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Showing 381 to 400 of 522 Records
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2004 (5) TMI 193
Issues: Confirmation of total duty demand and penalty against the manufacturers of electric motors, switch gear items, switch board items; demand on inputs cleared; demand on sorting and loading charges of scrap; demand on capital goods (tools) consumed captively in the manufacture of exempted products.
Confirmation of total duty demand and penalty on inputs cleared:
The demand of Rs. 5,55,483/- was confirmed on inputs cleared as such, requiring the reversal of duty equal to Modvat credit taken. The Tribunal upheld this demand based on the decision in the case of C.C.E., Vadodara v. Asia Brown Boveri Limited. However, the penalty imposed under Rule 57-I(4) was set aside as the credit was not taken wrongly due to fraud, wilful misstatement, collusion, or contravention of any provisions with intent to evade duty. The duty was paid before any written demand, so the provisions of Rule 57-I(2) were not attracted.
Demand on sorting and loading charges of scrap:
A demand of Rs. 86,896/- was confirmed by including sorting and loading charges of scrap in the assessable value under Section 4 of the Central Excise Act, 1944. The expenses incurred before the goods left the factory gate were rightly included, even though borne by buyers. The appellants' submission that sorting and loading were not done by buyers/customers on their behalf was rejected due to lack of evidence. The penalty under Section 11AC was set aside as there was no finding of suppression or misstatement leading to non-payment of duty.
Demand on capital goods consumed captively:
A demand of Rs. 8,263/- was confirmed on capital goods (tools) consumed captively in the manufacture of exempted products under Rule 57U(2) of the Central Excise Rules, 1944. The benefit of exemption under Notification 67/95 was denied as the tools were consumed in the manufacture of exempted products. However, the Tribunal set aside this demand and the penalty of equal amount after interpreting the exemption notification to not exclude capital goods used in the manufacture of final products exempt from duty.
In conclusion, the Tribunal upheld the demands of Rs. 5,55,483/- and Rs. 88,896/-, set aside the demand of Rs. 8,263/-, and also waived the liability to interest and penalties. The appeal was partly allowed, providing relief to the manufacturers on certain demands and penalties.
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2004 (5) TMI 188
Issues: Duty payment on job work manufacture, assessment basis, agency relationship determination
Duty Payment on Job Work Manufacture:
The appellant, engaged in manufacturing lubricating oil and greases, undertook job work for other parties. The dispute arose regarding duty payment on goods manufactured for job workers. The impugned orders held that duty should be assessed based on the depot sale price of the parties who provided the job work, without any deduction. This led to a duty demand of over Rs. 1.5 lakhs and a penalty of Rs. 10,000. The appellant contended that duty payment was in excess as they should only pay duty on the value at the end of processing, not based on the sale price of the parties selling the goods. The legal position, as per the decision in Ujagar Prints case and an order of the Tribunal in a previous appeal, supported the appellant's contention.
Assessment Basis:
The Tribunal analyzed the records and arguments, finding no sustainable basis for the lower authority's conclusion that the appellant acted as an agent of the parties providing job work. The appellant, being a limited company with its own manufacturing operations, was not deemed an agent based on returning processed goods under a stock transfer invoice or depositing duty amounts into their account by the parties ordering job work. The Tribunal emphasized that the goods were transferred under a stock transfer invoice after processing, not sold, and the duty liability was on the raw material supplier as per the agreement. The deposit for duty payment did not establish an agency relationship. The Tribunal reiterated that in job work manufacturing, the assessable value should include job work charges added to the value of materials supplied, not the sale price of the party selling the goods. Therefore, the duty demand based on the impermissible sale price basis was set aside, and the appeal was allowed.
Agency Relationship Determination:
The Tribunal clarified that the mere act of returning processed goods under a stock transfer invoice and depositing cash for duty payment did not establish an agency relationship between the appellant and the parties availing job work services. The contractual job work arrangement did not create an agency or related-party relationship between the parties. The Tribunal emphasized that job work contracts do not make the parties agents of each other, as established in previous legal precedents. The Tribunal's analysis focused on the nature of job work manufacturing contracts and the determination of assessable value, which should not be based on the sale price of the party selling the goods after processing.
