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2004 (5) TMI 446
The appellant sought restoration of appeals dismissed for non-appearance due to not receiving hearing notice. The tribunal recalled the final order and restored the appeals for final hearing on 1st September, 2004.
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2004 (5) TMI 445
The Appellate Tribunal CESTAT, Kolkata rejected the appeal as time-barred due to a delay of more than two months in filing, which was not satisfactorily explained. The order of the Commissioner (Appeals) was despatched to the appellant on 13-5-2003 by Registered AD, but there was no endorsement from the Postal Authorities on the envelope when the appellant collected it on 7-7-2003.
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2004 (5) TMI 444
Issues: Condonation of Delay in filing applications seeking condonation of delay of 116 days.
In this case, the appellants filed applications seeking condonation of a 116-day delay. The appellants were represented by Shri B.L. Sanjeev, who was absent during the proceedings. The JCDR representing the respondent argued against granting condonation, citing the enormity of the delay and the appellants' failure to obtain necessary sanctions from the government department in a timely manner. The JCDR pointed out that the delay in movement of files was not a valid ground for condonation, referencing the decision in the case of Union of India v. Tata Yodogawa Ltd. The affidavit filed by the Director of the appellant's concern acknowledged a delay of 213 days in various processes, with the limitation period being 90 days and the actual delay being 116 days. The appellants blamed the State Government for the delay in giving permission. However, after careful consideration, the tribunal found the appellants negligent in their approach. The tribunal held that the delay in inter-departmental file movement could not justify condonation, following the precedent set in the case of Union of India v. Tata Yodogawa Ltd. Consequently, the applications for condonation were rejected, leading to the dismissal of the appeals.
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2004 (5) TMI 443
Issues:
1. Valuation and imposition of redemption fines and penalties on import of old and used diesel engines.
Analysis:
Valuation Dispute:
The Appellate Tribunal, Mumbai, dealt with the appeal of the Appellants who contested the order of the Commissioner of Customs Central Excise, Goa, regarding the valuation of old and used diesel engines imported by them. The Commissioner had enhanced the values and imposed redemption fines and penalties on the imports made in March 2000. The Appellants' advocate did not press the loading of the valuation issue, leading to its dismissal.
Redemption Fine and Penalties:
The Tribunal analyzed the redemption fine and penalties imposed by the Commissioner. Referring to a previous case, the Tribunal emphasized that the Commissioner should determine the margin of profit through proper inquiries before imposing fines exceeding the norms. The Appellants argued that the Commissioner did not adequately consider their submissions on the value of reconditioned engines and profit margins. The Commissioner's decision to impose a redemption fine of 100% and a penalty of 10% was questioned, especially in light of market conditions and recent developments affecting the demand for diesel engines.
Tribunal's Decision:
In line with previous decisions, the Tribunal found that the fines and penalties imposed were excessive. Citing precedents, the Tribunal reduced the redemption fine to 45% and the penalty to 5% of the determined values. The Tribunal highlighted that the Commissioner's order lacked justification for the high fines and penalties imposed, emphasizing the need for adherence to Customs Act provisions and established guidelines.
Conclusion:
The Tribunal allowed the appeal partially by reducing the fine and penalty percentages, considering the lack of justification for the higher amounts imposed by the Commissioner. The decision underscored the importance of proper valuation procedures and adherence to legal provisions while determining fines and penalties in customs cases.
This detailed analysis covers the issues related to valuation disputes, redemption fines, and penalties addressed in the judgment by the Appellate Tribunal CESTAT, Mumbai, providing a comprehensive overview of the legal considerations and decisions made in the case.
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2004 (5) TMI 442
Demand/Reversal of credit - liability regarding inputs removed without undergoing a manufacturing process - HELD THAT:- The Modvat/Cenvat is a scheme of giving relief, while subjecting final products to duty, equivalent to the duty paid on the inputs. That is not a provision for levying duty on goods which had once been cleared on payment of duty. Provisions for levy of duty and valuation continue to be Sections 3 and 4 (or 4A) of the Central Excise Act, 1944. The inputs in question were manufactured by other manufacturers and those manufacturers had paid appropriate duty at the time of removal of these goods. The appellant had only taken credit of the duty paid by those manufacturers as those goods were supposed to be used as inputs in the production of final products. The duty liability of those inputs remain, already determined and discharged at the time of their original removal. There is no provision in Central Excise law for reassessment of goods, which had once been removed after payment of duty.
