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Showing 121 to 140 of 286 Records
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1994 (9) TMI 170
Issues:
1. Whether installation and commissioning charges are includible in the assessable value of the goods?
2. Whether the value of software is includible in the assessable value of the computer?
3. Whether the demand for duty is within the limitation period under Section 11A of the Central Excises & Salt Act, 1944?
Analysis:
1. Includibility of Installation and Commissioning Charges:
The appellants argued that the demand for the period from 1-1-1981 to 31-12-1985 is time-barred as they had disclosed the collection of installation charges to the department. They contended that such charges were not part of the selling price for the computer system and were shown separately in their invoices. The appellants also highlighted a factual error in the Collector's order regarding the classification of essential peripherals. The appellants relied on various case laws to support their position. However, the department argued that the demand was not time-barred as the appellants had not disclosed all relevant information about the valuation of their goods. The department invoked the longer period under Section 11A based on the discovery of new material during a visit to the factory. The Tribunal held that installation and commissioning charges, if quantified separately, should be excluded from the assessable value. The appellants were directed to provide necessary particulars for this quantification.
2. Includibility of Software in Assessable Value:
The Tribunal confirmed that the cost of software is includible in the assessable value of the computer, even if it is a bought-out item. The Collector's order was upheld, citing previous case laws and emphasizing that software costs must be considered in the valuation.
3. Limitation Period for Demand of Duty:
The appellants successfully argued against the invocation of the longer period under Section 11A for demanding duty. The correspondence between the department and the appellants in 1982 regarding price lists indicated that the department was aware of the installation charges. The Collector acknowledged that the appellants were following industry practices and did not deliberately withhold information. Consequently, the demand for duty beyond the six-month limitation period was deemed time-barred, and the appeal was disposed of in favor of the appellants.
In conclusion, the Tribunal clarified the treatment of installation charges and software costs in the assessable value while also ruling in favor of the appellants regarding the limitation period for demanding duty.
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1994 (9) TMI 169
Issues:
1. Determination of wholesale price from the retail price for excisable goods.
2. Inclusion of packing charges in the assessable value.
3. Admissibility of discounts in the valuation of goods.
Analysis:
Issue 1: Determination of Wholesale Price
The appeal challenged the order of the Collector of Central Excise (Appeals) regarding the disallowance of deductions claimed by the appellants on various costs in the price lists of office machines and computers. The appellants contended that the Assistant Collector recognized their direct sales to customers and directed the filing of price lists accordingly. They argued that deductions from the retail price should be granted to arrive at the wholesale price, as per Rule 6(a) of the Valuation Rules. The Tribunal noted the need to determine reasonable deductions from the retail price to establish the notional wholesale price. The Ministry of Finance's instructions clarified the methodology for such deductions, emphasizing the need to align the net value with wholesale prices. The Tribunal directed the Assistant Collector to reevaluate the assessable value by deducting suitable amounts from the retail price, as done in subsequent price lists.
Issue 2: Inclusion of Packing Charges
Regarding the inclusion of packing charges in the assessable value, the Collector (Appeals) disallowed it, stating that even if customers paid for packing, it should be included. The appellants argued that additional packing at customer's request for safe transport should not be included. The Supreme Court precedent established that packing necessary to make goods marketable should be included in the value. The Tribunal emphasized that the Assistant Collector should determine the necessity of the packing based on facts and the purpose of the packing. The issue was remanded to the Assistant Collector for a detailed assessment based on the Supreme Court's guidelines.
Issue 3: Admissibility of Discounts
The Supreme Court clarified that trade discounts should be allowed if established under agreements, terms of sale, or trade practices known before goods' removal. The Assistant Collector was advised to consider this clarification while reassessing the assessable value. The appeal was remanded to the Assistant Collector for a fresh determination of the assessable value in line with the discussions and legal principles highlighted in the judgment.
In conclusion, the Tribunal addressed the issues of determining wholesale price, inclusion of packing charges, and admissibility of discounts, providing detailed guidance for reassessment by the Assistant Collector based on legal precedents and statutory rules.
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1994 (9) TMI 168
Issues Involved:
1. Marketability of the "rough rolled flat form" of zinc.
2. Classification of the product under the Central Excise Tariff.
3. Admissibility of additional evidence submitted by the Revenue.
4. Interpretation of the Supreme Court's remand order.
Issue-wise Detailed Analysis:
1. Marketability of the "rough rolled flat form" of zinc:
The Supreme Court remanded the case to the Tribunal to determine whether the rough rolled flat forms of zinc are marketable commodities. The Tribunal examined the evidence provided by both parties. The Department argued that the product is marketable based on the appellant's own admission in a letter dated 19-9-1974, wherein they referred to the product as "zinc sheets" and sought permission to get them rolled from an external rolling mill. The Department also submitted an affidavit from the Assistant Collector of Central Excise, which indicated that the product was being sold in the market.
The appellant countered with affidavits from experts like Dinshaw Sorabji and Natarajan Sreenivasan, asserting that the rough rolled flat forms are not marketable as they do not meet ISI standards and are produced for immediate consumption in the manufacture of dry cell batteries. The Tribunal, however, found that the product's limited marketability to dry cell battery manufacturers was sufficient to establish its marketability.
