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Showing 41 to 60 of 220 Records
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1991 (5) TMI 182
Issues Involved:
1. Misdeclaration of value of imported goods.
2. Applicability of transaction value u/s 14(1) of the Customs Act, 1962.
3. Use of London Metal Exchange (LME) prices for valuation.
4. Burden of proof for undervaluation.
Summary:
1. Misdeclaration of Value:
The appellants imported Brass Ash Dross and declared the invoice value based on the invoice price. The authorities, suspecting misdeclaration, conducted investigations and sought to assess the goods based on the price of copper as given in the metal bulletin showing the London general price. A show cause notice was issued indicating a higher price, and the importers were charged with misdeclaration of the value of the goods. Enhanced duty based on this value was also sought to be charged.
2. Applicability of Transaction Value u/s 14(1) of the Customs Act, 1962:
The appellants resisted the demand, urging that the declared value should be accepted as the transaction value u/s 14(1) of the Customs Act, 1962. They cited contemporaneous imports of similar goods where the invoice value had been accepted and pleaded that the value should alternatively be determined as per the valuation clause 3(1) or 5 to 8 of the Customs Valuation Rules. The lower authority, however, did not accept the transaction value, stating that the computer print-outs for similar importation through Bombay showed a higher value, necessitating recourse to the Rules of Valuation.
3. Use of London Metal Exchange (LME) Prices for Valuation:
The lower authority used the LME Bulletin formula to determine the value, which the appellants contested, arguing that the LME prices were not applicable for goods meant for export to other countries and that Brass Ash Dross is an inferior raw material compared to Brass Scrap. The appellants also argued that the formula was not correctly applied and that the Metal Bulletin prices were for the local UK market, not for international trade.
4. Burden of Proof for Undervaluation:
The appellants cited several case laws to argue that the burden of proving undervaluation lies with the Department. The authorities must show that the imports were made at a higher price and that the invoice did not represent the correct price charged by the exporter. The lower authority failed to provide evidence of contemporaneous imports at higher values and did not furnish details of the computer print-outs relied upon.
Judgment:
The Tribunal observed that the appellants did not produce sufficient evidence to support their claim that the invoice price reflected the transaction value. The lower authority's reliance on the LME Bulletin and computer print-outs without providing details to the appellants was flawed. The Tribunal set aside the lower authority's order and remanded the matter for de novo adjudication, instructing the lower authority to furnish details of the imports at Bombay and give the appellants an opportunity for a hearing. The appeals were allowed by remand.
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1991 (5) TMI 181
Issues:
- Alleged contravention of provisions of Rule 9(1), 173B, 173F, and 173G(1) of the Central Excise Rules 1944.
- Applicability of the proviso to Section 11A regarding suppression of facts.
- Levy of penalty under Rule 173Q of the Central Excise Rules 1944.
Analysis:
1. The appellant challenged the order passed by the Additional Collector of Central Excise, Calcutta, alleging contravention of various rules. The Additional Collector initially held that there was no suppression of facts warranting the proviso to Section 11A, rendering the demand for duty beyond the six-month period unsustainable. However, he found a violation under the self-removal procedure, leading to a penalty of Rs. 6,000 under Rule 173Q.
2. The appellant's representative argued that the duty determination at 15% and goods removal under Rule 173F did not violate any rules. He contended that the department's subsequent approval of a 20% duty rate, after one year, did not invalidate the initial determination. The representative emphasized that Chapter VIIA, specifically Rule 173F, governed the removal process, ensuring compliance.
3. The respondent's representative countered, asserting a violation of Rule 9(1) due to the discrepancy between the paid 15% duty and the approved 20% rate. The argument centered on the duty payment requirement before goods removal, as stipulated by Rule 9(1). The representative maintained that the appellant's actions constituted a clear breach, justifying the penalty imposition.
4. The tribunal analyzed the conflicting interpretations of Rule 9(1) and Rule 173F. It concluded that the duty payment at the determined rate under Rule 173F fulfilled the Rule 9(1) obligation. By aligning the rules' provisions, the tribunal dismissed the violation claim under Rule 9(1). Additionally, it rejected the contention that deliberate underpayment warranted a penalty, emphasizing timely duty assessment approval.
5. Ultimately, the tribunal allowed the appeal, setting aside the imposed penalty. It emphasized the importance of promptly approving duty assessments to prevent delays in goods removal. The tribunal's decision rested on the harmonious reading of the rules and the appellant's compliance with the prescribed procedures, leading to the penalty's annulment.
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1991 (5) TMI 180
Issues Involved:
1. Enhancement of the value of imported goods without hearing the appellants.
2. Violation of principles of natural justice.
3. Comparison of imports for valuation purposes.
4. Applicability of Rule 5 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
5. Determination of assessable value and imposition of penalty.
Summary:
1. Enhancement of the value of imported goods without hearing the appellants:
The appellants imported 4,10,000 pieces of "Y.K.K. polyester zippers type LFC-32, No. 3, size 8" from Singapore. The Addl. Collector enhanced the value of the goods without hearing the appellants, leading them to appeal to this Tribunal. The Tribunal remanded the matter to the Addl. Collector with directions to hear the appellants and pass fresh orders.
2. Violation of principles of natural justice:
The appellants contended that the Addl. Collector relied on records without disclosing them, violating the principles of natural justice. The Tribunal noted that the Collector did not furnish copies of certain invoices to the appellants, which was unjustified.
3. Comparison of imports for valuation purposes:
The Collector enhanced the value based on imports made by M/s. Durga Enterprises, treating two separate imports as one, which the Tribunal found incorrect. The Tribunal emphasized that the imports by M/s. Durga Enterprises and the appellants were not comparable due to differences in quantity and origin.