Therefore, as held by this Tribunal in its earlier decision, what an assessee is required to do when he removes inputs as such can only be to restore the credit, which he had taken. In the present cases, the appellants have already restored the credit already taken. Nothing more was required of them. There was no short levy of duty involved. The impugned orders which have held to the contrary are not sustainable. They are, therefore, set aside and the appeals are allowed, with consequential relief, if any, to the appellants.
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2004 (5) TMI 441
Eligibility of Modvat credit on Bulldozer and Loader - Rebar Coils, CTD Bars, TOR Steel, Joists, and Cement - HELD THAT:- The appellant-assessee have emphasized and confirmed that they had not availed of the credit of duty in respect of that quantity of Rebar Coils, CTD Bars, TOR Steel, Joists and Cement which were used for civil construction of their office premises, godown, etc. It is now well settled legal position and the Apex Court in the case of CCE v. Jawahar Mills Ltd. [2001 (7) TMI 118 - SUPREME COURT] has held that the language used in Explanation (1) of Rule 57Q is very liberal and the capital goods can be machines, machinery, plant, equipments, apparatus, tools or appliances, the components, spare parts and accessories thereof.
The various decisions cited by the ld. Advocate and ld. Consultant for the appellant-assessee confirm the eligibility to credit in respect of steel structure and various building materials and items such as Rebar coils, CTD bars, TOR Steel, Joists and Cement when used as structural support or in foundation of machineries etc. and therefore these citations are squarely applicable to the facts of their case.
Thus, we are of the considered opinion that the credit would be admissible on Rebar coils, CTD bars, TOR Steel, joists and cement. We, therefore, allow the appeal filed by the appellant-assessee. We also reject the revenue appeal in Appeal and allow the credit of duty on Loaders under Rule 57Q of the rules ibid.
As regards the admissibility of the Modvat credit on Bulldozer we remand the case back to the adjudicating authority and we allow the appeal of the revenue by way of remand in respect of eligibility or otherwise of the item namely, bulldozer. We also allow the appeal of the appellant in respect of Modvat credit on Rebar coils, CTD Bars, TOR Steel, Joists and Cement with consequential relief, if any to the appellant and it is ordered accordingly.
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2004 (5) TMI 440
Issues: Point of limitation in tax assessments
The judgment by the Appellate Tribunal CESTAT, Kolkata, involved a dispute regarding the point of limitation in tax assessments. The appellant's representative argued that the assessments during the relevant period were provisional, and thus, the provisions of Section 11A would not apply. However, it was contended that the adjudicating authority did not consider the provisional nature of the assessments, which was not mentioned in the show cause notice. The appellant's representative emphasized that the case should be decided based on the facts presented in the notice or discussed by the adjudicating authority, without introducing new facts at the appeal stage. On the other hand, the respondent's representative argued that even though the Commissioner invoked a longer period of limitation without considering the provisional nature of the assessments, the fact remained that they were provisional, and hence, the limitation would not apply. The Tribunal examined the arguments and various decisions cited by both sides. It concluded that since the assessments were undisputedly provisional, the issue of limitation did not arise, and the fact that the provisional nature was not considered earlier did not diminish its significance. Therefore, the Tribunal rejected the plea of limitation and scheduled the appeal for a regular hearing on merits.
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2004 (5) TMI 439
Issues:
1. Imposition of penalty and demand of interest by the Commissioner.
2. Determination of annual production capacity by the Commissioner.
3. Applicability of Rule 96ZO(1)(I)(b) of Central Excise Rules, 1944.
4. Failure to pay differential duty and its consequences.
5. Claim for re-determination of annual capacity production.
6. Validity of penalty and interest imposition in light of Tribunal's decisions.
Analysis:
1. The appellant challenged the order passed by the Commissioner imposing penalty and demanding interest. The Tribunal found the Commissioner's view strange, especially considering the history of the case where the annual capacity determination by the Commissioner was repeatedly set aside by the Tribunal.