2. Classification of the product under the Central Excise Tariff:
The product in question was classified under Item 26B(2) of the Central Excise Tariff, which covers "zinc sheets, strips, circles, and foils in any form or size." The appellant argued that their product did not meet the specifications for zinc sheets and should not be classified under this item. However, the Tribunal noted that the tariff item includes zinc sheets "in any form or size," which is broad enough to encompass the rough rolled flat forms. The Tribunal also referred to the Supreme Court's observation that even defective or sub-standard goods could be classified under the tariff item if they fit the description.
3. Admissibility of additional evidence submitted by the Revenue:
The Tribunal had to decide whether to consider an affidavit from the Assistant Collector of Central Excise, which was submitted after the hearing in the High Court had concluded. The appellant argued that this affidavit should not be considered as it was not formally admitted into evidence by the High Court. The Tribunal agreed with this argument, stating that the affidavit could not be considered because the High Court did not pass an order allowing it to be taken on record, and the appellant was not given an opportunity to rebut it.
4. Interpretation of the Supreme Court's remand order:
The Supreme Court directed the Tribunal to determine the marketability of the product based on the evidence already on record and not to allow any new evidence. The Tribunal interpreted this to mean that it could only consider evidence that was formally admitted by the High Court. As a result, the affidavit from the Assistant Collector of Central Excise was excluded from consideration.
Judgments Delivered:
- Majority Opinion: The majority found that the rough rolled flat forms of zinc are marketable and fall under Item 26B(2) of the Central Excise Tariff. The appeal was rejected.
- Dissenting Opinion: One member disagreed, arguing that the product was not marketable as "zinc sheets" and should not be classified under Item 26B(2).
Final Order:
In terms of the majority order, it was held that:
1. Rough rolled flat forms of zinc ingots are liable to the payment of excise duty under Item 26B(2) of the erstwhile Schedule of the Central Excises & Salt Act, 1944, as "zinc sheets in any form or size."
2. The appeal was rejected.
Dated: 15-9-1994
Sd/-
(P.K. Kapoor)
Member (T)
Sd/-
(S.L. Peeran)
Member (J)
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1994 (9) TMI 167
The appellants failed to file attested copies of the Order-in-Original and Order-in-Appeal as directed, leading to the dismissal of their appeal for want of prosecution.
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1994 (9) TMI 166
Issues Involved:
1. Waiver of pre-deposit of customs duty and fine.
2. Definition and scope of "goods" under Customs Act and Notification No. 339/85-Cus.
3. Jurisdiction of the Collector of Customs in monitoring export obligations.
4. Correlation between imported goods and export obligations.
5. Interpretation of "goods" to include services.
Issue-wise Detailed Analysis:
1. Waiver of Pre-deposit of Customs Duty and Fine:
The applicant sought a waiver of pre-deposit of Rs. 2,93,68,904/- demanded as duty and Rs. 20,00,000/- imposed as fine in lieu of confiscation. The applicant argued that they had met the export obligations by providing computer consultancy services abroad, which should be considered as "goods" under the Customs Act. The Tribunal, considering the full disclosure of facts and the approval by the Government of India for the export of consultancy services, allowed the stay petition unconditionally, directing an early hearing.
2. Definition and Scope of "Goods" under Customs Act and Notification No. 339/85-Cus:
The applicant argued that "goods" should include services, based on the inclusive definition in Section 2(22) of the Customs Act and the Government of India's policy on computer software export. The department contended that "goods" referred to tangible items and did not include services. The Tribunal noted that the definition of "goods" in Section 2(22) includes "any other kind of moveable property" and, prima facie, could encompass services. The Tribunal emphasized that modern interpretations should consider technological advancements and new facts.
3. Jurisdiction of the Collector of Customs in Monitoring Export Obligations:
The applicant contended that the Collector of Customs had no jurisdiction to monitor export obligations, which was the duty of the Development Commissioner of NEPZ. The Tribunal observed that the Collector could demand duty if the capital goods were not used within the Zone as required. However, since the applicant had used the imported goods for the approved purposes, the Tribunal found no justification for the duty and fine imposed.
4. Correlation between Imported Goods and Export Obligations:
The department argued that the applicant did not correlate the imported goods with the export obligations. The applicant maintained that the contracts and the use of imported goods at NEPZ were directly related to the consultancy services provided abroad. The Tribunal found that the adjudicating authority had not thoroughly examined the correlation and had not given the applicant an opportunity to establish the same. The Tribunal, therefore, allowed the stay petition, noting that the requirements for exporting through shipping bills were procedural and could not be fulfilled due to the nature of the services.
5. Interpretation of "Goods" to Include Services:
The applicant cited the Supreme Court judgment in Senior Electric Inspector v. Laxminarayan Chopra, arguing for a broad interpretation of "goods" to include services. The Tribunal agreed, noting that the inclusive definition in Section 2(22) of the Customs Act and the absence of a specific exclusion of services supported a liberal interpretation. The Tribunal also referenced the General Clauses Act, which includes "moveable property" within the definition of goods, further supporting the inclusion of services.
