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Showing 141 to 160 of 374 Records
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1987 (7) TMI 305
Issues:
1. Application for stay of proceedings against the petitioner.
2. Appeal against the order of the Collector of Central Excise regarding the Show Cause Notice for alleged clandestine removal of branded beedies.
Analysis:
1. The application sought a stay of proceedings against the petitioner before the Collector of Central Excise, Cochin, in response to a Show Cause Notice dated 16-4-1986. The petitioner challenged the jurisdiction of the adjudicating authority, which was decided against the petitioner by the High Court. The appeal before the Tribunal focused on the question of limitation under the Central Excises and Salt Act, 1944. The Tribunal dismissed the application for stay and proceeded to hear the appeal, ultimately dismissing it as well.
2. The appeal was against the Collector's order rejecting the appellant's contention that the Show Cause Notice dated 16-4-1986 was legally untenable. The appellant argued that the proviso to Section 11A of the Act, allowing an extended period of limitation in cases of suppression, should apply prospectively from the enactment date. The Tribunal considered the validity of the Show Cause Notice and the competence of the adjudicating authority. It was determined that the Department could invoke the extended period of limitation under Section 11A for clandestine removal of excisable goods, such as branded beedies. The Tribunal emphasized that the provision should not be limited to prospective application only, as that would create an impractical scenario. The appeal was dismissed, allowing the adjudication to proceed promptly, with the limitation issue being the sole focus of the Tribunal's decision. The appellant retained the right to raise other legal arguments before the adjudicating authority.
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1987 (7) TMI 304
Issues:
- Appeal against rejection of Transfer of Residence concession for room air-conditioner and car air-conditioner.
- Interpretation of Transfer of Residence Rules and criteria for granting the concession.
Analysis:
The appellant returned to India after staying abroad for over two years and sought Transfer of Residence concession for personal goods. The Asst. Collector of Customs granted the concession for most goods but rejected it for a room air-conditioner and a car air-conditioner, stating they did not show signs of usage over a year. The appeal against this rejection was dismissed, leading to the current appeal.
The impugned order negated the Transfer of Residence concession solely because the model number was missing in the service bill for the air-conditioners. However, all other goods received the concession. The lower appellate authority did not dispute the purchase date of the air-conditioners, which was supported by a purchase voucher. The appellant also provided evidence of servicing the room air-conditioner in London. Despite the missing model number in the service invoice, the authenticity of the purchase voucher was not questioned, indicating possession for the required period.
Referring to previous rulings, the Tribunal emphasized that possession of an article for the minimum period implies its use. The Tribunal rejected the idea that an article must show signs of use to qualify for the concession, highlighting that possession and use should be considered strong evidence. The Tribunal held that denying the concession based on an article looking new or lacking signs of use is not sustainable without valid reasons. Considering these principles, the Tribunal concluded that the appellant is entitled to the Transfer of Residence concession for the room air-conditioner and car air-conditioner. Consequently, the impugned order was set aside, and the appeal was allowed.
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1987 (7) TMI 303
Issues:
1. Acceptance of evidence of seizure of gold when panchas did not support the panchnama.
2. Treatment of applicant's statement recorded under duress as voluntary.
3. Treatment of applicant's statement regarding metallic yarn as a confession justifying penalty under Gold (Control) Act.
Analysis:
Issue 1:
The applicant sought clarification on whether the evidence of seizure of gold, as per the panchnama, can be accepted when the panchas did not support it. The applicant's representative argued that the panch witnesses did not corroborate the seizure of gold bars during the search of the car. However, the Collector contended that this was a matter of evidence appreciation, not a legal question. The Tribunal upheld the seizure based on the panchanama and the presence of panchas during the search, concluding that the panchnama was valid evidence of the seizure. The Tribunal found no legal grounds to refer this issue to the High Court.
Issue 2:
The second issue raised was whether the applicant's statement, obtained under duress, could be considered voluntary. The applicant alleged that the statement was coerced after being detained and beaten by Customs officers. The Tribunal examined this claim and found no evidence supporting the coercion allegation. The statement was recorded by a Gazetted officer under Section 108 of the Customs Act, making it admissible as evidence. The Tribunal cited a Supreme Court judgment to support the admissibility of such statements. Consequently, the Tribunal ruled that this issue did not warrant a legal reference to the High Court.
Issue 3:
The final issue concerned the treatment of the applicant's statement regarding metallic yarn as a confession justifying a penalty under the Gold (Control) Act. The Tribunal clarified that the applicant's statement did not amount to a confession, as he denied knowledge of the hidden gold bars. The imposition of the penalty was based on the overall evidence presented, not solely on the applicant's statement. The Tribunal determined that this issue did not raise a legal question but was a matter of evidence evaluation. Therefore, it was deemed unnecessary to refer this issue to the High Court.
In a separate judgment by Member K. Gopal Hegde, it was emphasized that the application attempted to convert factual issues into legal ones to challenge the Tribunal's order. The judgment highlighted that the panchnama was used solely to evidence the seizure of gold bars, not as substantive evidence. The voluntary nature of the applicant's statement was also addressed, with the Tribunal finding no basis for coercion. Additionally, the Tribunal clarified that the applicant's statement was not treated as a confession, and the penalty was imposed based on a comprehensive assessment of all evidence. Consequently, the application was rejected based on the lack of legal grounds for reference to the High Court.