2. The Commissioner initially determined the annual production capacity of the appellant's unit at 9600 MT, which was challenged by the assessee before the Tribunal multiple times. Despite several re-determinations by the Commissioner, the Tribunal consistently set aside these orders, questioning the validity of the capacity determination.
3. The Commissioner, in the impugned order, relied on Rule 96ZO(1)(I)(b) of the Central Excise Rules, 1944, to impose a penalty on the assessee for failing to pay the required duty amount by the specified date. The Commissioner also directed the payment of interest based on the same rule.
4. The Commissioner calculated a differential duty amount that the assessee was required to pay, which they failed to deposit by the due date. Consequently, the Commissioner imposed a penalty on the assessee for this non-compliance, citing the relevant provisions of Rule 96ZO(1)(I) of the Central Excise Rules, 1944.
5. The assessee, in a written submission, requested a re-determination of their annual production capacity under sub-section (4) of Section 3A. This request was made during a personal hearing and was a factor considered in the imposition of interest by the Commissioner.
6. The Tribunal, after hearing arguments from both sides, set aside the impugned order, highlighting the lack of justification for the penalty and interest imposition by the Commissioner based on an initial capacity determination that had been consistently overturned by the Tribunal. The Tribunal directed the Registry to inform the Chairman, CBEC, of their decision.
This detailed analysis of the judgment provides insights into the issues raised, the legal provisions applied, and the Tribunal's reasoning behind setting aside the Commissioner's order.
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2004 (5) TMI 438
Issues involved:
1. Confirmation of demand by the Commissioner of Central Excise (Appeals) and imposition of penalties.
2. Challenge to the demand on the grounds of limitation and merits.
3. Requirement of establishing marketability before collecting duty.
4. Grounds of limitation and intention to evade duty.
5. Clarification on waiver of demand for revenue neutrality.
6. Availing concessional rate of duty and eligibility for duty exemption.
Issue 1: The Commissioner confirmed a demand of Rs. 2,28,806/- out of a total demand of Rs. 26,85,945/- against the appellant, along with penalties under Section 11 AC and Rule 209A for abetting duty evasion. The appeal contested this confirmation and penalties.
Issue 2: The appellants challenged the demand on the basis of limitation and merits. They argued that the department failed to establish the marketability of the product before attempting to collect duty. The appellants also claimed there was no intention to evade duty as any duty collected would be available to the customer for Modvat credit. However, the department contended that the conversion of PVA into PVA solution was not disclosed, constituting a suppression of facts warranting duty collection within the extended period of limitation.
Issue 3: The appellants argued that the product's marketability needed to be established before duty collection. The department countered by highlighting the standard practice in the industry of sending PVA powder for conversion into solution, indicating marketability.
Issue 4: The appellants contested the demand on the grounds of limitation and lack of intent to evade duty, claiming that any duty collected would benefit the customer through Modvat credit. However, the department asserted that the non-disclosure of the PVA conversion constituted a suppression of facts warranting duty collection within the extended period.
Issue 5: The concept of waiver of demand for revenue neutrality was discussed, with reference to the case law clarifications. The submission to quash the demand on the grounds of revenue neutrality was deemed unacceptable.
Issue 6: The appellants availed a concessional rate of duty for their products and argued for duty exemption for the PVA solution based on cumulative clearances not exceeding the limit of Rs. 50 lakhs. The Tribunal noted the factual position and upheld the appellants' claim for duty exemption based on the different modes of duty payment for various goods, setting aside the Commissioner's order and allowing the appeal with consequential relief.
In conclusion, the judgment addressed the challenges raised by the appellants regarding duty demands, penalties, marketability, limitation, revenue neutrality, and duty exemption, ultimately ruling in favor of the appellants based on the different modes of duty payment and cumulative clearances not exceeding the specified limit.