Separate Judgment by Member (J):
Member (J) disagreed with the majority, arguing that the applicant had not produced tangible goods for export and had only provided training, which did not constitute "goods" under the Customs Act. He emphasized the need for tangible, marketable goods and found the applicant's arguments to be an attempt to evade customs duty. He directed the applicant to deposit the entire duty amount and a part of the penalty.
Final Order:
In terms of the majority order, the pre-deposit of customs duty and penalty was waived, and recovery was stayed till the pendency of the appeal. The registry was directed to list the appeal for final hearing in November 1994.
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1994 (9) TMI 165
Issues:
Departmental appeal against Collector's order regarding differential Central Excise duty on Benzene and Toluene received under concessional rate of duty, non-utilization of inputs for intended use specified in Notification No. 75/84, maintainability of appeal by Collector, interpretation of end-use verification under Notifications 35/73 and 75/84, relevance of Tribunal's order in Shalimar Chemical Industries case, consideration of Board's Order 19-R, proper adjudication by Collector, requirement of evidence for intended use, determination of full duty liability and penalty.
Analysis:
The judgment involves a departmental appeal against the Collector's order concerning the demand for differential Central Excise duty on Benzene and Toluene received under a concessional rate of duty. The assessee was alleged to have removed these inputs without using them for the intended purpose specified in Notification No. 75/84. The Collector found the assessee liable to pay differential duty on a specific quantity of Benzene, confiscated the seized goods, and imposed a penalty. However, the Collector refrained from pursuing the charge related to non-use of Benzene/Toluene for intended use due to the withdrawal of similar demands against other parties by the Department.
The issue of non-utilization of inputs for intended use specified in the notification was central to the case. The department contended that the assessee did not actually use the inputs as thinners or solvents as required by Notification No. 75/84. The language of this notification differed from that of Notification 35/73, making end-use verification obligatory under the former. The assessee admitted to not having the necessary machinery for solvent manufacture and not using the chemicals for the intended purpose, raising questions about their eligibility for the concessional rate of duty.
The Tribunal's order in the Shalimar Chemical Industries case was cited, indicating that end-use verification was not mandatory under Notification 75/84. However, the present case involved specific allegations of non-utilization and clandestine removal of the inputs, distinguishing it from the cited case. The Collector's handling of the charges was criticized for not addressing all aspects of the case on their merits. The judgment emphasized the importance of evidence to demonstrate the actual use of goods for the declared purpose, as failure to do so would lead to duty liability.
The judgment highlighted the need for a comprehensive determination of duty liability and penalty based on all aspects of the case. The penalty aspect was deemed dependent on the duty liability, with seriousness judged in relation to the quantum of duty involved. The matter was remanded to the Collector for a reassessment of duty liability and penalty, with the requirement to consider all relevant factors and allow the appellants an opportunity to present their submissions before issuing a new order.
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1994 (9) TMI 164
Issues:
Interpretation of exemption notification for tyres of specific specifications under two different serial numbers.
Analysis:
The appeal was filed by the Revenue challenging the order of the Collector (Appeals) regarding the entitlement of exemption under a specific notification for tyres of the specification 6.70-15. The dispute was whether the tyres fell under Serial No. 2(ii) for Saloon cars or Serial No. 3B(i) for motor vehicles other than Saloon cars. The department argued that the tyres should be classified under Serial No. 3B(i) as they were meant for light motor vehicles, not Saloon cars, based on technical data indicating the tyres' use for light commercial vehicles.
The respondents contended that the tyres should be classified under Serial No. 2(ii) for Saloon cars, supported by certificates from vehicle manufacturers. They presented various documents, including technical data manuals, to demonstrate that the tyres met the criteria for Saloon cars, emphasizing the importance of technical parameters like ply rating in distinguishing between tyres for different types of vehicles.
The Tribunal noted that the department failed to substantiate its argument with any material evidence, while the respondents provided detailed technical information and expert opinions supporting their classification of the tyres for Saloon cars. The Tribunal emphasized the need to consider all relevant technical parameters, not just rim sizes, in determining the appropriate classification of tyres for different types of vehicles.
Ultimately, the Tribunal dismissed the department's appeal as unsubstantiated, upholding the Collector's decision in favor of the respondents. The cross objection was also disposed of accordingly, highlighting the importance of providing substantial evidence to support classification claims in such cases.
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1994 (9) TMI 163
Issues Involved:
1. Admission of Test Report as additional evidence.
2. Classification of Thermal Paper under the appropriate Customs Tariff Item.
Detailed Analysis:
1. Admission of Test Report as Additional Evidence:
The Collector of Customs filed Misc. Application No. C/Misc/553/94-C to admit a Test Report dated 23-6-1993 issued by the Chief Chemist, Central Revenue Control Laboratory. The Department received this Test Report after the Collector (Appeals) had passed the impugned order. The applicant argued that the Test Report was crucial for a judicious decision. However, the respondent opposed its admission, stating that the report was not available to the lower authorities or disclosed to the appellant.
Upon careful consideration, the Tribunal found that the Test Report was not available during the initial decision-making process and the matter had been decided based on the existing evidence. Consequently, the Tribunal rejected the Misc. Application No. Misc/553/94-C, deciding not to admit the Test Report at the appeal stage.