4. Applicability of Rule 5 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988:
The Tribunal noted that Rule 5(1)(b) requires the transaction value of identical goods to be at the same commercial level and in substantially the same quantity. Since the imports by M/s. Durga Enterprises were from Hong Kong and in a different quantity, Rule 5(1)(b) was not applicable.
5. Determination of assessable value and imposition of penalty:
The Tribunal determined that the assessable value should be fixed at 1159 Japanese Yen per 100 pieces, based on consistent evidence of the price of identical goods. The appellants were directed to pay the difference in duty on the enhanced value and a redemption fine of Rs. 25,000/-. The penalty imposed by the Collector was set aside due to the appellants facing litigation twice and the violation of natural justice principles.
Conclusion:
The appeal was disposed of with directions to assess the goods at 1159 Japanese Yen and allow the appellants to redeem the goods on payment of a redemption fine of Rs. 25,000/-. The penalty imposed by the Collector was set aside.
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1991 (5) TMI 179
Issues:
- Appeal against orders passed by the Additional Collector of Customs
- Contravention of Section 11K of the Customs Act, 1962
- Confiscation of silver slabs under Section 113(1) of the Customs Act
Analysis:
1. The appeal was filed against the orders of the Additional Collector of Customs regarding the confiscation of silver slabs based on the contravention of Section 11K of the Customs Act, 1962. The appellant contended that there was no evidence to prove that the silver bullion was transported without a proper voucher from Dumariaganj region of U.P. The Department issued a show cause notice under Sections 11K and 11L of the Customs Act, 1962, alleging the silver slabs were not properly accounted for. The Adjudicating Authority concluded that the appellant contravened Section 11K, leading to the confiscation of the silver slabs.
2. Under Section 113(1) of the Customs Act, 1962, specified goods contravening provisions of Chapter IVB can be confiscated. The Adjudicating Authority found a violation of Section 11K as the silver slabs were transhipped from Dumariaganj region of U.P. However, there was no substantial evidence to support this claim. The Authority also noted discrepancies in the appellant's declarations to the Income Tax Authorities regarding the weight of silver slabs. The appellant's explanation that the slabs were brought from Mathura for ornament manufacturing was rejected due to lack of proper documentation.
3. The Adjudicating Authority accepted a statement from the appellant's brother that the seized silver slabs were manufactured from old ornaments in a refinery at Mathura. This acceptance raised doubts on the claim that the slabs were transhipped from Dumariaganj region of U.P. The lack of evidence supporting the transportation from Dumariaganj region led to the conclusion that no contravention of Section 11K was established. Consequently, the confiscation of the silver slabs under Section 113(1) of the Customs Act was deemed unsustainable. The appeal was allowed, and the appellant was granted consequential relief.
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1991 (5) TMI 178
Issues Involved:
1. Validity of the Superintendent's communication demanding differential duty.
2. Applicability of Section 11A of the Central Excises and Salt Act, 1944.
3. Relevance of prior judgments and legal precedents.
Issue-wise Detailed Analysis:
1. Validity of the Superintendent's Communication Demanding Differential Duty:
The appellants, manufacturers of soft drinks, availed MODVAT benefits on various inputs. Following Notification 203/87, which removed soft drinks from MODVAT benefits, the appellants obtained a stay from the Andhra Pradesh High Court, allowing them to pay only half the duty. Upon the vacation of the stay, the Superintendent demanded the differential duty. The appellants challenged this on the grounds that the Section 11A procedure was not followed. The Tribunal upheld the Superintendent's communication, citing the Madras High Court's decision in H.N. Mariam & Others v. Superintendent of Central Excise, which established that the charge of duty attaches upon removal of goods, and the stay only postponed the right of recovery. Therefore, the endorsement on RT 12 returns was deemed sufficient notice for the levy.
2. Applicability of Section 11A of the Central Excises and Salt Act, 1944:
The appellants argued that the demand for differential duty was invalid without a show cause notice under Section 11A. The Tribunal referenced the Madras High Court's interpretation that Section 11A applies to cases of non-levy, short-levy, or erroneous refunds, which was not applicable here as the duty was already levied but its collection was stayed by the court. The Tribunal also distinguished the facts from the Supreme Court's decision in Gokak Patel Volkart Ltd. v. Collector of Central Excise, where no assessment occurred, and the stay was only on collection, not levy.
3. Relevance of Prior Judgments and Legal Precedents:
The Tribunal examined various precedents cited by the appellants, including decisions in Kosan Metal Products Ltd., Vipul Dyes Chemicals (P) Ltd., and Doorvani Cables P. Ltd., which dealt with demands raised on RT 12 returns without proper notice under Section 11A. However, the Tribunal found these cases distinguishable as they involved disputes over classification or entitlement to notifications, whereas in the present case, the classification and duty rate were undisputed, and the only issue was the stay on collection. The Tribunal concluded that the demand was valid as it followed the High Court's order and the established classification.
Conclusion:
The Tribunal dismissed the appeal, affirming the demand for differential duty. The decision emphasized that the stay order's vacation revived the duty demand, and no separate notice under Section 11A was necessary given the circumstances. The Tribunal's analysis relied heavily on the Madras High Court's precedent, reinforcing the principle that duty charges attach upon removal of goods, and stays only delay enforcement, not the levy itself.
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1991 (5) TMI 177
Issues Involved:
1. Whether the re-assembly of tea chests from dismantled plywood panels constitutes "manufacture" under Section 2(f) of the Central Excises & Salt Act, 1944.