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2004 (5) TMI 437
Issues:
1. Waiver of pre-deposit of duty and penalty.
2. Classification of printed carton/tops folders.
3. Interpretation of Chapter Heading 48.18 of CETA, 1985.
Analysis:
1. The case involved applications for the waiver of pre-deposit of duty and penalty amounting to Rs. 1,10,800/- confirmed against the applicant (proprietary concern) and an additional penalty of Rs. 25,000/- imposed on the Power of Attorney holder of the proprietor. The duty demand was upheld due to the classification of the product in dispute as printed carton/tops folders used in packing hosiery items, falling under CETA sub-heading 4819.19, rejecting the applicant's claim for classification under Chapter Heading 48.20 or Chapter 49 as a product of the printing industry. The period under consideration was from 1-4-1997 to 31-3-1998.
2. After hearing both sides, the Tribunal found a strong prima facie case for waiver based on the Apex Court decision in the case of G. Claridge & Company Ltd. v. CCE, 1991 (52) E.L.T. 341 (S.C.). The Court's ruling clarified that the term "containers" in Chapter Heading 48.18 of CETA, 1985 should be interpreted to refer to packing containers similar to boxes and cartons. The judgment further explained that enclosed receptacles suitable for storage and transportation, such as egg trays, are considered containers, whereas receptacles like the folders for packing hosiery items, which are not enclosed, cannot be classified as containers under Heading 48.18. Therefore, the Tribunal concluded that the folders in question, being open and not enclosed, do not fall under Chapter Heading 48.19 as containers. Consequently, the pre-deposit of duty and penalty was waived, and the recovery thereof was stayed pending the appeals.
3. The interpretation of Chapter Heading 48.18 of CETA, 1985 was crucial in determining the classification of the product in dispute. The Tribunal's decision hinged on the distinction between containers, which are enclosed receptacles suitable for transportation, and open receptacles like the folders used for packing hosiery items. By applying the precedent set by the Apex Court, the Tribunal clarified that the folders could not be considered containers falling under Chapter Heading 48.19. This interpretation was pivotal in granting the waiver of pre-deposit of duty and penalty to the applicant, emphasizing the importance of legal precedents and established classifications in customs and excise matters.
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2004 (5) TMI 436
Issues Involved:
1. Eligibility for SSI Exemption Notification for clearing excisable goods bearing the brand name of another person.
Analysis:
Issue 1: Eligibility for SSI Exemption Notification
The appeal filed by M/s. Kamfin Paints (India) Ltd. raised the question of whether they were entitled to the benefit of the Small Scale Industries (SSI) Exemption Notification while clearing excisable goods bearing the brand name of another person. The appellant contended that the thinners they manufactured, bearing the brand name and logo of M/s. Kamfin Industries, should not disqualify them from the SSI Exemption Notification. They argued that the thinners produced by them and by M/s. Kamfin Industries were different, and the brand name "Kemfin" was not a registered trademark but merely a house mark. They also cited a Board's Circular to support their claim that the same brand name could be used for different classes of goods by different entities. Additionally, they argued that the demand for duty was time-barred under Section 11A(1) of the Central Excise Act.
In response, it was highlighted that one of the directors of the appellant-company, who was also the proprietor of M/s. Kemfin Industries, confirmed that the brand name and logo belonged to him and were used for manufacturing goods. Referring to legal precedents, it was argued that the use of an unregistered brand name or trade name, even if not for the same goods, would disqualify the appellant from the exemption. The Tribunal noted that the impugned goods were indeed cleared with the brand name "Kemfin" and logo belonging to M/s. Kemfin Industries, and the appellant could not claim ignorance about this association. The Tribunal held that the appellants were not eligible for the SSI Exemption Notification due to the use of another person's brand name on their goods. However, following previous decisions, the Tribunal directed the re-computation of duty based on the sale price as the cum-duty price and imposed a penalty of Rs. 30,000, considering all circumstances.
In conclusion, the Tribunal ruled that while the appellants were not entitled to the SSI Exemption Notification due to using another person's brand name on their goods, they were directed to pay the revised duty amount calculated based on the cum-duty price and a penalty of Rs. 30,000.