2. Classification of Thermal Paper:
The primary issue was whether the Thermal Paper should be classified under Customs Tariff Item No. 4811.90 or 3707.10. The Collector of Customs argued for classification under Item No. 4811.90, while the appellant claimed it should be under Item No. 3707.10.
The facts of the case involved the import of Thermal Paper described in invoices and Bills of Entry as "Thermal Paper of 60 HK-2." The Customs Laboratory Test Report for similar goods described the sample as "white sheet of paper made of chemical pulp, coated with organic thermal colouring substances."
The appellant's argument was that the Thermal Paper should be classified under Chapter 37, specifically 37.03, which includes "Photographic Paper, Paper Board, and Textiles, Sensitised, unexposed." The appellant cited various technical definitions and literature to support their claim that Thermal Paper is a thermographic material, which should fall under Chapter 37.03.
The respondent, however, argued that the Thermal Paper did not meet the criteria for classification under Chapter 37.03. They pointed out that Chapter 37 covers sensitised paper that requires developing and exposing, which is not applicable to Thermal Paper. Instead, they argued that the paper should be classified under Chapter 48, specifically 4811.90, which covers "Paper, Paper Board, Cellulose Wadding and Webs of Cellulose Fibres, Coated, Impregnated, Covered, Surface-coloured, Surface-decorated or Printed, in Rolls or Sheets."
The Tribunal analyzed the competing entries and noted the significant difference between Chapter 37 and Chapter 48. Chapter 37.03 covers photographic paper that forms visible images through exposure to light or other radiation, while Chapter 48.11 covers paper coated with organic or inorganic substances.
The Tribunal found that the Thermal Paper in question was coated with organic thermal colouring substances, making it more akin to the goods classifiable under Chapter 48.11. The Tribunal also referenced the judgment in the case of Cosmos Enterprises v. CC, which classified thermal sensitive paper under Chapter Heading 48.11.
In conclusion, the Tribunal held that the Thermal Paper should be classified under Customs Tariff Heading No. 4811.90, as it did not meet the criteria for classification under Chapter 37.03. The Tribunal set aside the impugned order and allowed the appeal, confirming the classification under 4811.90.
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1994 (9) TMI 162
Issues Involved:
1. Eligibility for a refund claim under Notification No. 178/77 and 295/77.
2. Compliance with the conditions stipulated in the notifications.
3. Jurisdiction of the Larger Bench to hear and decide the appeal.
4. Interpretation of conflicting judgments regarding procedural compliance for set-off claims.
Issue-Wise Detailed Analysis:
1. Eligibility for a Refund Claim under Notification No. 178/77 and 295/77:
The respondents filed a refund claim for Rs. 1,30,902.43 on account of Central Excise duty paid on Sodium Sulphate used in the manufacture of Glass sheets. The Assistant Collector rejected the claim, citing non-compliance with the condition of furnishing a statement showing the quantity of inputs used in the manufacture of every unit of Sheet glass. The lower Appellate Authority allowed the appeal, stating that the substance of the notification was satisfied as the inputs had paid duty and were utilized in the manufacture of excisable goods. The Collector (Appeals) held that the claim was not time-barred and directed the refund subject to verification.
2. Compliance with the Conditions Stipulated in the Notifications:
The respondents argued that they had complied with the notification requirements by submitting various documents and letters detailing the usage of Sodium Sulphate in the manufacture of glass sheets. The Tribunal examined the relevant correspondence and found that the respondents had indeed fulfilled the condition of furnishing the statement of quantity of inputs used. The Board's Circular No. 18/77-CX.6 supported this view, stating that the determination of duty paid on inputs should be based on the quantity used in the manufacture of the finished product.
3. Jurisdiction of the Larger Bench to Hear and Decide the Appeal:
A preliminary objection was raised by the respondents' counsel, arguing that the Larger Bench had no jurisdiction to hear and decide the appeal itself, as it was constituted only to determine whether a Larger Bench should resolve the conflict of judgments. The Tribunal overruled this objection, stating that the Larger Bench was empowered to hear the appeal to avoid a judicial stalemate and needless repetition of the exercise of reference to a Larger Bench.
4. Interpretation of Conflicting Judgments Regarding Procedural Compliance for Set-Off Claims:
The Tribunal reviewed conflicting judgments on the issue. In Andhra Pradesh Lightings Ltd. v. Collector of Central Excise, it was held that furnishing the statement was a vital condition for relief under the exemption notification. Conversely, in Grindwell Norton Ltd. v. Collector of Central Excise, it was held that non-furnishing of the input/output statement due to practical difficulties could not deny the benefit if other substantive conditions were met. The Tribunal noted that in none of the decisions was the condition of submitting the statement of input/output ratio dispensed with. However, it concluded that the respondents had satisfied the condition prescribed in the notifications and were entitled to the benefit of set-off.
Conclusion:
The Tribunal held that the respondents were entitled to the benefit of set-off under Notifications No. 178/77 and 295/77. The impugned order was upheld, and the appeal of the Revenue was dismissed. The cross-objection abated.