2. Whether the appellant company or the job workers should be considered the "manufacturer" of the re-assembled tea chests.
3. Applicability of the extended time limit for demand under Rule 9(2) read with Section 11A and the imposition of penalty under Rule 173Q.
Issue-Wise Detailed Analysis:
1. Whether the re-assembly of tea chests from dismantled plywood panels constitutes "manufacture" under Section 2(f) of the Central Excises & Salt Act, 1944:
The core question was whether the re-assembly of tea chests from dismantled plywood panels, often in different sizes, involves a process of manufacture as defined under Section 2(f) of the Act. The Tribunal referred to a previous decision (Order No. E/272/90-D dated 12th April, 1990) where it was held that no new product emerged from the re-assembly process, and thus, it did not constitute "manufacture." The Tribunal observed that the process was more akin to repair or reconditioning, and not the creation of a new article with a distinct name, character, or use.
The Tribunal also cited the Bombay High Court decision in Century Spinning (1981 (8) E.L.T. 676), where it was held that merely melting worn-out spinnerettes did not result in a new product liable to duty. Similarly, the Supreme Court's judgment in Bharat Forge & Press Industries (1990 (45) E.L.T. 525) supported the view that pipe fittings made from pipes and tubes continued to be classified as pipes and tubes, emphasizing that a mere change in form does not constitute a new product.
2. Whether the appellant company or the job workers should be considered the "manufacturer" of the re-assembled tea chests:
The Department argued that since the appellant company supplied raw materials to job workers who then assembled the tea chests, the job workers were essentially contractors, and the appellant was the real manufacturer. The Tribunal, however, found that the job workers operated on a principal-to-principal basis, without any written contracts, and were paid job charges for their work. The Tribunal emphasized that the nature of the relationship did not change the fundamental question of whether the re-assembly process constituted "manufacture."
The Tribunal concluded that if the re-assembly did not amount to manufacture when done by one party, it could not be considered manufacture when done by multiple parties. Therefore, the question of who the manufacturer was became irrelevant once it was established that no manufacture was involved.
3. Applicability of the extended time limit for demand under Rule 9(2) read with Section 11A and the imposition of penalty under Rule 173Q:
The Collector had confirmed a demand for Rs. 18,77,365.38 for the period 1-8-1977 to 30-6-1982 and imposed a penalty of Rs. one lakh, alleging mis-statement or suppression of facts by the appellant company. The Tribunal found that the Collector's findings were based on a bald statement without supporting evidence. The Tribunal also noted that the re-assembly of tea chests was not done clandestinely, and hence, the extended time limit of five years could not be invoked.
The Tribunal referenced the case of Vasant Sahakari Sakhar Karkhana Ltd. (1989 (43) E.L.T. 98 Trib.), where it was held that the extended period was not applicable when the nature of the product and its by-products were not suppressed from the Department. Consequently, the Tribunal concluded that the conduct of the appellant company did not warrant the imposition of a penalty.
Conclusion:
The Tribunal concluded that the re-assembly of tea chests from dismantled plywood panels did not constitute "manufacture" under Section 2(f) of the Act. As a result, there was no liability to duty on the re-assembled tea chests. The Tribunal set aside the orders of the lower authorities and allowed both appeals with consequential relief, if any.
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1991 (5) TMI 176
Issues: Classification of 'sulphur sludge' under Chapter No. 3801.90 of CET Act, 1985 and its dutiability under Section 9(2) read with Section 11A of the Central Excises and Salt Act.
In this case, the appeal was filed against the Order-in-Original confirming the duty demand on 'sulphur sludge' under Chapter No. 3801.90 of the CET Act, 1985. The appellants argued that the product should not be dutiable as it arose as "waste and scrap material" during the manufacture of sulphuric acid in their factory. The appellants relied on previous rulings of the Delhi High Court and the Tribunal to support their position. The learned SDR, on the other hand, reiterated the findings of the Collector but acknowledged that the product in question was not manufactured but arose as waste and scrap during the manufacturing process. With the consent of both sides, the appeal was taken up for final disposal by granting a stay.
The Delhi High Court ruling in the case of Modi Rubber Ltd. established the principle that waste/scrap obtained during the manufacturing process, without transforming into a new article, is not excisable under the Central Excises and Salt Act. The Court emphasized that waste and scrap lack distinguishing characteristics of goods and cannot be subject to duty. The Tribunal's decision in the case of Asiatic Oxygen Ltd. regarding carbide sludge reiterated that industrial waste, not a marketable commodity, is excisable. The Tribunal further considered spent bleaching earth as waste material, supporting the view that such materials are excisable. In the present case, the Tribunal found that 'sulphur sludge' emerged during the production of sulphuric acid and other products, akin to waste and scrap material, lacking the characteristics of a manufactured item. Therefore, the Tribunal concluded that 'sulphur sludge' does not qualify as goods under the Central Excises and Salt Act, and the duty demand on it was unjustified. The impugned order was set aside, allowing the appeal in favor of the appellants.
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1991 (5) TMI 175
Issues:
Appeal against duty demand for molasses produced in 1977-78 stored in katcha pit. Interpretation of contractual liability and duty under T.I. 68. Application of Rule 49 and second proviso. Permission to destroy unfit goods.
Analysis:
The appeal was filed against a duty demand for molasses produced in 1977-78 and stored in katcha pit, based on an order by the Collector of Central Excise & Customs, Aurangabad. The appellants, sugar manufacturers, argued that there was no restriction on storing molasses in katcha pits during that period under T.I. 68. They highlighted that the molasses had deteriorated and sought permission to destroy them, as they were unfit for marketing. The State Excise authorities were involved in the process, and the appellants had addressed the issue with them before the duty demand was issued.
