taken into consideration in the amortized cost of the cylinder, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Helio was amortised by the Appellants. Thus, duty was paid twice on the processing charges. Whenever it was possible, Helio issued commercial invoice to those customers who were agreeable to pay the same. It is not recovered from all customers. This is clear from the Annual Reports. As the entire cost of the cylinder including the processing charges incurred by Helio has been amortised in the value, the question of adding the amounts recovered by Helio to the value of cylinders does not arise. (b) The Commissioner's findings that if the cost of the cylinders had been amortized there would have been no need to separating recovery the processing charges is untenable in as much as the cost sheets duly certified by Chartered Accountants make it abundantly clear that the Appellants amortized cost of the cylinder including processing charges and excise duty. The Commissioner has not even cared, to peruse or consider of the said cost sheets which he was specifically directed to do so by the Tribunal. In Hyderabad in the Appellants' own case, the same issue was raised and Addl. Commissioner dropped show cause notice. (c) There can be no question of suppression. The depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Artwork is not at all included in the value of flexible laminated packaging on which duty has been paid. (c) Attention was drawn to the various replies filed to the various show cause notices which are available on page 156-227 of the paper-book. (i) In reply to show cause notice 4-3-94 vide letter dated 24th March, 1994 (page 156) the Appellant has stated that the cylinder were manufactured by them in the factory of Helio Gravure (sister concern) on behalf of various clients whose designs and motifs were etched on such cylinder. Therefore, the payments are reimbursed and such reimbursements by the customers cannot be included in the assessable value of the product manufactured by them. (ii) With reference to show cause notice dt. 23-6-94, the reply vide letter dated 26th July, 1994 (page 159). It was stated that the printing cylinders are manufactured by them in their factory i.e. M/s. Helio Gravure out of different materials and are incorporated with their various customers' motifs or designs. The printing cylinders cannot be considered as an input of flexible packaging laminate and its value cannot be included in the value of the flexible packagi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice dated 9-11-95 vide reply dated November, 20, 1995 (page 176) they submitted that the charges realized by separate invoice on behalf of M/s. Helio Gravure cannot be transplanted into assessable value of printed flexible laminates. (viii) With reference to show cause notice dated 22-1-96 vide reply dated 12th February, 1996 (page 180) they submitted that the debit note issued by them to their clients for cylinders is not toward cost of the cylinders but towards maintenance of their clients' cylinders in specifically designated storage spaces in their factory which are to be kept under controlled temperature. Such special storage is required for protecting and prolonging the intellectual property incorporated on these cylinders. Such maintenance is expensive and these expenses has got no nexus with the cost of making cylinder by their cylinder making division. Therefore, these charges are not collected by them from their various customers, through Excise Invoice, raised against them The cost of making cylinders is amortised in the over-all capital costs incurred in the manufacture of the end product i.e. flexible laminate. They further stated that the cost of the cylinde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re post manufacturing charges which are incurred by them every month for the security of the fully manufactured printing cylinder. These charges are towards maintenance of the cylinders for a long period and thus not includable in the value of printing materials. The value of the cylinder is paid to the M/s. Helio Gravure at the mean average rate of Rs. 75,000/- per cylinder, the cost of 461 cylinders being Rs. 75,000 x 461 = Rs. 3,45,75,000/- approx. The maintenance of service charges is post manufacturing charge and cannot be included in the manufacturing of laminates. 5.1 From the various replies, it was submitted that the appellants have changed their stand from time to time on the nature of Development and Maintenance of Design and Artwork. Now the Appellants' plea is that the invoices issued by M/s. Helio Gravure includes the cost of cylinder + processing charges and the processing charges are nothing but Development and Maintenance of design and Artwork. It was submitted that in the invoice of M/s. Helio Gravure at page (1) cost of the one cylinder is shown as Rs. 4,300/- and the processing charges are shown as Rs. 8,170/-. The Appellant himself has submitted that the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as the same are includible. (b) from a perusal of various replies to the show cause notice submitted by the Appellant, as pointed out by the Jt. CDR. it is apparent that, the appellant has charged its stand from time to time. At times a plea has been taken these charges are not includible due to the fact these are reimbursed by the customers being the printing cylinder cost, and at times plea has been taken that these charges are not towards cost of the cylinders but for maintenance of printing cylinder. (c) The appellant has now submitted that these charges are processing charges and are included in the cost of cylinder which has been amortised. In the cost sheets submitted by the appellant there is no mention of charges recovered by debit notes on account of "Development Maintenance of Design and Art work". The annual report of the assessee itself says gravure printing involved image design and processing work. For the image design and art work, these charges have been recovered though this work could be done from outside advertising agencies. Photoengravings of design and art work on cylinder is a process which is done by a division of the appellant. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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