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1987 (7) TMI 302
Issues Involved:
1. Presumption of attempted export under Section 11(M) of the Customs Act.
2. Liability of silver chorses sale within India under Section 114.
3. Evidence of illegal export or attempted export.
4. Practicality and enforceability of Rule 5.
5. Appropriateness and amount of penalties imposed.
Issue-wise Detailed Analysis:
1. Presumption of Attempted Export under Section 11(M) of the Customs Act:
The appellants contended that the authorities were not justified in drawing the presumption of attempted export as provided under Section 11(M) of the Customs Act. They argued that the silver was neither received nor sold by the firm, and hence, Section 11(M) should not be invoked. They also claimed that the return of summons undelivered did not prove the fictitious nature of the purchasers. However, the Tribunal found that the admission by the main partner, Kantilal, that the purchasers were fictitious, along with other evidence, justified the presumption under Section 11(M). The Tribunal concluded that the sales were to fictitious persons, thus raising the presumption of illegal export.
2. Liability of Silver Chorses Sale within India under Section 114:
The appellants argued that the sale of silver chorses within India did not amount to an attempt to export, and therefore, the goods were not liable to confiscation under Section 114. The Tribunal rejected this argument, stating that Section 11(M) was introduced to address the difficulty of proving actual or attempted export. The unrebutted presumption of illegal export, along with evidence of violations of Section 11L and Rule 5, justified the application of Section 114 and the imposition of penalties.
3. Evidence of Illegal Export or Attempted Export:
The appellants claimed there was no evidence of illegal export or attempted export of silver, and thus no basis for penalties under Section 114. The Tribunal disagreed, noting that the presumption under Section 11(M) was sufficient to establish illegal export. The clear admission by Kantilal and other circumstantial evidence supported the conclusion that the purchasers were fictitious, thus justifying the penalties.
4. Practicality and Enforceability of Rule 5:
The appellants contended that the steps specified in Rule 5 were impracticable and could not be enforced. The Tribunal rejected this contention, emphasizing the necessity of stringent restrictions to prevent illegal export. The Tribunal also noted that it lacked the jurisdiction to declare the rule as ultra vires or inoperative. The Tribunal upheld the enforceability of Rule 5, considering it essential for achieving the objectives of the Act.
5. Appropriateness and Amount of Penalties Imposed:
The appellants argued that the penalties imposed were harsh and unreasonable, especially given that similar cases had resulted in much lower penalties. They also contended that imposing penalties on both the firm and the partners was unjustified. The Tribunal found that the purchase of 114.540 kgs of silver was genuine, but the subsequent sales were fictitious. The Tribunal did not find evidence of leniency in similar cases and noted that the penalties imposed were proportionate to the scale of transactions amounting to Rs. 86 lakhs. However, the Tribunal agreed that imposing penalties on both the firm and the partners was excessive. Consequently, the penalty on the firm was set aside, while the penalties on the main partner and the manager were upheld.
Conclusion:
The Tribunal upheld the presumption of attempted export under Section 11(M) and the applicability of Section 114 for the sale of silver chorses. The evidence supported the conclusion of illegal export, and the enforceability of Rule 5 was affirmed. The penalties on the firm were set aside, but the penalties on the main partner and the manager were confirmed. The firm was granted consequential relief by way of refund of the penalty amount deposited.
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1987 (7) TMI 285
Issues:
1. Claim for refund of duty on repaired/re-conditioned machines.
2. Compliance with conditions specified in Notification No. 5/70.
3. Applicability of time limitation under Section 11B of Central Excises and Salt Act, 1944.
Analysis:
Issue 1: Claim for refund of duty on repaired/re-conditioned machines
The case involved a claim for refund of duty by M/s. Lohia Machines Ltd. on repaired/re-conditioned machines. The Assistant Collector rejected the claim citing non-fulfillment of requirements under Rule 173H and time bar under Section 11B. The Collector (Appeals) allowed the appeal, stating that the respondents had substantially complied with the rule and the time limit should be calculated from the date of receipt. The Department appealed against this decision.
Issue 2: Compliance with conditions specified in Notification No. 5/70
The Collector had issued Notification No. 5/70 under Rule 173H, specifying conditions for claiming exemption. The respondents argued that the notification was not legally binding. However, the Tribunal held that the conditions specified in the notification were binding on the appellants if they wanted to avail the benefit of Rule 173H. The Tribunal cited precedents to support the binding nature of such notifications issued by the Collector.
Issue 3: Applicability of time limitation under Section 11B
The Tribunal referred to previous judgments and concluded that the time limitation under Section 11B of the Central Excises and Salt Act, 1944, cannot be relaxed. The Tribunal highlighted that even the High Court may choose not to lift the bar of limitation for ordering a refund of duty. The Tribunal upheld the decision of the Assistant Collector and set aside the order of the Collector (Appeals).
In conclusion, the Tribunal allowed the appeal, reinstating the decision of the Assistant Collector and rejecting the claim for refund of duty on repaired/re-conditioned machines by M/s. Lohia Machines Ltd.
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1987 (7) TMI 284
Issues Involved:
1. Duty demand on destroyed and unaccounted watch components.
2. Duty demand on assembly losses.
3. Duty demand on clandestine removals to ancillary units.
4. Confiscation of components and vehicle.
5. Seizure of excess components.
6. Non-maintenance of raw material account and non-submission of RT5 returns.
7. Imposition of personal penalties and fines.
Detailed Analysis:
1. Duty Demand on Destroyed and Unaccounted Watch Components:
The adjudication order demanded Rs. 20,22,639.67 for watch components destroyed as rejects and Rs. 1,41,766.40 for components lost in assembly. The appellants argued that their internal accounting was detailed and previously accepted by the department for other components. They contended that the department presumed all rejected components were destroyed without considering rework and reissue. The Tribunal found merit in the appellants' internal records but noted the lapse in not following prescribed destruction procedures. Consequently, while the demand for duty was not upheld, a suitable penalty was justified for procedural lapses.