During the proceedings, the appellants' advocate referred to relevant correspondence and argued that the contractual liability for duty arose only after restrictions were imposed in 1980, which was after the molasses were stored. The advocate cited previous decisions in favor of the appellants to support their case. On the other hand, the JDR did not dispute the facts but emphasized that the production in this case was from 1977-78, questioning the need to store a large quantity for an extended period.
The Tribunal considered the contractual liability issue and the application of Rule 49 and its second proviso. It was noted that the molasses were stored before the special bond for duty remission was executed, raising doubts about enforcing contractual liability. The Tribunal referred to previous cases where it was held that duty recovery based on a special bond required a valid contract, which was absent in this case. Additionally, the second proviso to Rule 49 stated that duty need not be demanded for goods unfit for consumption or marketing, subject to conditions imposed by the Collector.
The Tribunal concluded that since the molasses were unfit for marketing and the appellants sought permission to destroy them, the duty demand was not justified. The proper officer could not demand duty in such circumstances, as per the provisions of Rule 49. The appeal was allowed, and the order of the Collector demanding duty was set aside.
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1991 (5) TMI 174
Issues:
Challenging demand of duty on nylon filament yarn under Notification 188A/62-C.E.
Validity of sample drawn for denier test.
Frequency of drawal of samples for test purposes.
Interpretation of Board's instructions on sample validity.
Applicability of test result to subsequent production.
Compliance with Central Excise Rules on sample testing and re-testing.
Acceptance of test results for levy of duty.
Claim of adherence to international standards for denier determination.
Tolerance limits under exemption notification.
Validity of appellants' denierage records.
Duration of validity of test results for levy of duty.
Analysis:
The appellants contested the duty demand on nylon filament yarn under Notification 188A/62-C.E., challenging the validity of the sample drawn for denier test. The sample was found to exceed the denier limit specified in the notification, leading to the dispute. The appellants argued that the sample was not representative and was drawn incorrectly. However, the Tribunal noted that the sample was drawn in accordance with Rule 56 of the Central Excise Rules, and the appellants did not request a re-test as allowed under the rule. As a result, their objections on the sample's validity were dismissed.
The frequency of drawal of samples for test purposes was also a point of contention. The appellants argued that the sample drawn on 30th June 1983 should not apply to production in the subsequent month as per Board's instructions. They cited a judgment from the Andhra Pradesh High Court to support their claim. However, the Departmental Representative relied on a Madras High Court judgment, emphasizing that the test result governs production until the next sample is drawn. The Tribunal upheld this principle, rejecting the appellants' argument on sample validity duration.
Regarding the interpretation of test results for levy of duty, the Tribunal emphasized that the purpose of the sample test was clearly indicated, and the denierage determined the duty rate. The appellants' plea to adhere to international standards for denier determination was dismissed, as the Central Excise authorities verify compliance with exemption notification standards, not international norms. The Tribunal also upheld the tolerance limits specified in the notification, rejecting the claim that professional body standards should apply additionally.
The appellants' denierage records were challenged, but discrepancies between their records and the test results led to the initiation of proceedings. The Tribunal noted that the Assistant Collector had correctly limited the duty demand to one month based on the sample test results. The appellants' argument against the duration of test result validity was rejected, as the test result governs production until the next sample is drawn, as per legal precedents.
In conclusion, the Tribunal upheld the Assistant Collector's decision, finding it reasonable and correct. The appeal challenging the duty demand on nylon filament yarn was rejected, affirming the validity of the sample test results and the compliance with Central Excise Rules and exemption notification standards.
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1991 (5) TMI 173
Issues:
- Demand of Central Excise duty on metallised/lacquered PVC films
- Imposition of penalty for contravention of Central Excises & Salt Act
- Confiscation of plant and machinery used in the manufacture of offending goods
Analysis:
1. The Appellate Tribunal CEGAT, New Delhi, heard an appeal against the order of the Collector of Central Excise, Baroda, demanding Central Excise duty on metallised/lacquered PVC films, imposing a penalty, and ordering confiscation of plant and machinery. The appellants contested the order, arguing that metallising and lacquering did not amount to manufacture. The key issue was whether metallising/lacquering of PVC films constitutes manufacture and if such films should be subjected to duty under the Central Excise Tariff.
2. The appellants, in their defense, cited a judgment from the Division Bench of Bombay High Court in a similar case, where it was held that lacquering and metallising of polyester films did not amount to manufacture. The appellants argued that the same principle should apply to their case, as no new distinct commercial commodity emerged from the process. The central question was whether the process of metallising/lacquering created a new product with a different identity or name.
3. Before the judgment was delivered, the appellants submitted a Miscellaneous Application referring to the Bombay High Court judgment, emphasizing its relevance to their case. The Tribunal considered this application and re-opened the matter for further review based on the new information provided by the appellants.
4. The appellants' counsel relied on the Bombay High Court judgment and argued that the change in the tariff description did not necessitate duty on lacquered/metallised films as it did not involve a manufacturing process. The counsel highlighted that the process did not result in a new commercial commodity with distinct properties or uses, as per the Supreme Court's precedent.
5. The appellants' counsel further emphasized the importance of the Garware case as a definitive judgment on the matter, supported by the Tribunal's decision in a related case. The argument centered on the absence of duty liability for metallising/lacquering of PVC films based on established legal precedents and interpretations of manufacturing processes.