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2004 (5) TMI 186
Issues Involved:
1. Inclusion of barge expenses in the assessable value.
2. Inclusion of expenses on Floating Crane and other handling charges.
3. Determination of the place of importation.
4. Applicability of Rule 9(2) of the Customs Valuation Rules, 1988.
5. Legal implications of "Out of Customs Charge" order.
6. Definition and treatment of "transhipment" under the Customs Act, 1962.
7. Applicability of previous judgments and Board Circulars.
Summary:
1. Inclusion of barge expenses in the assessable value:
The lower authority included barge expenses incurred for transporting cargo from the anchorage to Vikram Jetty in the assessable value u/s 14 of the Customs Act, 1962, read with Rule 9(2)(a) of the Customs Valuation Rules, 1988. However, the Tribunal found that these expenses were incurred after the "Out of Customs Charge" order was given, which signifies the completion of customs formalities and transfer of title to the importer. Therefore, such expenses cannot be added to the assessable value.
2. Inclusion of expenses on Floating Crane and other handling charges:
The expenses on Floating Crane, payloaders/uniloaders, and manual labor for cleaning hatches were also included by the lower authority. The Tribunal held that these expenses are distinct from landing charges and are incurred before the barge expenses. They are considered as handling charges associated with the delivery of imported goods and should be included under Rule 9(2)(b), not Rule 9(2)(a).
3. Determination of the place of importation:
The lower authority concluded that the place of importation is the Vikram Jetty at Revdanda port. The Tribunal disagreed, stating that the place of importation is where the "Out of Customs Charge" order is given, which in this case was onboard the mother vessel at anchorage. Therefore, the expenses incurred after this point cannot be added to the assessable value.
4. Applicability of Rule 9(2) of the Customs Valuation Rules, 1988:
The Tribunal clarified that Rule 9(2)(a) covers the cost of transport up to the place of importation, which ends at the point where the "Out of Customs Charge" order is given. Any expenses incurred thereafter fall under Rule 9(2)(b) as loading, unloading, and handling charges, and are covered by the 1% addition already made by the appellants.
5. Legal implications of "Out of Customs Charge" order:
The Tribunal emphasized that the "Out of Customs Charge" order signifies the completion of customs formalities and transfer of title to the importer. Therefore, any expenses incurred after this order cannot be added to the assessable value.
6. Definition and treatment of "transhipment" under the Customs Act, 1962:
The Tribunal found that the goods were not transhipped as per the definition and regulations under the Customs Act, 1962. The goods were cleared on Bills of Entry with the Import General Manifest (IGM) number of the mother vessel, and Boat Notes were issued for landing, not transhipment. Therefore, the expenses cannot be treated as transhipment costs.
7. Applicability of previous judgments and Board Circulars:
The Tribunal referred to various judgments and Board Circulars, including the Supreme Court's decision in Corromondal Fertilizers Ltd., which held that landing charges cover all expenses incurred to bring goods to land. The Tribunal found that the lower authority's reliance on the case of Ispat Industries Ltd. was misplaced, as it did not consider the Supreme Court's decision and other relevant provisions.
Conclusion:
The Tribunal allowed the appeals, setting aside the orders of the lower authorities. It held that the expenses incurred after the "Out of Customs Charge" order cannot be added to the assessable value. The Tribunal remanded the cases of Reliance Industries Ltd. and Essar Steel Ltd. for re-determination of the nature of the transfer of cargo and the point of the Section 47 order in each Bill of Entry.
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2004 (5) TMI 184
Issues involved:
Classification of tyres under concessional rate of duty for mopeds, duty demand confirmation, penalty imposition under Section 11AC, limitation period for duty demand, misdeclaration of goods, misuse of tyres by buyers, interpretation of moped definition, liability of manufacturer for buyer's misuse.
Analysis:
1. The appellant, a manufacturer of tyres for two-wheeled motor vehicles, cleared tyres claiming concessional duty rates for mopeds under specific notifications. The department alleged misdeclaration, stating the tyres were for motorcycles, invoking a show cause notice for duty demand and penalty imposition under Section 11AC.
2. The Commissioner confirmed the duty demand and imposed penalties under Section 11AC, citing suppression and misdeclaration. The appellant contended that their tyres were single-ply reinforced, marked as "moped," and approved by the department, emphasizing the end-use by buyers doesn't justify denying concessional rates.
3. The appellant argued that the department's denial of exemption notifications based on a statement and letters contradicted subsequent approvals of classification lists, indicating departmental awareness of the tyres' use in mopeds. They relied on legal precedents emphasizing willful misstatement for invoking Section 11A and the importance of approval in assessment processes.
4. Regarding the limitation period, the appellant highlighted physical control until 1993 and departmental awareness since 1994 of the tyres' use in vehicles other than mopeds. Citing legal precedents, they argued against invoking a larger limitation period due to departmental knowledge post-1994.
5. The appellant referenced legal judgments emphasizing willful misstatement for invoking penalties under Section 11AC, arguing against its applicability for the period pre-1996. The period in dispute ranged from 1992 to 1996, and the appellant challenged the penalty imposition based on the timeline.