2. Duty Demand on Assembly Losses:
The demand for Rs. 1,41,766.40 on components lost in assembly was addressed similarly to the destroyed components. The Tribunal noted the appellants' detailed internal accounting and the lack of evidence for clandestine removal. The procedural lapse in not following destruction protocols was acknowledged, warranting a penalty but not the duty demand.
3. Duty Demand on Clandestine Removals to Ancillary Units:
The demand for Rs. 48,99,812.05 was based on differences in reconciliation statements of ancillary units and receipts under Gate Passes. The appellants argued that both indigenous and imported components were supplied under dispatch vouchers with distinct stock numbers. The Tribunal found that the Collector did not adequately consider the appellants' submissions and records. Therefore, the demand was set aside and remanded for re-examination by the Collector, directing a fresh adjudication with proper consideration of the appellants' records.
4. Confiscation of Components and Vehicle:
The confiscation of components from an Ambassador car and the car itself was upheld. The appellants' explanation that the components were imported and permitted for movement was not immediately substantiated. The Tribunal found no documents covering the movement, justifying the confiscation.
5. Seizure of Excess Components:
The excess components seized from the ancillary units were rightly confiscated due to concealment and lack of denial of excess by the appellants. However, the Tribunal found the seizure of the entire stock based on detected excesses harsh and unjustified, given the appellants' maintained records. The order confiscating components valued at Rs. 40,83,426.61 and Rs. 39,42,612.22 and the corresponding duty demand was set aside.
6. Non-Maintenance of Raw Material Account and Non-Submission of RT5 Returns:
The appellants admitted to not maintaining the raw material account in form IV and not submitting RT5 returns. The Tribunal found this lapse justified a penalty, as the appellants failed to comply despite instructions from the jurisdictional Superintendent.
7. Imposition of Personal Penalties and Fines:
The Tribunal reduced the personal penalty on HMT Watch Factory to Rs. 50,000 and on Bharatha Matha Watch Assembly Unit and Gayathri Women Welfare Association to Rs. 5,000 each, considering the nature of the offence. The fines in lieu of confiscation were deemed reasonable and upheld. The case related to the demand for Rs. 48,99,812.05 was remanded for fresh adjudication.
The judgment reflects a detailed consideration of procedural lapses and the necessity for proper record maintenance while recognizing the appellants' internal systems and previous departmental practices.
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1987 (7) TMI 283
Issues:
Classification of cutting dies and cutting discs under Item 68 CET or Item 51A(iv) CET; Barred by limitation review notice by Central Government; Jurisdiction of Central Board to decide on classification; Proper classification of goods as industrial knives under Item 51A(iv) CET; Imposition of penalty justified or not.
Analysis:
1. The case involved the classification of cutting dies and cutting discs by M/s. Bata (India) Ltd., with the Collector of Central Excise, Calcutta confirming demands under three show cause notices. The Collector classified the goods under Item 51A(iv) CET, while the Central Board later held that the goods fell under Item 68 CET, setting aside the demands and penalties imposed by the Collector.
2. A preliminary objection was raised regarding the review notice issued by the Central Government being barred by limitation under Section 36(2) of the Central Excises and Salt Act. The objection was partially upheld, stating that the bar of limitation may not apply to the penalty imposed under the Collector's order dated 13-12-1979.
3. The issue of whether the penalty could be imposed depended on the proper classification of the goods. Both parties presented arguments on the classification, with the Department questioning the jurisdiction of the Central Board to decide on classification without an appeal against the Assistant Collector's classification order. However, the Tribunal ruled that only grounds mentioned in the review notice by the Central Government could be considered.
4. The Tribunal focused on the classification issue, determining whether the goods were industrial knives under Item 51A(iv) CET. The Central Board's order lacked detailed reasoning for its conclusions, leading the Tribunal to consider evidence presented by both parties regarding the classification of the goods.
5. The Tribunal examined previous cases and certificates provided by the respondents to establish that the products were known as cutting dies and not industrial knives. Relying on precedent and evidence, the Tribunal concluded that the products did not fall under Item 51A(iv) or 51A(iii) CET, leading to the dismissal of the appeal and discharge of the review notice dated 15-2-1982.
6. In a separate judgment, the Sr. Vice-President concurred with the decision to dismiss the appeal, emphasizing that the grounds for review set out by the Central Government should limit the scope of the Tribunal's consideration. The Revenue was not allowed to introduce new grounds at a later stage, and the appeal was dismissed based on the grounds specified in the review notice.
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1987 (7) TMI 282
Issues Involved:
1. Eligibility for benefit under Notification 119/75-C.E.
2. Legality of the show cause notice under Rule 10 of the Central Excise Rules.
3. Validity of the demand for differential duty and penalty.
Issue-wise Detailed Analysis:
1. Eligibility for Benefit under Notification 119/75-C.E.:
The appellants, a unit of Simon Carves India Ltd., claimed benefit under Notification 119/75-C.E. for fabrication work. The department contended that this benefit was only available to job workers receiving materials from a customer and returning the fabricated product to the customer. The department argued that since the material was sent from one unit of the company to another, the despatching unit could not be considered a customer. The appellants argued that their units at Bombay and Calcutta dealt with the Adityapur unit as independent customers. However, the tribunal concluded that despite the procedural formalities, all units were part of the same company and thus were not distinct legal entities. Consequently, the Adityapur unit was not entitled to the benefit under Notification 119/75-C.E., as it was not a job worker in the legal sense.