6. The Respondent's representative contended that the appellants themselves declared the metallised/lacquered films as such in the Classification List, indicating that they were commercially recognized as distinct products. The argument focused on the nature of the traded goods and whether the process of metallising/lacquering constituted a manufacturing activity.
7. In response to the arguments presented, the appellants' counsel reiterated the significance of the Garware judgment, emphasizing that the burden of proof regarding the creation of a new article rested with the department. The counsel maintained that the conclusions drawn in the Bombay High Court judgment left no room for doubt regarding the duty liability on metallised/lacquered films.
8. After careful consideration of the appeal and arguments from both sides, the Tribunal relied on the Garware judgment, which concluded that lacquering/metallising did not result in a new commercial commodity with a distinct identity. Following this precedent, the Tribunal ruled in favor of the appellants, setting aside the impugned order and granting consequential relief based on the interpretation of the manufacturing process and duty liability in the case.
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1991 (5) TMI 172
Issues Involved:
1. Determination of the value of plant and machinery installed in the appellants' factory.
2. Eligibility for benefits under Notification No. 89/79.
3. Whether the demand for duty was barred by limitation.
4. Applicability of penalty under Rule 173Q of the Central Excise Rules, 1944.
Issue-wise Detailed Analysis:
1. Determination of the value of plant and machinery installed in the appellants' factory:
The appellants, a private limited company, were engaged in manufacturing oil cans, grease guns, barrel pumps, and cycle chains, subject to excise under Tariff Item 68. The factory was taken over in 1972, and the appellants invested in additional plant and machinery. They claimed an investment of Rs. 8,37,037.73, supported by a Chartered Accountant's certificate and an SSI registration certificate. However, the department estimated the value at Rs. 11,04,642.17, based on a physical verification by the Superintendent and market prices of similar machines. The adjudicating authority upheld this valuation, leading to a demand for differential duty and a penalty. The Tribunal found that the valuation of old and used machinery based on market prices was irrelevant for Notification No. 89/79, which required the face value of the investment at the time it was made. The Tribunal emphasized that the department should accept certificates issued by Chartered Accountants or State Industries Departments to avoid disputes.
2. Eligibility for benefits under Notification No. 89/79:
Notification No. 89/79 exempted goods under Tariff Item 68 from duty for the first Rs. 15 lakhs of clearances, provided the capital investment on plant and machinery did not exceed Rs. 10 lakhs. The appellants claimed eligibility based on their declared investment. The department's higher valuation led to the denial of this benefit. The Tribunal, however, held that the appellants' declaration, supported by a Chartered Accountant's certificate, was acceptable for determining eligibility. The department's rejection of the certificate due to the unavailability of purchase vouchers for old machinery was deemed unreasonable.
3. Whether the demand for duty was barred by limitation:
The show cause notice was issued on 5-6-1981 for clearances from 1-4-1979 to 28-4-1980. The department alleged misdeclaration by the appellants. The Tribunal noted that the appellants had furnished the required list of machinery and detailed information on investments promptly after the factory inspection on 31-10-1979. The Tribunal found no evidence of deliberate suppression or misstatement by the appellants. Therefore, the extended period for issuing the demand was not applicable, and the demand was barred by limitation.
4. Applicability of penalty under Rule 173Q of the Central Excise Rules, 1944:
The adjudicating authority imposed a penalty of Rs. 1,00,000/- under Rule 173Q. The appellants argued that no evidence of deliberate suppression was presented by the department. The Tribunal agreed, noting the absence of any proof of intentional misdeclaration. Consequently, the penalty was deemed unjustified.
Conclusion:
The Tribunal set aside the order appealed against, allowing the appeal. The appellants' declaration of investment, supported by a Chartered Accountant's certificate, was accepted. The demand for duty was barred by limitation, and the penalty was deemed unwarranted.
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1991 (5) TMI 171
Issues:
1. Condonation of delay in filing supplementary appeals.
2. Eligibility for exemption under Notification 71/71-C.E. and Notification 228/76 for Polyester Metallised Film imports.
3. Interpretation of terms for exemption criteria.
4. Consideration of new grounds for refund during de novo proceedings.
5. Rejection of refund claims based on lack of evidence and original claim scope.
Analysis:
1. The judgment addressed the issue of condonation of delay in filing supplementary appeals, noting that the main appeals were filed within the limitation period. The delay in filing the supplementary appeals was condoned based on procedural requirements and common issues in the appeals.
2. The judgment discussed the eligibility for exemption under Notification 71/71-C.E. and Notification 228/76 for imports of Polyester Metallised Film by two appellants. The Assistant Collector rejected refund claims based on various grounds, including non-fulfillment of exemption criteria and lack of test reports. The Collector (Appeals) upheld the rejections, emphasizing the need for goods to meet specific criteria for exemption.
3. The interpretation of terms for exemption criteria was crucial in determining the eligibility of the imported goods. The judgment referred to previous court decisions and legal provisions to analyze whether the goods qualified for exemption under the relevant notifications based on their characteristics and composition.
4. The judgment considered the introduction of new grounds for refund during de novo proceedings. It highlighted that raising fresh grounds during such proceedings, not included in the original claim, could be deemed time-barred and outside the scope of the initial refund application.
5. The rejection of refund claims by the lower authorities was based on the lack of supporting evidence, such as test results, to establish eligibility for exemption. The judgment emphasized that the original refund claims did not include sufficient data to qualify for the exemptions under consideration, leading to the dismissal of the appeals.