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1994 (9) TMI 161
Issues Involved:
1. Determination of assessable value under Section 14(1)(a) or 14(1)(b) of the Customs Act, 1962.
2. Inclusion of royalty payments in the invoice value under Rules 6 and 8 of the Customs Valuation Rules, 1963.
3. Relevance of the Brussels Convention and Customs Cooperation Council's advice.
Issue-wise Detailed Analysis:
1. Determination of assessable value under Section 14(1)(a) or 14(1)(b) of the Customs Act, 1962:
The appellants entered into a joint venture agreement and a technical assistance agreement with foreign collaborators for the manufacture of light commercial vehicles (LCVs). The customs authorities initially allowed the clearance of imported goods on a provisional basis, loading the invoice values by 25%. The Assistant Collector of Customs later held that due to the special relationship between the appellants and their foreign collaborators, the invoice values should be loaded by 0.25% for components and LCVs, and by 2.5% for spare parts under Rules 6 and 8 of the Customs Valuation Rules, 1963. The Collector (Appeals) confirmed this decision.
The appellants contended that there was no special relationship and the assessable value should be determined under Section 14(1)(a) based on the invoice value. They argued that the Collector (Appeals) failed to provide reasons for not applying Section 14(1)(a). The Tribunal agreed with the appellants, stating that mere holding of 15% shares and the right to nominate two Directors did not create a mutual interest in each other's business. Citing the Tribunal's decision in *Collector of Customs Bombay v. Maruti Udyog Limited*, it was held that there should be mutuality of interest, which was not present in this case. Thus, the invoice price should be the assessable value under Section 14(1)(a).
2. Inclusion of royalty payments in the invoice value under Rules 6 and 8 of the Customs Valuation Rules, 1963:
The Assistant Collector included royalty payments in the invoice value, stating that the appellants used the patent, design, and trademark of the foreign collaborators. The appellants argued that the royalty payments were related to indigenously manufactured goods and not the imported parts. They pointed out that the Technical Assistance Agreement specified that the licensing of the trademark was free of charge and the royalty was only for local parts.
The Tribunal found merit in the appellants' argument, noting that the lump sum payment was for technical assistance and not related to the imported goods. The royalty payments were to be made only for local parts, calculated at 3% of the FOB Japanese port price of similar goods. The Tribunal concluded that the provisions of the agreement did not support the inclusion of royalty payments in the invoice value for imported goods.
3. Relevance of the Brussels Convention and Customs Cooperation Council's advice:
The Collector (Appeals) relied on the Brussels Convention and the advice of the Customs Cooperation Council to support his findings. The appellants contended that these were not relevant as they were not incorporated into the statute.
The Tribunal agreed with the appellants, stating that the issues should be decided strictly based on the provisions of Section 14 of the Customs Act. The reliance on the Brussels Convention and the Customs Cooperation Council's advice was misplaced.
Conclusion:
The Tribunal set aside the impugned order, agreeing with the appellants that the assessable value of the imported goods should be determined under Section 14(1)(a) based on the invoice price. The decision to load the invoice value under Rules 6 and 8 of the Customs Valuation Rules, 1963, was found to be unsustainable. The appeal was allowed.
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1994 (9) TMI 160
Issues:
1. Interpretation of Notification No. 31/88 regarding concessional rates for bulk drugs.
2. Requirement of End-use Certificate for availing benefits under the notification.
3. Determination of whether the products in question qualify as bulk drugs under the notification.
4. Compliance with pharmacopoeial standards for products to be considered as bulk drugs.
5. Consideration of Merck Index and Drug Controller's certification in determining the nature of the products.
6. Necessity of End-Use Certificates for certain products covered by the Drug (Price Control) Order.
Analysis:
The case involved an appeal against the order of Collector (Appeals), Chandigarh dated 30-9-1992, concerning the interpretation of Notification No. 31/88 for concessional rates on bulk drugs. The main issue revolved around whether the appellants rightly availed the benefit of the notification and the necessity of producing End-use Certificates for the same. The Circular No. 8/90-CX-III dated 6-3-1990 by CBEC initially required End-use Certificates for availing benefits, but a subsequent circular clarified that such certificates were only necessary for specific bulk drugs listed, which did not include the drugs in question in this case.
The Notification No. 31/88 described bulk drugs and other bulk drugs, with the definition of 'bulk drug' aligning with the Drugs Order 1987. The appellants argued that their drugs were accepted and licensed by the Drug Control Authorities as bulk drugs, with no alternative use except for formulation purposes. They contended that the Central Excise Department should have accepted the certificates issued by the State Drug Controller, and any inquiry into actual usage was unwarranted as not specified in the notification.
The Tribunal observed that determining whether the products qualified as bulk drugs under the notification was crucial, with emphasis on compliance with pharmacopoeial standards. The Chief Chemist's opinion supported considering the products as bulk drugs subject to verification of standards. However, lack of evidence regarding pharmacopoeial standards raised doubts. The Collector (Appeals) and lower authorities assumed the items were bulk drugs without proper verification.
The Tribunal noted that the appellants submitted End-Use Certificates issued by customers, but new evidence could not be considered without proper procedure. The necessity of End-Use Certificates was discussed, especially for products covered by the Drug (Price Control) Order. The Merck Index and Drug Controller's certification were considered, but the absence of evidence for alternative use raised concerns.
In conclusion, the appeal was allowed based on the observations made, emphasizing the need for proper verification of pharmacopoeial standards and compliance with the notification's requirements for availing benefits on bulk drugs.