2. Legality of the Show Cause Notice under Rule 10 of the Central Excise Rules:
The show cause notice issued on 19-6-1980 did not quantify the duty demanded or specify the period for which the demand was raised. The appellants argued that this omission rendered the notice invalid under Rule 10, which required the quantum of duty to be mentioned. The department relied on the Delhi High Court's decision in Hindustan Aluminium Corporation Ltd., which held that the omission to mention the quantum of duty would not invalidate the notice. The tribunal noted that in the present case, the department lacked the necessary information to quantify the duty because the appellants had not furnished the required details. The tribunal concluded that the notice was fundamentally defective due to the absence of specified details, rendering the adjudication invalid.
3. Validity of the Demand for Differential Duty and Penalty:
The Assistant Collector demanded differential duty on the cost of raw materials received by the Adityapur unit from the Bombay and Calcutta units and imposed a penalty of Rs. 2,000/-. The appellants contended that the confirmation of the demand was invalid due to non-compliance with Rule 10. The tribunal found that the department had not complied with the statutory requirements of Rule 10, as the notice did not specify the duty amount or the period. The tribunal held that the demand for an unspecified amount and period was not valid in law. Consequently, the confirmation of the demand and the penalty was set aside.
Separate Judgments by the Judges:
The tribunal members delivered separate judgments. One member concluded that the show cause notice was fundamentally defective, and the adjudication should be set aside on that ground. The other member held that the absence of details in the notice was not fatal and upheld the order of adjudication. The President of the tribunal resolved the difference, concluding that the show cause notice was valid despite the lack of specific details, given the appellants' failure to furnish necessary information.
Final Order:
The appeal was dismissed except to the extent that the demand for duty from the appellants would be enforceable only for the period of five years preceding the date of the show cause notice. The balance of the demand for the prior period was set aside.
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1987 (7) TMI 281
Issues:
1. Appeal against summary rejection of writ petition filed by the appellants.
2. Contention regarding the collection of octroi on goods stored in Customs Bonded Warehouses.
3. Consideration of the point raised by the appellants in light of a judgment from the Gujarat High Court.
4. Granting of interim relief to the appellants based on their undertaking.
5. Argument against granting interim relief and the issue of the service charge for octroi collected.
Analysis:
The judgment by the High Court of Bombay involves an appeal challenging the summary rejection of a writ petition filed by the appellants. The appellants import goods into India and transport them to their mills at Thane without paying octroi. However, when goods are stored in Customs Bonded Warehouses within the Municipal limits of Greater Bombay, octroi is collected by the Municipal Corporation and refunded, excluding a service charge. The appellants argue that octroi should not be collected on goods stored in Customs Bonded Warehouses as per Section 192 of the Bombay Municipal Corporation Act, which allows octroi collection only on goods entering for consumption, use, or sale within Greater Bombay.
The court acknowledges the appellants' contention, noting that it warrants consideration. The respondents refer to a judgment from the Gujarat High Court that differs from the appellants' position, but the Bombay High Court deems the issue raised by the appellants significant. Consequently, interim relief is granted to the appellants based on their undertaking that imported goods stored in Customs Bonded Warehouses will be transported outside the Municipal limits and not used, consumed, or sold within the area. The appellants also agree to provide monthly statements to the Municipal Corporation regarding the goods stored and transported.
Despite objections raised against granting interim relief and the mention of the service charge for octroi collected, the court allows the appeal. The order of summary rejection is set aside, and the appellants' undertakings are accepted. The court orders that the appellants pay the service charge on goods stored in Customs Bonded Warehouses, with the liberty to apply for a refund of this charge during the petition hearing. The Municipal Corporation is given the liberty to apply for a fixed date for the petition hearing after filing an affidavit-in-reply. The judgment concludes with no specific order as to costs, maintaining a neutral stance on the matter.
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1987 (7) TMI 270
Issues Involved:
1. Whether zinc calots used in the manufacture of dry battery cells are dutiable.
2. Application and interpretation of Rule 9 and Rule 49 of the Central Excise Rules.
3. The requirement of a specified place for the collection of excise duty.
4. The effect of paying duty under protest.
5. The concept of intermediate goods in Central Excise law.
6. The necessity of a licence for manufacturing excisable goods.
7. The implications of manufacturing without a licence and the consequences of such actions.
Issue-wise Detailed Analysis:
1. Whether zinc calots used in the manufacture of dry battery cells are dutiable:
The appellants argued that zinc calots, which are intermediate products in the continuous process of manufacturing dry battery cells, should not be subject to excise duty. They contended that since these calots are used internally within their factory and not removed as per Rule 9 and Rule 49 of the Central Excise Rules, they should not be dutiable. However, the judgment clarified that zinc calots are specifically listed under Central Excise Tariff Item 26B(2a) and are thus excisable. The court held that the moment zinc calots are taken for further use in the manufacturing process, they are considered removed and become liable to duty immediately before such use.