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2004 (5) TMI 435
Issues:
1. Undervaluation of C2O3 leading to duty demand.
2. Levy of penalty, interest, and duty under Central Excise Rules.
3. Show cause notices issued for denying duties.
4. Adjudication of the notices by the Commissioner.
5. Liability of duty on merits not pressed.
6. Penalty under Section 11AC and Rule 173Q.
7. Interest computation under Section 11AB.
Undervaluation of C2O3:
The duty demand was confirmed due to undervaluation of C2O3 by the assessee, as Ministry of Petroleum re-fixed prices, necessitating re-determination of assessable value. The appellant did not dispute selling products at Rs. 3,300/- P.M.T., but the delay in discharging duty at revised prices was attributed to late receipt of re-fixation decision. The appellant emphasized lack of mala fides or intention to evade duty, arguing against penalty under Section 11AC and interest under Section 11AB.
Levy of Penalty, Interest, and Duty:
The Department relied on the order-in-original to support penalty, interest, and duty imposition. The Commissioner upheld the demand of duty on certain notices, imposing penalties under various rules and Sections, including Section 11AC. However, the Commissioner refrained from ordering confiscation under Rule 173Q(2) but ordered interest payment.
Show Cause Notices and Adjudication:
Several show cause notices were issued for different periods, with varying amounts totaling significant sums. The Commissioner adjudicated the notices, confirming duty demands on some notices while dropping a substantial demand from one notice. Penalties were imposed under Section 11AC and Rule 173Q for non-compliance and failure to determine correct duty payable.
Liability of Duty and Penalty Imposition:
As the issue of duty liability was not contested, no specific findings were made regarding the duty payment. The Commissioner's decision on penalty under Section 11AC was challenged, arguing that there was no deliberate attempt to short pay duty, as the appellant paid duties based on prices fixed by the Ministry of Petroleum and made efforts to revise prices with the Ministry.
Interest Computation:
Regarding interest computation under Section 11AB, the liability to pay interest starts from the month following the duty payment due date, with no retrospective effect. The interest calculation should adhere to legal provisions.
Conclusion:
The appeal challenging penalties under Section 11AC and Rule 173Q was allowed, with the Tribunal setting aside the penalties. The judgment emphasized the lack of intentional evasion and the appellant's compliance with Ministry-fixed prices. Interest computation was to be done in accordance with Section 11AB provisions.
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2004 (5) TMI 434
Issues: Classification of Tobacco as Branded, Time Limit for Demand of Duty
Classification of Tobacco as Branded:
The case revolves around the classification of tobacco sold by the appellants in new packets as branded tobacco. The Commissioner (Appeals) noted that the appellants had seized branded unmanufactured tobacco, which led to a demand for duty payment. Despite the appellants' claim that they had stopped putting any brand on the packets since a certain date, subsequent investigations revealed the continued use of symbols like "Shop No. 4" or "Shop No. 5" on the packets. These symbols were acknowledged to identify the goods as belonging to the appellants. The Commissioner concluded that the presence of such symbols constituted branding, in line with Note 1 to Chapter 24 of the Central Excise Tariff. The appellants' attempt to avoid duty payment by removing certain markings while retaining others was deemed deliberate, justifying the imposition of Section 11A provisions. The Commissioner's decision to classify the goods as branded tobacco was upheld.
Time Limit for Demand of Duty:
The appellants had previously informed the Department that they had ceased printing brand names on the packets and would not do so in the future. However, subsequent inspections in February 1996 revealed the continued use of brand names, contrary to their declaration. The Commissioner found that the extended time limit for demanding duty applied in this case due to the appellants' actions. The Tribunal concurred with the Commissioner's findings on both the classification of the goods as branded tobacco and the application of the extended time limit. Consequently, the appeals were dismissed, affirming the correctness of the Commissioner's order.
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2004 (5) TMI 433
The appeal was heard by the Appellate Tribunal CESTAT, New Delhi regarding the entitlement of the appellant to exemption under Notification No. 16/97 and Notification No. 8/98. The Tribunal found that the appellant had the trade mark 'Cristopia' registered in its name before the period in question and granted the benefit of exemption, setting aside the Commissioner's decision.
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2004 (5) TMI 432
Issues:
Violation of rules of natural justice in passing the impugned order imposing penalty under Section 114(iii) of the Act.
Analysis:
The appeal challenged the correctness of the impugned order on the grounds of violating natural justice as no show cause notice was served on the appellant, and no personal hearing was afforded by the Commissioner of Customs. The Counsel emphasized a letter sent to the Commissioner of Customs as evidence of lack of notice. However, the Respondent contended that show cause notices and personal hearing notices were sent multiple times but were undelivered, supported by photocopies of speed post reports.