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1994 (9) TMI 159
Issues:
1. Modvat credit denial for ramming mass and gases used in manufacturing process.
2. Eligibility of packaging materials for modvat credit.
3. Plea of limitation for wrongly availed modvat credit.
Analysis:
The appellants challenged the denial of Modvat credit for ramming mass and gases used in their manufacturing process. The consultant argued that the issue was covered by a larger Bench decision and a Calcutta High Court judgment. Additionally, they contended that the notice issued was time-barred as it exceeded the six-month period and lacked suppression or misstatement. The Departmental Representative conceded that the decisions cited supported the appellants' case, leaving the final decision to the Bench. The Tribunal found the consultant's contentions valid and allowed the appeal based on the cited decisions, emphasizing that packaging materials used for eligible inputs were also entitled to Modvat credit.
Regarding the plea of limitation for wrongly availed Modvat credit, the Tribunal acknowledged conflicting judgments from various High Courts on the application of time bar in such cases. While there were precedents supporting the time bar, the Gujarat High Court had ruled otherwise. The Tribunal noted a proposal for a reference to the Supreme Court due to these conflicting judgments. However, as the appeal was allowed on merits, the Tribunal did not delve into the limitation issue. The notices in this case were issued before the Rule 57-I amendment, which made it self-contained with a six-month notice requirement, further complicating the matter.
The Collector of Central Excise, Indore filed a cross-objection seeking to uphold the order-in-appeal and dismiss the appeal. However, since the appeal was allowed in favor of the appellants, the cross-objection was deemed misconceived and automatically disposed of.
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1994 (9) TMI 158
Issues:
Maintainability of reference application under Section 130(1) of the Customs Act regarding effective rate of additional duty levied under the Customs Tariff Act.
Analysis:
The reference application questioned the maintainability under Section 130(1) of the Customs Act, arguing that it was permissible as it did not relate to the rate of duty of customs. The counsel contended that the reference pertained to the effective rate of additional duty under the Customs Tariff Act, not the Customs Duty leviable under Section 12 of the Customs Act. He emphasized that the issue involved interpretation of a Central Excise Notification, not the rate of duty of customs.
The Departmental Representative opposed the application, asserting that the additional duty under Section 3 of the Tariff Act was akin to Customs Duty, calculated using Central Excise Tariff and notifications for amount computation. Referring to a Supreme Court judgment, the representative argued that the basic nature of additional duty remained that of a customs duty, despite involving excise notifications.
The Tribunal concurred with the Departmental Representative, highlighting that the additional duty was leviable under the Customs Tariff Act and was considered a duty of customs. They cited relevant sections of the Customs Tariff Act to support this stance. The Tribunal referenced a previous case to establish that no reference lay to the High Court for matters concerning the determination of duty rates or valuation for assessment purposes.
Ultimately, the Tribunal held that the application was not maintainable under Section 130(1) of the Customs Act, as it involved a question related to the effective duty rate for assessment, falling within the exclusion clause. They emphasized that a comprehensive assessment for customs purposes encompassed all prescribed components from various laws. Consequently, the application was dismissed.
This detailed analysis of the judgment from the Appellate Tribunal CEGAT, New Delhi underscores the intricacies of the maintainability of reference applications under the Customs Act, specifically regarding the effective rate of additional duty levied under the Customs Tariff Act.
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1994 (9) TMI 157
Issues: Confiscation of contraband goods, penalties imposed on individuals involved, confiscation of the vehicle, legal ownership of the truck, applicability of relevant sections of the Customs Act, burden of proof, legal precedents cited
Confiscation of Contraband Goods:
The judgment pertains to the confiscation of 4752 Kgs. of synthetic polyester texturised yarn of foreign origin, along with other items, concealed in a truck intercepted by Central Excise officers. The goods were found in violation of relevant provisions of the law, as synthetic polyester texturised yarn is a notified item under Section 123 of the Customs Act, 1962. The occupants of the truck, including the owner, were involved in the smuggling operation, as per their detailed statements. The defense of lack of knowledge or duress was rejected, and the involvement of the individuals was established based on the evidence presented.
Penalties Imposed on Individuals Involved:
Show cause notices were issued to the occupants of the truck and others involved, proposing confiscation of goods, the vehicle, and penalties. Despite denials and claims of innocence, the adjudicating authority imposed penalties on the individuals, including the owner of the truck. The detailed statement of the main accused provided substantial evidence of their active participation in the smuggling operation, leading to the imposition of penalties.
Confiscation of the Vehicle:
The legal ownership of the truck, which was used to transport the contraband goods, was a subject of contention. The owner of the truck, represented by the main accused, contested the confiscation on the grounds of lack of notice as per Section 124. However, the tribunal upheld the confiscation, considering the detailed statement of the main accused, who claimed to be sitting in the truck in the capacity of its owner. The tribunal found no merit in the argument against the confiscation of the vehicle.
Applicability of Relevant Sections of the Customs Act:
The tribunal examined the applicability of various sections of the Customs Act, particularly Sections 121, 123, and 124. It was determined that the burden of proof under Section 123 was not discharged by the accused, while the Department successfully met the burden under Section 121 regarding the currency involved. The judgment emphasized the importance of complying with the legal provisions of the Customs Act in cases of smuggling and contraband goods.