2. Application and interpretation of Rule 9 and Rule 49 of the Central Excise Rules:
The appellants argued that Rule 9 requires a specified place for the removal of goods for duty to be levied. They claimed that no such specification was made by the Collector, hence duty should not be applicable. The judgment refuted this by stating that the appellants had paid duty under protest, which implies that the necessary licensing and specification procedures were followed. Rule 9 and Rule 49 were interpreted to mean that excisable goods are deemed removed immediately before they are consumed or utilized within the specified premises.
3. The requirement of a specified place for the collection of excise duty:
The court emphasized that the issuance of a licence for manufacturing excisable goods inherently involves the specification of a place. The appellants' argument that no place was specified was dismissed as unreasonable, given that they had received a licence and had been paying duty, albeit under protest. The court held that the appellants were bound by the terms and conditions of the licence, which included the specification of the place of manufacture.
4. The effect of paying duty under protest:
The court noted that the appellants' action of paying duty under protest nullified their argument that there was no removal from the specified place. The payment of duty indicated compliance with the licensing and specification requirements, and thus, the duty was rightly levied.
5. The concept of intermediate goods in Central Excise law:
The judgment clarified that there is no distinction between intermediate goods and final products in Central Excise law. All excisable goods are subject to duty unless specifically exempted. The court rejected the appellants' argument that intermediate goods used within the same factory should not be dutiable, stating that excisable goods retain their duty liability until it is lawfully discharged.
6. The necessity of a licence for manufacturing excisable goods:
The court highlighted that manufacturing excisable goods without a proper licence is a serious breach of the law. The appellants' failure to obtain a licence for the production of zinc calots and other excisable goods like zinc bars and zinc sheets was a significant violation. The judgment stressed that no one may profit from their lawbreaking, and the absence of a licence does not exempt the goods from duty.
7. The implications of manufacturing without a licence and the consequences of such actions:
The court condemned the appellants' actions of manufacturing excisable goods without a licence and not paying the required duty. It was pointed out that such conduct amounts to fraud on the revenue. The judgment stated that the appellants' failure to report their production and pay duty laid them open to severe penalties. The court affirmed that the duty on zinc calots must be paid as ordered by the lower authorities, and the appeal was rejected.
Conclusion:
The appeal was rejected, and the court upheld the duty liability on zinc calots used in the manufacture of dry battery cells. The judgment reinforced the importance of compliance with Central Excise Rules, the necessity of obtaining proper licences, and the non-exempt status of intermediate goods in excise law.
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1987 (7) TMI 269
Issues:
- Whether the appellant is entitled to take credit of duty paid on raw materials used in the manufacture of intermediate products exempt from duty, which are further used in the production of dutiable finished products.
Detailed Analysis:
1. The case involved M/s. Garware Paints Ltd., where the department allowed set off of duty paid on raw materials for the manufacture of products. The department contended that the raw materials were used in the production of intermediate products exempt from duty, which were then used in the manufacture of dutiable finished products under a different item of the Central Excise Tariff.
2. The Assistant Collector held that since the intermediate product was exempt from duty, proforma credit for raw materials used in its manufacture was not permissible. However, the Collector (Appeals) overturned this decision, citing a Trade Notice and a Bombay High Court judgment, leading to the department's appeal.
3. The central issue was whether the appellant could claim credit for duty paid on inputs used in the manufacture of exempt intermediate products that were subsequently used in the production of dutiable finished products. The department argued against allowing proforma credit, citing specific notifications.
4. The Tribunal considered arguments from both sides. The department contended that proforma credit would contradict certain notifications, while the respondent supported the Collector (Appeals) decision, emphasizing the Trade Notice and the Bombay High Court judgment. The respondent also raised the issue of the demand being time-barred.
5. The Tribunal examined the Trade Notice provided by the respondent, which clarified the applicability of Rule 56A in cases where fully exempt intermediate products are involved. The Tribunal found the Trade Notice to be an authoritative interpretation, supporting the allowance of proforma credit in such cases.
6. The Tribunal agreed with the Collector (Appeals) and the Bombay High Court decision, stating that if raw materials are used in the manufacture of exempt intermediate products that further contribute to the production of dutiable finished goods, proforma credit should be allowed. The Tribunal found the department's arguments unconvincing in light of the Trade Notice and the legal precedent.
7. Consequently, the Tribunal dismissed the appeal and disposed of the Cross Objections, affirming the right of the appellant to claim proforma credit for duty paid on raw materials used in the manufacture of exempt intermediate products that ultimately contribute to the production of dutiable finished products.
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1987 (7) TMI 268
The judgment by the Appellate Tribunal CEGAT, New Delhi stated that the power of relaxation under Notification 5/81-C.E. is not retrospective, and the Collector's order was set aside. The Collector was directed to rehear the application and make a new decision based on the power conferred by Notification 5/81-C.E.
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1987 (7) TMI 267
Issues:
1. Deduction of post-manufacturing expenses claimed by the respondents.
2. Barred by limitation - whether the demand for duty is time-barred.
3. Allegation of suppression of facts with intent to evade duty.
4. Submission of price lists and intent to evade duty.
5. Failure to furnish invoices and its impact on the case.
6. Provisional assessment under Rule 9-B and its relevance.
7. Whether the department safeguarded revenue during the inquiry.
8. Applicability of extended period for raising demand.
9. Comparisons with relevant case laws - Jay Prestressed Products Ltd., Khardah Company Ltd., Porritts & Spencer (Asia) Ltd.
10. Final decision on the demand for duty.
Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved a case concerning the deduction of post-manufacturing expenses claimed by the respondents. The Assistant Collector had raised a demand of Rs. 2,49,415.08, rejecting the claim of the respondents and deeming the demand time-barred. The Collector (Appeals) upheld the time-barred decision, leading to the department appealing the order. The department alleged suppression of facts by the respondent company, citing delays in submitting invoices and price lists as evidence of intent to evade duty.
