TMI Blog1998 (5) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... n Pipes (P) Ltd. (KPL Ltd. for short), had manufactured and cleared PVC pipes, waste and scrap classifiable under sub-heading 3917.00 and 3915.90 respectively without payment of duty of Rs. 6,05,054/- and without observing the Central Excise procedure laid down under the CER, 1944 and M/s. Star Marketing Salem have contravened the provisions of Rule 209A of the CER, 1944 inasmuch as they have dealt with excisable goods which are non duty paid and are liable for confiscation. It is alleged that the officers attached to the Divisional Preventive Unit, Salem visited the factory of KPL Ltd. on 18-10-1994 and searched the unit. At the time of search, Shri V. Sivagnanam, Director of KPL was present and he extended full co-operation to the officers to carry out check and verification. On search it was found that (i) MPL Ltd. were engaged in the manufacture and clearance of PVC pipes falling under sub-heading 3917 of the said Schedule during the financial years 1993 to 94 and 1994-95; (ii) that KPL Ltd. were a SSI unit availing the benefit of Notification No. 1/93-C.E. during the respective periods; (iii) that KPL Ltd. had registered themselves under Registration No. 2/94 with the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d outside the factory as PVC scrap powder under their delivery challans without payment of duty and without observing Central Excise formalities; (vii) that they did job work for M/s. Star Marketing, only and job charges were received through cheques and also by cash; (viii) that they cleared the PVC waste of 8500 Kgs valued at Rs. 2,55,000/- through their delivery challans without observing Central Excise procedure and such waste could be reused for the manufacture of PVC pipes; (ix) that all the raw materials received from M/s. Star Marketing were utilised for the manufacture of ready to use PVC pipes and sent back to M/s. Star Marketing and that there was no stock of any raw material sent by M/s. Star Marketing to their factory as on date; (x) that they knew the fact that the value of the clearances including the raw material used for the manufacture of the PVC pipes should be included in their turnover; that they did not file any classification list classifying the waste and scrap of PVC pipes with Department till date; (xi) that a quantity of 3.095 kgs. of waste and scrap valued at Rs. 92,861.00 arising at the time of manufacture of said PVC pipes of M/s. Star Marketing was cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 209A of the CER, 1944 inasmuch as they acquired and were in position of non-duty paid excisable goods which are liable for confiscation. 6. It was also alleged that KPL Ltd. did not inform the department about job work undertaken by them for manufacture of PVC pipes for the other party i.e. M/s. Star Marketing and suppressed the above fact from the knowledge of the department with intent to evade payment of duty and hence extended period of time in terms of Section 11A(1) of the CEA was invoked and hence the show cause notice. 7. The appellants filed reply to the show cause dated 10-10-1995. Appellants KPL Ltd. stated that it is not disputed that they did not manufacture PVC pipes from out of the raw materials supplied by M/s. Star Marketing and they are a SSI Unit and are eligible for the benefit of exemption Notification 1/93, dated 28-2-1993 as amended, from the whole of payment of duty upto clearance of Rs. 30 lacs and since they were under this exemption limit from 1-4-1994 to 13-7-1994, they did not get registered and hence they did not follow the Central Excise procedure. They stated that under Notification 93/94, dated 11-4-1994, the specified goods manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of clearance of semi-finished goods cannot be taken into account for computing aggregate value for purpose of applying the rate of duty. They stated that the goods cleared to Star Marketing should not have been included for calculating differential duty. They also stated that the value of the scrap had been taken as Rs. 30 lacs whereas the value was only Rs. 21 per Kg. They stated that the scrap under delivery challans 990 991, dated 18-10-1994 on which date there was checks of accounts by the officers they inadvertantly prepared the delivery challans instead of invoices and forgot to pay duty on the same due to extreme mental tension. They stated that they are prepared to pay duty on the same and they have already debited their RG 23A, Part II account. In respect of the goods cleared under their own account they have submitted a detailed account in the reply to show cause according to which the differential duty required to be paid by them was only Rs. 50,363.75 and they have debited their RG 23A, Part II in respect of this amount. In regard to the balance amount they requested for dropping the amount. 8. The Collector in the impugned order rejected their plea that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reply to the show cause notice and the grounds made in the appeal. He submitted that clearance made to Star Marketing was not in fully manufactured condition and hence they were rightly not included by them and Notification No. 83/94 was rightly claimed by them. In support of his plea he relied upon the judgment of the Hon ble Supreme Court rendered in the case of Bhor Industries v. CCE, reported in 1989 (40) E.L.T. 280 and in the case of Ambal Sarabhaia Enterprises reported in 1989 (43) E.L.T. 214 (S.C.). He also submitted that they are entitled for the first exemption of Rs. 30 lacs under the Notification and calculation of duty has not been properly worked out. He further submitted that the demand was barred by time as the department took all the information on 18-10-1994 and show cause notice was issued beyond the period of six months, i.e. on 27-7-1995. Therefore, the demand is clearly barred by time. In regard to the initial exemption up to Rs. 30 lacs, he relied upon the judgment rendered in the case of Kemexc Industries v. CCE, Calcutta reported in 1995 (75) E.L.T. 377. He pointed out that the Collector s observation that the Unit had not followed the prescribed procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges. The Collector relied upon the admission made by the party as noted supra. From these admissions it is clear that KPL Ltd. were supplying fully manufactured goods and not semi-finished goods to Star Marketing. The appellants have not produced any evidence to show that there was no manufacturing activity at Star Marketing. Therefore, in the light of these evidence discovered by the department, the Collector has come to the conclusion that the allegations against the appellants that they cleared goods manufactured on job work basis, to Star Marketing is proved. Likewise the charge of clearance of waste and scrap arising out of the manufacture of PVC pipes is also proved. In this regard, the appellants themselves have calculated the admitted duty liability and have debited the duty amount due in their RG 23A, Part II. The only other question that arises for consideration is whether the show cause notice issued on 27-7-1995 is barred by time after a lapse of 6 months from the date of 18-10-1994. It is the contention of the appellants that all the information had already been taken by the department on 18-10-1994 and there was nothing remained to be furnished to the department and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elapsed, yet the show cause notice was issued beyond the period of six months. Therefore, the judgment rendered in the case of Upper Doab Sugar Mills (supra) would apply to the facts of the present case. In the case of Walia Engineering Associates (P) Ltd. v. CCE, Ahmedabad reported in 1998 (99) E.L.T. 165, it was noted that the appellant had pleaded they were under the bona fide belief that separate exemption available in respect of arrangements made by them and intention of evasion of duty was not proved and it was held that extended period of limitation was not applicable. In the case of JSL Industries v. CCE, Ahmedabad, reported in 1999 (109) E.L.T. 316 (Tribunal) = 1998 (25) RLT 779 (CEGAT) it was held that extended time limit was not invokable when show cause notice not issued within 6 months from the date of knowledge of the department about the requisite information. The Tribunal in this judgment has relied upon a number of judgments to come to that conclusion. Apart from the judgments cited therein, they have relied upon the judgment in the case of MP Vegetable Fruits Products v. CCE, Raipur reported in 1995 (76) E.L.T. 393, wherein it was noted that the appellants had giv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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