The case involved illegal export of garments through misdeclaration, with fraudulent withdrawal of drawback amounts totaling Rs. 3,87,12,610. Fictitious firms were used for export, none of which existed upon investigation. The appellant was found to be an active associate in the fraudulent activities, providing incorrect addresses to avoid proceedings. The appellant's claim of not receiving show cause notices was refuted by evidence of multiple attempts to deliver notices, all returned due to incorrect addresses provided by the appellant.
The appellant's Counsel referred to a letter alleging non-receipt of show cause notices, but failed to disclose the source of this information. The appellant himself admitted receiving the impugned order from a co-noticee without revealing the co-noticee's identity. The Tribunal found that the appellant knowingly evaded participation in the proceedings, following the fraudulent actions of the main perpetrator. The Tribunal concluded that the appellant's deliberate avoidance of the proceedings barred him from claiming a violation of natural justice, upholding the penalty imposed due to the substantial drawback amount involved.
In the final decision, the Tribunal upheld the impugned order, dismissing the appeal as lacking merit. The judgment emphasized that the appellant's actions, including providing false addresses and avoiding participation in the proceedings, prevented him from claiming a violation of natural justice. The penalty of Rs. 2 lakhs was deemed appropriate given the significant amount of drawback involved, especially since the Counsel did not challenge the allegations on merits during the proceedings.
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2004 (5) TMI 431
Issues:
1. Entitlement of the appellant for the refund of the amount in dispute.
2. Relief to be granted.
Analysis:
1. The appellant, a company, filed an appeal against an order related to the arrest of its director in connection with an offence under the Central Excise Act. The director deposited Rs. 50 lakhs as a security for bail, which was retained by the Settlement Commission. The appellant sought a refund of this amount, contending that it falls under 'pre-deposit' and should be refunded once proceedings are terminated. The appellant also relied on a Circular by the Central Board of Excise & Customs and a Bombay High Court decision. The department argued that the amount is not a pre-deposit and should be withheld to protect the interest of Revenue. The Settlement Commission retained the amount for protecting Revenue's interest without attaching it. The Commission did not make a final order regarding the amount, and as no proceedings were pending, the appellant was entitled to a refund with interest accrued.
2. The appellant had also deposited Rs. 4,46,284 towards admitted duty liability. The Tribunal held that this amount, whether deposited in compliance with the Settlement Commission's order or voluntarily, was towards duty payable and could not be refunded. Therefore, the Tribunal allowed the appeal partly, granting a refund of Rs. 50 lakhs with interest but denying the refund of Rs. 4,46,284 deposited towards duty liability. The orders of the adjudicating authority and Commissioner (Appeals) were set aside accordingly.
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2004 (5) TMI 430
Issues Involved:
1. Classification of products under the Central Excise Tariff.
2. Determination of duty demands.
3. Applicability of penalties and confiscation.
4. Consideration of the brand name "COSTA" and its impact on classification.
Detailed Analysis:
1. Classification of Products:
The core issue revolves around the classification of various meat products. The disputed Chapter Headings are 0201.00, 1601.10, and 1601.90. The products include items like Cocktail sausages, Frankfurters, Luncheon Meat, Corned Beef, and others. The process involves cleaning, chopping, freezing, and adding ingredients like spices and oil. The products are marketed in frozen conditions in poly pouches and need to be cooked before consumption.
2. Determination of Duty Demands:
The appeals involve duty demands confirmed by the Commissioner under Section 11A(1) of the Central Excise Act, 1944. The duty demands are based on the classification of products under Heading 1601.10. The products are either classified under Chapter 2 or Chapter 16, depending on the extent of treatment. If classified under Chapter 2, no further sub-classification is needed. For Chapter 16, the classification depends on whether the products are "put up in unit containers" and "bearing a brand name."
3. Applicability of Penalties and Confiscation:
Penalties were imposed under Section 11AC and Rule 173Q for contravening various provisions of the Central Excise Rules. The goods valued at Rs. 98,128/- were confiscated and ordered to be redeemed on a fine of Rs. 25,000/-. The issue of penalties is kept open and will be re-determined based on the quantum of demands after reclassification.