Burden of Proof and Legal Precedents:
The judgment discussed the burden of proof on the accused under the Customs Act and cited legal precedents to support its decision. The tribunal differentiated the present case from previous judgments, highlighting the significance of reasonable belief and evidence in establishing the smuggling nature of goods. The tribunal also clarified the application of legal precedents cited by the appellants, ultimately upholding the penalties imposed and confirming the confiscation of contraband goods and related items.
Conclusion:
In conclusion, the tribunal confirmed the penalties imposed on the main accused, upheld the confiscation of contraband goods, Indian currency, and Chinese balm, and directed the recovery of a redemption fine. The judgment emphasized the importance of evidence, compliance with legal provisions, and the burden of proof in cases involving smuggling activities. The decision was based on detailed statements, legal analysis, and precedents cited, ensuring the enforcement of customs regulations and penalties for unlawful activities.
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1994 (9) TMI 156
The appeal was filed against an order by the Additional Collector disallowing Modvat credit on electron guns. The appellants received and returned electron guns, taking Modvat credit based on endorsements on gate passes. The Additional Collector demanded duty and imposed a penalty for lack of permission under Rule 57F(2). The appellants provided proof of correlation between the goods and original duty payment. The Tribunal found evidence of correlation and set aside the order, allowing the appeal.
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1994 (9) TMI 155
Issues:
1. Assessment of imported car without certain accessories.
2. Rejection of appeal by lower authorities.
3. Determination of assessable value based on abatement and deductions.
Analysis:
1. The appellant, a Skin Specialist, imported a V.W. Passat GLD car (1980 Model) which was used as a demonstration car by Volkswagon. The car had missing fittings like air-conditioner and radio cassette, which were not imported into India. The Assistant Collector assessed the car's value at Rs. 39,403 after various deductions. The appellant contended that the starting point for valuation should be the actual purchase value of DM 14,605, with abatements for missing accessories and replacement costs.
2. The appellant appealed to the Collector of Customs (Appeals) after the Assistant Collector's order. The Collector rejected the appeal, leading to further legal proceedings. The appellant's counsel argued for a revised valuation method based on the actual purchase value and abatements for missing accessories, emphasizing the need for proper deductions and discounts in the assessment process.
3. The Tribunal considered the submissions and emphasized that imported goods must be assessed in the condition they are imported. Since the car was used and lacked certain standard accessories, the assessable value needed adjustment. The Tribunal directed a reassessment of the car's value, allowing abatements for missing accessories like air-conditioner, radio cassette, and replacement of defective glass. The final assessment was calculated based on the purchase price of DM 14,605, with deductions and allowances, resulting in an assessable value of Rs. 29,581.55. The appeal was disposed of in favor of the appellant based on the reassessment criteria outlined by the Tribunal.
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1994 (9) TMI 154
Issues:
1. Classification of woollen yarn under Tariff Item 18-B(ii)
2. Confiscation of seized goods and imposition of penalty
3. Liability of goods to confiscation under Rule 173-Q
Analysis:
1. The case involved the classification of woollen yarn found in a factory under Tariff Item 18-B(ii) based on a chemical examination that revealed the composition of the yarn, containing more than 1/6th by weight of nylon. The appellants contended that they were not the manufacturers of the yarn, disputing the duty liability on the goods.
2. The adjudicating authority held the appellants guilty of connivance with the manufacturers of the yarn, leading to the confiscation of the seized goods, imposition of duty demand, and a personal penalty. The appellants challenged this decision through an appeal, arguing against the liability for duty payment and penalty due to not being the manufacturers of the yarn.
3. The appellate tribunal considered the applicability of Rule 173-Q, which imposes liability for confiscation on goods where duty has not been paid by the manufacturer or producer. The tribunal noted that the liability attaches to goods cleared without duty payment, emphasizing the importance of establishing non-payment of duty for confiscation. The tribunal cited a previous case to support the principle that goods become tainted due to non-payment of duty at the time of removal, justifying confiscation.
4. Referring to a Supreme Court judgment in a similar context, the tribunal differentiated between the liability of manufacturers and purchasers regarding duty payment. The tribunal set aside the duty demand and penalty while upholding the confiscation of the seized goods, providing an option for redemption. The decision highlighted the distinction between duty liability of manufacturers and purchasers in excise matters, ultimately ruling in favor of confiscation while relieving the appellants of duty payment and penalty.
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1994 (9) TMI 153
Issues Involved:
1. Misdeclaration and under-invoicing of imported goods.
2. Validity of import licenses.
3. Confiscation of goods and imposition of penalties.
4. Request for re-export of goods.
Detailed Analysis:
1. Misdeclaration and Under-invoicing of Imported Goods:
The appellants, M/s. Supreme Electronics (SE) and M/s. Caditronics (CAD), imported parts of VCRs from Singapore. The examination revealed discrepancies in the description, under-invoicing, and misdeclaration of the goods. The invoices lacked full descriptions and manufacturer details. The goods were found to be undervalued based on comparisons with contemporary imports and expert advice. The adjudicating authority determined that the goods were wrongly described and undervalued to evade customs duty. The Tribunal upheld the rejection of the declared prices, agreeing that the valuation was correctly determined under Rule 8 of the Customs Valuation Rules, 1988, using the best possible information available.