The department argued that even if suppression of facts was not proven, the matter was subjudice and ultimately led to a de novo decision by the Collector (Appeals). They also highlighted the late submission of price lists by the respondent company as further proof of intent to evade duty. The department relied on various case laws to support their arguments.
In response, the consultant for the respondents refuted the allegations of failure to furnish invoices and argued that the delay was due to the Assistant Collector's inaction. The consultant emphasized that the price lists submitted matched those of M/s. Garware Paints Ltd., indicating no intent to evade duty. The Tribunal acknowledged the late submission of price lists but noted that they were voluntarily submitted, absolving the respondent company of any deliberate evasion.
Regarding the failure to furnish invoices, the respondent company denied the allegation, shifting the burden of proof to the department. The Tribunal observed that the department failed to provide evidence of correspondence regarding provisional assessments or open issues on assessable value. The Tribunal also considered the department's reliance on case laws but found them inapplicable to the present case.
Ultimately, the Tribunal upheld the Collector (Appeals) decision that the demand was time-barred, rejecting the department's appeal. The judgment emphasized the importance of safeguarding revenue during inquiries and highlighted the need for provisional assessments under Rule 9-B. The decision underscored the significance of timely decisions by the Assistant Collector and the lack of evidence supporting the department's claims of evasion.
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1987 (7) TMI 266
Issues Involved:
1. Whether the appellant had given any declaration in terms of Section 77 of the Customs Act and whether there was any misdeclaration involved?
2. Whether there has been concealment of the goods on the part of the appellant?
Issue-wise Detailed Analysis:
1. Declaration under Section 77 of the Customs Act and Misdeclaration:
The appellant, a tourist of Indian origin, arrived in India and was intercepted at the exit gate of the Green Channel at the Indira Gandhi International Airport. Upon examination, gold items were found in her hand baggage, which she did not declare. The appellant contended that she was unaware of the requirement to declare the gold items and that she had brought them for making jewelry in India. The Additional Collector of Customs confiscated the gold items and imposed a personal penalty of Rs. 500/-. The appellant argued that she was treated as a tourist and that under Rule 3 and Rule 7 of the Tourist Baggage Rules, personal effects, including personal jewelry, are permitted free of duty. The appellant claimed that no declaration was asked for until she reached the exit gate, and she declared the jewelry when intercepted.
The Department's representative argued that the appellant, having visited India earlier, was expected to be aware of the rules and was required to give a declaration under Section 77 of the Customs Act. However, the representative could not confirm whether the appellant was asked to make a declaration before entering the Green Channel or if there was any provision for making a written declaration. The Tribunal noted that there was no evidence that the appellant was called upon to make a declaration before being intercepted and that a declaration could only be made if a proper officer was present to receive it. The Tribunal found no violation of the rules by the appellant as she was treated as a tourist and was allowed to clear personal effects, including personal jewelry, free of duty.
2. Concealment of Goods:
The appellant's jewelry was found in her hand baggage, which she claimed was her purse. The Tribunal observed that a purse is a normal place for a lady to keep her personal jewelry while traveling. There were no findings by the lower authority on the concealment of the jewelry or any evidence that it was kept in a way to evade detection. The Tribunal held that there was no concealment as such and that the appellant did not violate any law or instructions for clearance through the Green Channel. The jewelry was considered personal jewelry, and there were no adverse findings by the lower authority regarding its nature.
Conclusion:
The Tribunal concluded that the lower authority's order was not maintainable in law and that the appellant should be allowed the benefit under the Tourist Baggage Rules. The appeal was allowed, and the confiscated goods were to be returned to the appellant.
Summary:
The Tribunal found that the appellant did not violate Section 77 of the Customs Act as there was no evidence she was asked to make a declaration before being intercepted at the exit gate. The jewelry was considered personal jewelry, and there was no concealment. The lower authority's order was set aside, and the appeal was allowed, granting the appellant the benefit under the Tourist Baggage Rules.
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1987 (7) TMI 265
Issues:
1. Interpretation of the conditions of an Advance Licence for import of synthetic waste.
2. Imposition of restrictions on the import of synthetic waste under a Replenishment Licence.
3. Application of the Import Export Policy of 1984-85 to the issuance of import licences.
4. Validity of restrictions imposed on the import of synthetic waste under the new Policy.
Analysis:
The judgment by H. Suresh, J. of the Bombay High Court involved a dispute regarding the import and export obligations of a company holding an Advance Licence for synthetic waste. The petitioners, engaged in manufacturing products, had received an order for woollen blankets for export to Iran, requiring synthetic waste for production. The Import Control Authorities issued an Advance Licence with specific export obligations. The petitioners fulfilled their export obligations but utilized only a portion of the Advance Licence for imports, leading to an Excess Entitlement Certificate. Subsequently, the authorities issued a Replenishment Licence with restrictions, causing the petitioners to seek removal of the limitations.
The respondents relied on the Import Export Policy of 1984-85, citing transitional arrangements under Para 254 to justify the restrictions imposed on the import of synthetic waste. They argued that the new Policy limited the replenishment entitlement, and the petitioners' grievances were unfounded. The respondents also mentioned a suspension order affecting the processing of the licence application. However, the petitioners contended that their entitlement arose under the 1983-84 Import Policy, and subsequent changes should not affect their rights. They highlighted a previous judgment supporting their position and emphasized that the transitional arrangements did not permit restrictions on specific items like synthetic waste.