4. Consideration of the Brand Name "COSTA":
The mark "COSTA" was initially on the packages and later on the price stickers. The Commissioner (Appeals) found that "COSTA" is a house mark and not a brand name specific to the products. The Supreme Court's judgment in the case of M/s. Astra Pharmaceuticals (P) Ltd. was relied upon, which distinguished between a house mark and a product-specific brand name. The mark "COSTA" being used on various products, including non-exigible ones, and the name and address of the manufacturer being printed on the pouches, served as an emblem of the manufacturer, not as a trade-specific mark.
Conclusion:
The appeals are allowed as remand. The classification of the products under Chapter 2 or Chapter 16 is to be re-determined by the original authority. The duty demands and penalties will be re-assessed based on the reclassification. The orders of CCE (Appeals) regarding the applicability of the mark "COSTA" are confirmed, recognizing it as a house mark and not a product-specific brand name.
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2004 (5) TMI 429
Issues:
1. Demand of duty and penalty against M/s. Thejo Engineering Services Pvt. Ltd.
2. Waiver of pre-deposit and stay of recovery for duty and penalty amounts.
3. Differential duty on lagging sheets, Repacking of Solution and Hardener, Repacked Solution and Hardener, and clubbing of clearances.
4. Applicability of CAS-4 methodology and Chapter Note 3 of CETA Schedule.
5. Time-bar plea against the demand of Rs. 24.69 lakhs.
6. Clubbing of clearances of M/s. TES and M/s. Saroth Bonds.
7. Waiver of pre-deposit and stay of recovery for duty demanded by the Commissioner.
8. Pre-deposit of penalty amounts.
Analysis:
1. The adjudicating authority confirmed a duty demand of Rs. 133.89 lakhs against M/s. Thejo Engineering Services Pvt. Ltd. (M/s. TES) and imposed an equal penalty under Section 11AC read with Rule 173Q. The demand pertained to various products for the periods from 1995-96 to 1999-2000, with additional penalties on senior functionaries. The applications sought waiver of pre-deposit and stay of recovery for the duty and penalty amounts.
2. Out of the total duty amount, Rs. 3.4 lakhs, Rs. 1.53 lakhs, and Rs. 97,844 had already been paid by the assessee. The main appeal contested demands including differential duty on lagging sheets, Repacking of Solution and Hardener, Repacked Solution and Hardener, and clubbing of clearances with M/s. Saroth Bonds. Arguments were made regarding the valuation methodology and applicability of Chapter Note 3 of the CETA Schedule.
3. The Counsel argued against the demand of Rs. 24.69 lakhs, claiming errors in the adjudicating authority's findings and pointing out the manual repacking process without pilfer-proof sealing. The Counsel relied on instructions and circulars, but the Tribunal found no substantial basis for the appeal. However, a plea of time-bar against this demand was considered forceful due to the extended period beyond normal limits.
4. Concerning demands of Rs. 53.92 lakhs and Rs. 43.90 lakhs, the Counsel contested the clubbing of clearances of M/s. TES and M/s. Saroth Bonds. The Tribunal noted a previous order where clearances of the two units were not clubbed, indicating a strong case for waiver of pre-deposit and stay of recovery for these amounts.
5. Given the strong prima facie case for a major part of the demand, the Tribunal decided to dispense with the requirement of pre-deposit for the penalty amounts. Compliance was ordered by a specified date, and waiver of pre-deposit and stay of recovery were granted for the duty amounts demanded by the Commissioner, except for a specific sum to be deposited within a month.
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2004 (5) TMI 428
Issues:
Classification of Battery Assembly for UPS under Heading 8507.00 vs. 85.04, Interpretation of Component Parts, Dispute over Classification List No. 5/94, Allegation of Clearance of Batteries vs. Battery Assemblies, Reversal of Duty under Modvat Rules.
Classification of Battery Assembly for UPS under Heading 8507.00 vs. 85.04:
The judgment deliberated on whether the Battery Assembly for UPS should be classified under Heading 8507.00 or 85.04. It was observed that the entity in question is an assembly of batteries/cells specifically designed and configured for a particular end purpose, making it more than just a battery. Applying the theme for defining component parts, the Battery Assembly was considered a component part of a UPS System, falling under Section Note 2 (b) and classified under 85.04 rather than 8507.00.