In conclusion, the judgment thoroughly analyzed the issues related to the eligibility for exemption under specific notifications for Polyester Metallised Film imports, considering legal interpretations, evidence requirements, and procedural aspects. The decision to reject the appeals was based on the lack of substantiating evidence and the introduction of new grounds outside the scope of the original claims during the de novo proceedings.
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1991 (5) TMI 170
Issues Involved:
1. Classification of imported dies for plastic extruders under the correct Customs Tariff Heading.
2. Determination of whether plastic extruders are machine tools.
3. Classification of dies as interchangeable tools.
Detailed Analysis:
1. Classification of Imported Dies for Plastic Extruders:
The appellants claimed the imported dies should be classified under Heading No. 84.59(2) of the Customs Tariff Act, read with Central Excise Tariff Item No. 68, as component parts of plastic extruder machines. The Assistant Collector classified the goods under Heading No. 82.05(1) read with Central Excise Tariff Item No. 51A. The main contention of the appellants was that Heading 82.05 covers only interchangeable tools and dies for wire drawing and extrusion dies for metals, not for plastic extruders. They argued that the imported dies should be classified under Heading 84.59(2) as parts of plastic extrusion machines. The department maintained that the dies were classifiable under Heading 82.05 as interchangeable tools designed for fitment on plastic extruders.
2. Determination of Whether Plastic Extruders are Machine Tools:
The department argued that plastic extruders could be deemed as machine tools based on the definition provided in the Tool Engineers' Handbook and the CCCN Notes to Heading 82.05. They contended that plastic extruders, being machines designed for the production of plastic tapes, fall under Heading 84.59 and the dies used in such extruders should be classified under Heading 82.05 as interchangeable tools. The appellants countered this by arguing that plastic extruders for manufacturing tapes from materials like HDPE and Polypropylene could not be categorized as machine tools, as they do not carry out processes like turning, boring, drilling, grinding, or polishing of solid parts, especially metals.
3. Classification of Dies as Interchangeable Tools:
The appellants argued that the imported dies were not interchangeable tools as they were designed exclusively for use in plastic extruders for producing plastic tapes. They referenced the Tribunal's decision in the case of Purewell & Associates Ltd. v. Collector of Customs, Bombay, where die sets intended for power presses were held as non-interchangeable. The department argued that the use of the word "including" in Heading 82.05 enlarges its scope to cover other types of dies, relying on the Supreme Court's decision in Commissioner of Income Tax v. Taj Mahal Hotel. However, the Tribunal found that the dies in question were usable only for the manufacture of plastic tape and no other tool could perform the same function, thus they could not be deemed interchangeable.
Conclusion:
The Tribunal concluded that the imported dies were classifiable under Heading 84.59(2) as parts of plastic extruders for the manufacture of plastic tapes and could not be deemed as interchangeable tools for machine tools. The appeal was allowed, and the order appealed against was set aside with consequential relief to the appellants.
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1991 (5) TMI 169
Issues:
1. Interpretation of import policy regarding coral.
2. Determination of the form of imported coral.
3. Application of redemption fine in case of non-compliance with import policy.
Issue 1: Interpretation of import policy regarding coral.
The appeal was brought by the Revenue against the Collector (Appeals) order allowing the respondents' appeal. The dispute arose over the import of coral declared as broken bits, seeking clearance under OGL Appendix 6 List 4 Sr. No. 7(A) of AM 84-85 Policy. The Deputy Collector held that the goods, though of non-jewellery quality, did not meet the requirement of being in powder form as specified in the policy. The Collector (Appeals) set aside the order citing the lack of expert opinion on the form of the imported goods. The appellant argued that the previous policy allowed import of broken bits as well as powder, but the current policy specified only powder form for coral. The Tribunal noted the distinction between the two policies and upheld the Deputy Collector's decision, emphasizing the need for compliance with the current policy's requirements.
Issue 2: Determination of the form of imported coral.
The respondents contended that the imported coral was not in chip form suitable for jewelry but rather granules or irregular broken bits, unsuitable for jewelry use. They argued that the goods were intended for Ayurvedic drug manufacturing, supported by supplying the goods to a registered small-scale unit. The Tribunal acknowledged the nature of the imported goods as broken pieces of non-jewellery quality, not in powder form as required by the policy. Despite upholding the confiscation order, the Tribunal reduced the redemption fine from Rs. 37,000 to Rs. 10,000, considering the intended use and quality of the goods.
Issue 3: Application of redemption fine in case of non-compliance with import policy.
While confirming the Deputy Collector's decision and setting aside the Collector (Appeals) order, the Tribunal reduced the redemption fine due to the nature of the imported goods and their utilization for Ayurvedic drug manufacturing. The Tribunal emphasized the importance of adherence to the import policy requirements, even when the imported goods were of non-jewellery quality and intended for specific industrial purposes. The decision aimed to balance enforcement with fairness, resulting in a reduced redemption fine and consequential relief for the respondents.
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1991 (5) TMI 168
Issues Involved:
1. Jurisdiction of the Delhi Collector to adjudicate the case.
2. Alleged fraudulent importation and mis-utilization of additional licenses.
3. Confiscation of goods and imposition of penalties.
4. Post-importation violations and their adjudication.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Delhi Collector to Adjudicate the Case:
The appellants contested the jurisdiction of the Delhi Collector, arguing that the goods were imported and cleared at Bombay Customs under Section 47 of the Customs Act, 1962, and thus, the Delhi Collector had no authority to adjudicate the proceedings. The Department contended that the Delhi Collector had jurisdiction due to the fraudulent clearance of goods at Bombay Customs. The Tribunal held that the jurisdiction is territorial-cum-functional and that the Delhi Collector had no jurisdiction to pass orders under Section 110 for goods cleared by Bombay Customs. The proper course of action would have been to inform the Bombay Customs for appropriate action. The Tribunal referenced previous decisions, including Ramnarain Bishwanath v. Collector of Customs, Calcutta, and Singh Radio & Electronics v. Collector of Customs, Delhi, to support its conclusion.