In the court's analysis, the judge found that the transitional arrangements did not support the restrictions imposed on the petitioners' import of synthetic waste. The judge emphasized that the right to replenishment against earlier exports should align with the conditions applicable at the time of export. Since there were no changes in the item of import or overall replenishment entitlement, any limitations under the new Policy were deemed inapplicable to the petitioners. Consequently, the judge ruled in favor of the petitioners, making the rule absolute in their favor and allowing a period of revalidation. The judgment concluded with no order as to costs, settling the dispute in favor of the petitioners.
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1987 (7) TMI 264
Issues: Assessment of basic customs duty on imported Electrical Noise Testing Equipment under the Customs Tariff Act, 1975.
In this case, the appellants imported Electrical Noise Testing Equipment and sought a lower assessment of basic customs duty. The lower authorities assessed the goods under Heading 90.28(4) read with 90.16(1) of the Customs Tariff Act, 1975 at 60% basic customs duty. The appellants argued for a 40% assessment by either re-assessing under Heading 90.28(4) read with Heading 90.16(2) or claiming exemption under notification No. 394/76-Customs dated 2-8-1976. Both sides presented their arguments based on the catalogue, with the department contending that the goods were measuring instruments. However, upon careful consideration, the Tribunal found that the goods were actually measuring-cum-checking instruments, combining both functions. This finding was in line with the Collector (Appeals) decision as well.
The Tribunal ruled that since Heading No. 90.16(2) only covers checking instruments and the goods in question were measuring-cum-checking instruments, they could not fall under Heading 90.16(2). The appellants also tried to rely on the new Harmonised Customs Tariff that came into force later, but the Tribunal noted that the goods were imported before this new tariff, making the reliance on it irrelevant. Additionally, the Tribunal addressed the appellants' plea for exemption under notification No. 394/76-Customs, stating that while the notification covered measuring instruments and measuring-cum-checking instruments falling under Heading 90.16 (non-electrical type), the appellants' goods were electrical and fell under Heading 90.28, not specified in the notification. The Tribunal emphasized that the exemption notification had to be strictly construed, and the rate entry against Heading 90.28(4) did not automatically extend the exemption to these goods.
Ultimately, the Tribunal confirmed the assessment made by the lower authorities and dismissed the appeal, upholding the 60% basic customs duty on the imported Electrical Noise Testing Equipment.
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1987 (7) TMI 263
Issues:
1. Classification of Rayon Tyre Cord Fabrics under Central Excise Tariff (CET).
2. Validity of credit taken by the respondents under notification No. 201/79.
3. Applicability of Section 11A of the Central Excises and Salt Act for the demand.
4. Interpretation of paragraphs 3 and 4 of the notification's appendix.
Analysis:
1. The case revolves around the classification of Rayon Tyre Cord Fabrics under the Central Excise Tariff (CET). Initially classified under item 68 CET, the Supreme Court later reclassified it under item 22 CET, leading to a dispute regarding the duty credit taken by the respondents for the period from 19-9-1979 to 31-12-1980.
2. The respondents, manufacturers of tyres and rubber products, had obtained permission under notification No. 201/79 to take credit for duty paid on the Rayon Tyre Cord Fabrics under item 68 CET. The Department contended that since the fabric was reclassified under item 22 CET, the credit taken by the respondents was incorrect, leading to a demand for repayment of Rs. 6,30,838.05P.
3. The Department initially relied on Section 11A and Rule 10 of the Central Excise Rules for issuing the demand notice. However, a revised notice cited paragraph 4 of the notification's appendix as the basis for the claim. The respondents argued that the demand was time-barred under Section 11A and that paragraph 3, not paragraph 4, should govern the case.
4. The Tribunal analyzed paragraphs 3 and 4 of the notification's appendix to determine the appropriate provision for the demand. It concluded that paragraph 3 applied in this case as it covered situations where duty paid on inputs was varied subsequently, resulting in a refund to the manufacturer of the inputs. Since the manufacturer of the fabric had applied for a refund under item 68 CET, paragraph 3 was deemed applicable.
5. The Tribunal noted that the rejection of the refund claim by the fabric manufacturer was based on the duty already set off by the tyre manufacturers. Despite this rejection, the Department sought to recover the amount from the respondents, contradicting its own reasoning.
6. As the condition precedent for invoking paragraph 3 of the notification was not met due to the rejection of the refund claim, the Tribunal upheld the order of the Collector (Appeals) and dismissed the appeal. The judgment emphasized the correct application of the notification's provisions and the lack of basis for the demand in this case.
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1987 (7) TMI 262
Issues Involved:
1. Interpretation of the term "factory" under Notification No. 80/80-C.E.
2. Determination of the "manufacturer" for goods produced by cottage industries.
3. Eligibility for exemption under Notification No. 80/80-C.E. based on aggregate value of clearances.
Detailed Analysis:
1. Interpretation of the term "factory" under Notification No. 80/80-C.E.:
The central issue was the interpretation of the term "factory" as used in Notification No. 80/80-C.E., dated 19-6-1980. The appellants contended that the term should be defined as per Section 2(m) of the Factories Act, 1948, which excludes premises where manufacturing is done by household ladies without the aid of power. However, the Collector of Central Excise argued that the term "factory" should be interpreted as per Section 2(e) of the Central Excises and Salt Act, 1944. The Tribunal concluded that since Notification 80/80-C.E. was issued under Rule 8(1) of the Central Excise Rules, 1944, the term "factory" should be governed by the definition in Section 2(e) of the Central Excises and Salt Act, 1944, in the absence of any specific provision in the Notification referring to the Factories Act, 1948.