Interpretation of Component Parts:
The judgment discussed the concept of component parts of machinery, highlighting the need to distinguish between a component part of a machine and an independent entity. It referenced the proposed definition for component parts emphasizing that only parts essential for the working of the machine and given special shape or quality should be considered as component parts. This definition was deemed crucial in determining the classification of the Battery Assembly as a component part of a UPS System.
Dispute over Classification List No. 5/94:
The judgment addressed the dispute arising from Classification List No. 5/94, focusing on the classification of the Battery Assembly under this list. It was concluded that the Battery Assembly, when not supplied or removed along with the item at S. No. 1 of the list, should not be classified separately. The assembly was considered more than mere interconnections of batteries and was classified under 85.04 as component parts of a UPS System.
Allegation of Clearance of Batteries vs. Battery Assemblies, Reversal of Duty under Modvat Rules:
The judgment analyzed the allegation of clearance of batteries instead of Battery Assemblies, highlighting the importance of verifying the actual goods cleared. It was noted that if Batteries were cleared as inputs instead of Battery Assemblies, duty demand reversals would be required under Modvat rules. The issue was remitted back to the original authority for further verification and confirmation.
In conclusion, the judgment upheld the Assistant Collector's classification of the Battery Assembly, set aside the Commissioner of Central Excise (Appeals) order, and directed a re-determination of duty pursuant to the notice dated 23-1-1995 by remitting the issue back to the original authority. The appeals were disposed of accordingly, providing a detailed analysis of the classification and interpretation of component parts in the context of the Battery Assembly for UPS.
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2004 (5) TMI 427
Issues:
1. Clearance of staple pins under REP license.
2. Interpretation of the clarification regarding import of staple pins.
3. Delay in adjudication and imposition of penalty.
4. Existence of a practice for clearance of staple pins.
5. Validity of penalty based on the clarification issued.
Issue 1: Clearance of staple pins under REP license
The case involved the clearance of staple pins under a REP license for product group 'O' of Appendix 17 against Entry at S. No. (IX) Para 188 of EXIM Policy 1985-88. The appellants sought clearance for staple pins imported as stationery items but were denied clearance based on a clarification that only staple pins used as embellishments in the manufacture of export products were allowed for import under the mentioned license.
Issue 2: Interpretation of the clarification regarding import of staple pins
The Commissioner (Appeals) found that the appellants were using the staple pins as stationery items and not as items of embellishment, as required by the clarification. It was noted that the appellants were aware of the clarification issued by the D.G.F.T. and could not claim ignorance. The delay in adjudication was attributed to the appellants' choice to file a Writ Petition, leading to the final imposition of a penalty under Section 112(a) of the Customs Act, 1962.
Issue 3: Delay in adjudication and imposition of penalty
The delay in adjudication following a Writ Petition filed by the appellants was acknowledged, but it was highlighted that the appellants also shared the blame for the delay. Despite the goods being allowed clearance under an interim order, a penalty was imposed under Section 112(a) of the Customs Act, 1962, as the goods were found liable for confiscation under Section 111(d).
Issue 4: Existence of a practice for clearance of staple pins
The Tribunal considered the existence of a practice for clearing similar goods under REP licenses based on past precedents and decisions. The Tribunal referred to previous cases where staple pins were allowed for import under similar circumstances, emphasizing the importance of past practices and bona fide actions by importers.
Issue 5: Validity of penalty based on the clarification issued
The Tribunal analyzed the validity of the penalty imposed based on the clarification issued by the Deputy Chief Controller of Imports and Exports. It was argued that the penalty could not be upheld as the Customs Department also had doubts about the interpretation of the policy, and no Public Notice of change in practice had been issued. The penalty was set aside based on the lack of findings regarding lack of bona fides and in accordance with the Custom Appraising Manual guidelines.
In conclusion, the Tribunal set aside the penalty and allowed the appeal based on the findings related to the issues discussed above, emphasizing the importance of past practices, interpretations of clarifications, and adherence to procedural guidelines in customs matters.
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