2. Alleged Fraudulent Importation and Mis-utilization of Additional Licenses:
The Department alleged that M/s. Casino Electronics (P) Ltd. and its Director fraudulently imported 63 Fax Machines using non-transferable additional licenses from three export houses, and subsequently sold these machines in the open market. The Delhi Collector ordered the confiscation of the Fax Machines under Sections 111(d) and 111(o) of the Customs Act due to the mis-utilization of licenses and violation of import conditions. The appellants argued that the goods were imported against valid licenses and sold to buyers, including government departments, without any fraud.
3. Confiscation of Goods and Imposition of Penalties:
The Additional Collector of Customs, New Delhi, ordered the confiscation of the Fax Machines and imposed penalties on the involved parties. The appellants contended that the confiscation and penalties were unjustified as the goods were cleared by the proper officer at Bombay Customs. The Tribunal held that the Delhi Collector had no jurisdiction to confiscate the goods or impose penalties, as the proper authority was the Bombay Customs.
4. Post-importation Violations and Their Adjudication:
The appellants argued that any post-importation violations, such as selling goods to non-actual industrial users, should be adjudicated by the Chief Controller of Imports & Exports (CCIE) and not by the Customs authorities. The Tribunal agreed that the power to adjudicate post-importation conditions is vested in the CCIE, referencing the decision in Audio Vision v. Collector of Customs. The Tribunal emphasized that the Delhi Collector should have referred the matter to the appropriate authority with all-India jurisdiction.
Separate Judgments Delivered by Judges:
- Member (Judicial): Concluded that the Delhi Collector had no jurisdiction to adjudicate the case and allowed the appeals on the point of jurisdiction.
- Member (Technical): Differentiated between two groups of appellants and concluded that the Delhi Collector had jurisdiction for Group II appellants but not for Group I appellants. Suggested that the appeals of Group II be posted for hearing on merits.
- Third Member (Technical): Concurred with the Member (Judicial) that the Delhi Collector had no jurisdiction to adjudicate the case for all appellants.
Final Order:
In view of the majority opinion, the appellants succeeded on the point of jurisdiction, and all the appeals were allowed.
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1991 (5) TMI 167
Issues Involved:
1. Jurisdiction of the Assistant Collector to issue the show cause notice.
2. Classification of Rasna Soft Drink Concentrate (RSDC) under the Central Excise Tariff.
Detailed Analysis:
1. Jurisdiction of the Assistant Collector to Issue the Show Cause Notice:
The appellants contended that the Assistant Collector lacked jurisdiction to issue the show cause notice dated 17th June, 1987, as it covered a period beyond six months, contrary to Section 11A of the Central Excise Act. They argued that the agreement before the High Court not to raise the plea of bar of limitation was unenforceable as it was contrary to law.
Conversely, the Department argued that the interim order of the Gujarat High Court dated 28th February, 1986, which directed the maintenance of the status quo, effectively restrained them from issuing the notice. Therefore, the period from 28th February, 1986, to 20th April, 1987, should be excluded from the six-month limitation period as per the explanation to Section 11A.
The Tribunal analyzed whether the interim order resulted in a 'stay of service of notice.' It concluded that the order to maintain the status quo implied that the Department could not proceed with the classification of the product or levy and collect duty, as this would violate the High Court's directive. Hence, the period of the stay (28th February, 1986, to 20th April, 1987) should be excluded in computing the six-month limitation period.
The Tribunal referred to Section 15 of the Limitation Act, which supports excluding the period during which an injunction or stay order is in force. The Tribunal concluded that the show cause notice issued on 17th June, 1987, was within the permissible period, as the stay period was to be excluded. Therefore, the Assistant Collector had jurisdiction to issue the notice.
2. Classification of Rasna Soft Drink Concentrate (RSDC):
The appellants argued that RSDC should not be classified under Tariff Item 2107.91 as 'edible preparations not elsewhere specified or included.' They contended that the product was eligible for exemption under Notification No. 17/70 dated 1st May, 1970.
The Tribunal noted that the Collector had not decided on the classification issue and had remanded the matter to the Assistant Collector for de novo consideration. The Tribunal allowed the appellants to advance arguments on classification but refrained from expressing any view since the Collector had not made a finding on the merits.
The Tribunal remanded the matter back to the Collector to consider the classification issue afresh. Both the appellants and the Department were directed to present all relevant material before the Collector for a thorough examination.
Conclusion:
The Tribunal held that the Assistant Collector had jurisdiction to issue the show cause notice, as the period of stay by the Gujarat High Court was to be excluded in computing the limitation period. The issue of classification of RSDC was remanded to the Collector for fresh consideration.
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1991 (5) TMI 166
The High Court directed the Tribunal to refer a question regarding the admissibility of statements under Section 108 of the Customs Act, 1962, made by individuals transferred from police custody to customs custody. The Tribunal found no prohibition in Section 108 against recording statements in such circumstances. The Tribunal rejected a Reference Application by the accused challenging the admissibility of the statements. The Tribunal referred the question to the High Court for its opinion.
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1991 (5) TMI 165
Issues: Eligibility for exemption under Notification 64/79 for imported goods used in drug manufacture.