2. Validity of Import Licenses:
The imports were found unauthorized as both SE and CAD were not engaged in the manufacture of VCRs and lacked valid import licenses. The appellants argued that the licenses covered the imported goods, relying on various legal precedents. However, the adjudicating authority found that the assemblies/sub-assemblies being restricted items could not be permitted against REP licenses. The Tribunal agreed, finding no infirmity in the order regarding the licensing angle.
3. Confiscation of Goods and Imposition of Penalties:
The Collector of Customs ordered the confiscation of the goods, re-determination of the assessable value, and imposed redemption fines and penalties. The appellants contested these findings, arguing that the evidence was not fully considered. The Tribunal, however, upheld the confiscation and penalties, agreeing that the goods were liable for confiscation and the importers for penalties due to the contraventions of law. The Tribunal also considered the appellants' request for re-export but maintained the penalties and fines imposed by the adjudicating authority.
4. Request for Re-export of Goods:
The appellants requested re-export of the goods, citing a steep fall in market prices and the potential loss of foreign exchange. The goods had been provisionally warehoused and not cleared. The Tribunal noted that while the request for re-export merits acceptance, it must be subject to suitable fines and penalties due to the contraventions. The majority order allowed re-export of the goods with conditions: M/s. Caditronics to pay a fine of Rs. 2.50 lakhs and a penalty of Rs. 1.25 lakhs, and M/s. Supreme Electronics to pay a fine of Rs. 1 lakh and a penalty of Rs. 50,000/-.
Separate Judgments:
S.L. Peeran, Member (J):
Disagreed with the re-export request, citing inconsistencies in the appellants' claims about payment for the goods. Reduced the redemption fines and penalties due to the long detention and rapid obsolescence of electronic items.
P.K. Kapoor, Member (T):
Agreed with the findings of Member (J) and supported the reduction in fines and penalties.
Final Order:
The appeals were rejected subject to modifications in fines and penalties as indicated in para 19.
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1994 (9) TMI 152
Issues Involved:
1. Valuation of Imported Goods
2. ITC Policy Violation
3. Imposition of Penalties
Issue-wise Detailed Analysis:
1. Valuation of Imported Goods:
The primary issue was the valuation of 30,000 pieces of IC LA 4440 imported by the appellant. The declared value was S$ 0.072 per piece, but the revenue authorities determined the value at S$ 1.07 per piece based on quotations from M/s. Shing Components (S) Pvt. Ltd., Singapore, and M/s. Sanyo Shin-Nichi Electronic Devices, Hong Kong. The appellant contended that the Bombay Customs had accepted the value of identical goods at US$ 0.05 CIF in earlier bills of entry. The Tribunal noted discrepancies in the quotations provided by the revenue, which were unsigned and varied even on the same date. The Tribunal emphasized the importance of Section 14(1) of the Customs Act, 1962, which mandates that the value should reflect the price at which such goods are ordinarily sold in international trade. Given the contemporaneous imports accepted by Bombay Customs, the Tribunal determined that the value should be Rs. 1.86 per piece, not based on the disputed quotations.
2. ITC Policy Violation:
The adjudicating authority held that the imported goods were consumer goods and the import licenses were not valid, thus constituting an ITC violation. The appellant argued that the goods were covered under the REP license and, alternatively, under OGL. The Tribunal referred to the definition of "consumer goods" as per Public Notice No. 22 (N-3)-ITC(PN)/92-97, which included components of consumer durables. The Tribunal concluded that the importation was unauthorized as the goods did not fall under the valid license or OGL.
3. Imposition of Penalties:
The adjudicating authority imposed penalties on M/s. Polyvinyl Industrial Corporation, Shri N.K. Aggarwal, and Shri M. Walia, citing serious acts of forgery and undervaluation. The Tribunal noted that penalties on both the proprietor and the firm were redundant as they constituted a single entity. Consequently, the penalty on Polyvinyl Industrial Corporation was quashed, and the penalty on Shri N.K. Aggarwal was reduced from Rs. 2 lakhs to Rs. 40,000. Similarly, the penalty on Shri M. Walia was reduced from Rs. 2 lakhs to Rs. 40,000, given his lesser role. The penalties of Rs. 1,000 each under Section 117 of the Customs Act, 1962, were upheld.
Conclusion:
The Tribunal partly allowed the appeal, modifying the valuation of the goods to Rs. 1.86 per piece, reducing the redemption fine to Rs. 50,000, and adjusting the penalties accordingly. The importation was deemed unauthorized, but the penalties were tempered considering the prolonged custody of the goods and the specific roles of the individuals involved.
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1994 (9) TMI 151
The appeal was against the rejection of refund claims under Rule 173L and relief under Rule 151A for disposable plastic body of syringes. The Tribunal allowed the appeal, stating that no duty can be charged again on goods returned to the factory without undergoing processes specified under Rule 173L. The mere procedural irregularity of not seeking permission under Rule 51A does not warrant charging duty a second time. The Tribunal cited a case to support the decision that goods returned to the factory do not create new products liable for excise duty again. The impugned order was set aside.
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