2. Determination of the "manufacturer" for goods produced by cottage industries:
The appellants argued that they were not the manufacturers of the goods (Agarbatti, amlapodi, and dhup) produced by household ladies without the aid of power, as they merely supplied raw materials and paid wages based on the number of pieces manufactured. They contended that these cottage industries operated independently and the goods did not come to their factory premises. The Tribunal examined various precedents, including cases where it was held that mere supply of raw materials does not make the supplier the "manufacturer" if the dealings were on a principal-to-principal basis and the unit was not a dummy. The Tribunal agreed with the appellants, concluding that they were not the manufacturers of the goods produced by the cottage industries.
3. Eligibility for exemption under Notification No. 80/80-C.E. based on aggregate value of clearances:
The exemption under Notification No. 80/80-C.E. depended on whether the aggregate value of clearances of all excisable goods by or on behalf of the manufacturer from one or more factories exceeded Rs. 20 lakhs during the preceding financial year. The Collector had included the value of goods produced by the cottage industries in the total clearance value, thereby exceeding the Rs. 20 lakhs limit and disqualifying the appellants from the exemption. However, the Tribunal, having determined that the appellants were not the manufacturers of those goods, excluded the value of the goods produced by the cottage industries from the aggregate clearance value. Consequently, the total value of clearances from the appellants' factory during 1980-81 amounted to Rs. 18,09,873.00, which is below the Rs. 20 lakhs threshold, making the appellants eligible for the exemption.
Conclusion:
The Tribunal held that the order-in-original by the Assistant Collector of Central Excise was correct, legal, and proper. The appellants were entitled to the exemption from duty under Notification No. 80/80-C.E. for the financial year 1981-82. The impugned order-in-review by the Collector of Central Excise was set aside, and the appeal filed by the appellants was allowed.
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1987 (7) TMI 261
Issues:
Availing benefit of Notification No. 178/77 and Notification No. 295/77-CE, Admissibility of proforma credit under Rule 56A, Compliance with procedure for availing proforma credit.
Analysis:
In this case, the appellants sought to avail the benefit of Notification No. 178/77 and Notification No. 295/77-CE, which exempted excisable goods from duty if certain conditions were met. The appellant company applied for availing the procedure under Rule 56A to get the benefit of the notifications. The company started availing proforma credit pending formal orders, leading to Show Cause Notices alleging inadmissible proforma credit under Rule 56A. The Assistant Collector made a demand for the amount in question.
The advocate for the appellants argued that the proforma credit was covered by the notifications and authorized under the rules. He cited relevant provisions and a tribunal decision supporting the admissibility of proforma credit. The JDR reiterated the lower authority's view. The Tribunal found that the Assistant Collector's orders lacked proper consideration of the facts and arguments presented. The Tribunal clarified that proforma credit could be allowed even if inputs and finished goods fell under different Tariff Items, as long as the government sanctioned remission or adjustment of duty, which was the case here.
Regarding compliance with the procedure for availing proforma credit, the Assistant Collector mentioned the requirement to furnish a statement showing the quantity of inputs used. The Collector of Central Excise (Appeals) rejected the appeal based on alleged non-compliance. However, the Tribunal reviewed the appellant's letters and found that they had duly applied for availing proforma credit and were following the necessary procedures. The appellants had also submitted input/output ratios certified by a Chartered Accountant for most raw materials, with a willingness to provide the remaining certifications.
Based on the findings, the Tribunal set aside the previous orders and directed that the appellants be granted the benefit of proforma credit under Notification No. 178/77 after due verification. The appeal was allowed, ruling in favor of the appellants.
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1987 (7) TMI 260
Issues:
- Inclusion of carton cost in the assessable value of glass bottles sold by the assessee.
- Determination of the rate at which the carton cost should be included.
Analysis:
1. The judgment involved seven matters with common issues regarding the inclusion of carton cost in the assessable value of glass bottles sold by the assessee to a customer. The assessee supplied empty glass bottles in cartons provided by the customer, and the dispute centered around the interpretation of Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.
2. The assessee contended that since the cartons were provided free of cost by the customer and were used solely for transportation purposes, no cost of packing should be included in the assessable value. They argued that the glass bottles could be supplied without any packing and cited previous judgments to support their case.
3. On the other hand, the department argued that Section 4(4)(d)(i) did not differentiate between packing belonging to the customer or the assessee. They asserted that packing was essential for the protection of fragile glass bottles and relied on the Supreme Court judgment in a similar case. The department also highlighted the lack of evidence regarding the repeated use of the same carton for multiple dispatches.
4. The Tribunal considered the need for uniformity in valuation and assessment to prevent discrimination among manufacturers of similar goods. They noted that previous High Court judgments involving identical goods and customers supported the assessee's position. As there was no contrary judgment, the Tribunal followed the Karnataka High Court's ruling, holding that the cost of the customer's carton should not be included in the assessable value.
5. Consequently, the Tribunal dismissed the department's appeals and allowed the cross-objections of the assessee, ruling that the cost of the customer's carton should not be added to the assessable value of the glass bottles. The Tribunal directed that consequential relief be granted to the assessee and acknowledged the need for reassessment if the retained portion of duties on packing cost was to be considered as part of the price realization.
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