In this case, the main issue revolves around the eligibility of goods imported for the benefit of exemption under Notification 64/79, which partially exempts specified raw materials used for drug manufacturing from customs duty. The appellants imported acetonitrile in three shipments for manufacturing the Sodium Salt of sulpha somidine, which was further converted into the bulk drug sulpha somidine. The Customs Department required the conversion of acetonitrile to take place in the appellants' own factory to claim the concessional duty rate under the notification. The refund claims for the three consignments were initially rejected due to lack of evidence of the goods' usage in drug manufacturing. The Collector (Appeals) granted the benefit of the Notification for consignments No. 1 and 2 but rejected the appeal for consignment No. 3, leading to the current appeal.
The primary contention was the rejection of refund claims by the Assistant Collector based on the absence of the original end-use certificate. The Tribunal remanded the matter for reconsideration due to confusion in processing the claims and the submission of the end-use certificate by the appellants. The Department argued that the goods were used for drug intermediate, not a drug, based on a photocopy of a certificate, and dismissed a letter from a third party confirming the usage for drug manufacturing. However, the appellants consistently claimed submission of an end-use certificate issued by Central Excise authorities, which detailed the consumption of acetonitrile in drug manufacturing. The Tribunal found the Department's contentions unsubstantiated, accepted the certificate's validity, and rejected the Department's argument that importers should manufacture the drugs themselves based on the notification's language.
Upon careful consideration of submissions and the end-use certificate, the Tribunal held that the importers were entitled to the concessional duty rate under Notification 64/79-Cus. The impugned order was set aside, and the appeal was allowed with any consequential relief deemed necessary.
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1991 (5) TMI 164
Issues:
Classification of Polyurethane Resin Polytetramethlene Adipate Glycol (PTMAG) under Heading 3907.99 as "other polyesters" or under 2905 as "other Diols".
Detailed Analysis:
The appeal was against the order confirming the classification of PTMAG as "other polyesters" under Heading 3907.99 instead of "other Diols" under 2905.39. The Chief Chemist's report stated that PTMAG is a synthetic polymer with more than five monomer units, classifiable under Chapter 39 based on the number of monomer units. The appellants argued that PTMAG is a Diol or glycol, specifically covered under 2905.39. They referred to chemical dictionaries and supplier's literature to support their claim.
The Department contended that PTMAG is a polymerized product with more than five monomer units, falling under Chapter 39 as per Chapter Note 3(c). The Chief Chemist's opinion supported this classification. The Department emphasized that the Assistant Collector's decision was based on the Chief Chemist's report, which was not challenged by the appellants. The Department also highlighted the Rule 3(c) of the Rules for Interpretation of the Tariff.
The Tribunal considered both parties' submissions and analyzed the classification criteria. It was noted that PTMAG contains an ester chain provided by adipic acid, making it more than a Diol. The General Explanatory Note to the Tariff indicated that products under Heading 29.05 should be sub-classifications of the articles covered by that heading. The Chief Chemist's report, confirming PTMAG as a polymer with more than five monomer units, supported the classification under Chapter 39. Textual authorities also supported the classification of PTMAG as a polyester under Heading 3907.99.
The Tribunal upheld the Collector (Appeals) decision, concluding that PTMAG is correctly classified as "other polyesters" under Heading 3907.99 and not as "other Diols" under Heading 29.05. The alternate claim for classification under Heading 38.23 was also rejected as PTMAG was not a mixture of glycols. The decision was based on a detailed consideration of textual authorities and HSN Notes, affirming the classification of PTMAG as a raw material for the manufacture of thermoplastic polyurethane under Chapter 39. The appeal was ultimately rejected.
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1991 (5) TMI 163
Issues:
- Appeal against order passed by Collector of Central Excise
- Claim for benefit of Notification No. 119/66-CE and subsequent amendments
- Request for adjournment due to consideration of Section 11C Notification
- Exemption Notification No. 3/91-CE(NT) dated 30th January, 1991
- Dispensation with pre-deposit of duty amount
- Remand of the matter to Collector of Central Excise for re-adjudication
Analysis:
The case involves an appeal filed by M/s. Kaycee Electricals against an order by the Collector of Central Excise, Delhi. The appellant claimed the benefit of Notification No. 119/66-CE and subsequent amendments, asserting entitlement due to the use of crude copper for manufacturing copper wire rods. The appellant highlighted the issuance of Exemption Notification No. 3/91-CE(NT) dated 30th January, 1991, exempting copper wire rods manufactured from copper wire bars from certain duties. The appellant argued that the Collector did not consider this notification as it was issued after the hearing, leading to a gap between notification and the order. The appellant sought dispensation with the pre-deposit of a substantial duty amount, citing undue hardship and requested a remand for re-examination based on the new notification.
The respondent, represented by Shri M.K. Sohal, acknowledged the relevance of Exemption Notification No. 3/91-CE(NT) and expressed no objection to dispensing with the pre-deposit and remanding the matter for re-adjudication. After hearing both parties, the Tribunal, comprising S/Shri Harish Chander and P.K. Kapoor, analyzed the facts and circumstances. They noted discrepancies in the Collector's awareness of the exemption notification and the timing of the order. Referring to the retrospective effect of the notification, the Tribunal cited a similar case to support remanding for further examination in line with natural justice principles.
Consequently, the Tribunal decided to set aside the impugned order and remand the matter to the Collector of Central Excise, New Delhi, for re-adjudication. The Collector was instructed to consider the benefit of Exemption Notification No. 3/91-Central Excise (NT) dated 30th January, 1991, observe natural justice principles, and provide a personal hearing opportunity. The Tribunal allowed the appeal by way of remand, emphasizing the need for a fair re-examination of the case.
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