6. The department argued that the tyres' use in kick-start vehicles indicated motorcycle tyres, not mopeds, justifying the duty demand and penalty imposition. They contended that the appellant misdeclared goods to avail concessional rates, emphasizing the buyers' use as evidence against the appellant.
7. The Tribunal analyzed the markings on the tyres, the modern definition of mopeds, and the buyers' use to determine if the appellant misdeclared the product. It concluded that the department failed to prove the appellant's misdeclaration for availing concessional rates, dismissing the duty demand and penalty imposition.
8. The Tribunal rejected the larger limitation period invocation, citing physical control until 1993 and departmental knowledge post-1994, leading to the dismissal of the duty demand based on limitation grounds. The appeal was allowed, setting aside the Commissioner's order.
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2004 (5) TMI 183
Disallowance of Modvat credit wrongly availed - duty demand - Confiscation of excess stock - penalty - Fraudulent availment of Modvat credit by various parties - HELD THAT:- Since there are no goods to be moving, as found by the ld. Commissioner and credit has been availed only on documents without receipt of any goods, the question of liability of any goods to confiscation does not arise and has not been determined. To effect and uphold penalty liability goods should have been found to be liable to confiscation. Since it is the case of Revenue itself that there were no goods which actually moved, the liability under Rule 209A arrived only on account of role in fraudulent availment of credit cannot be upheld. All appeals as regards Rule 209A are to be allowed after setting aside the order of penalty under the rule.
Since no goods have moved the penalty under Rule 173Q read with other rules cannot be approved as far as alleged fraudulent Modvat credit is concerned, as penalty under Rule 173Q is related to value of the goods and since goods are admittedly as per the case of Revenue not to exist the value thereof cannot. Penalty under Rule 173Q read with the rules is to be set aside.
The appeals were allowed in terms of penalty under certain rules being set aside, while other appeals were remitted for rehearing and de novo adjudication on all issues. The judgment concluded by disposing of the appeals in the above terms, addressing the various issues raised in the case.
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2004 (5) TMI 182
Issues Involved:
1. Whether the activities of slitting, rolling, and painting aluminum sheets amount to "manufacture" under Section 2(f) of the Central Excise Act.
2. Whether the show cause notices issued are time-barred under the proviso to Section 11A of the Central Excise Act.
3. Whether M/s. Aldec Corporation is liable for Central Excise duty on the painted aluminum slats.
4. Whether M/s. Aldec Corporation is eligible for Modvat credit if the activities are considered as manufacture.
Issue-wise Detailed Analysis:
1. Whether the activities of slitting, rolling, and painting aluminum sheets amount to "manufacture" under Section 2(f) of the Central Excise Act:
The appellants argued that neither the cutting or slitting of aluminum sheets into strips nor the painting of these strips amounts to manufacture. They cited previous departmental decisions where similar activities were deemed not to constitute manufacturing. The Commissioner of Central Excise, in the impugned order, held that the combined processes undertaken at M/s. Srinivasa and M/s. Vittaleshwara amounted to manufacture. However, the Tribunal found that the processes carried out in 1985-86 remained the same and were not considered as manufacturing then. The Tribunal emphasized that for an activity to be considered as manufacture, it should result in a new product with a distinct name, character, and use, which did not occur in this case. The Tribunal concluded that the conversion of sheets into strips and painting did not bring into existence a new product known in the market with a distinct character and use.
2. Whether the show cause notices issued are time-barred under the proviso to Section 11A of the Central Excise Act:
The appellants contended that the show cause notices were time-barred as the department was aware of their activities since 1986, and the proceedings initiated by the department were dropped at various stages. The Tribunal agreed with the appellants, noting that the entire activities of M/s. Aldec Corporation, M/s. Vittaleshwara, and M/s. Srinivasa were known to the department. Therefore, the extended period under Section 11A could not be applied for demanding duty, making the show cause notices time-barred.
3. Whether M/s. Aldec Corporation is liable for Central Excise duty on the painted aluminum slats:
The Tribunal found that the processes carried out did not amount to manufacture, and no new excisable product had come into existence. Consequently, M/s. Aldec Corporation was not liable for Central Excise duty on the painted aluminum slats. The Tribunal also noted that the classification of the finished product under Chapter Sub-Heading 7616.90 by the Commissioner was incorrect, as the painted strips did not fall under this heading.
4. Whether M/s. Aldec Corporation is eligible for Modvat credit if the activities are considered as manufacture:
Since the Tribunal concluded that the activities did not amount to manufacture and no new excisable product came into existence, the issue of Modvat credit eligibility did not arise.
Conclusion:
The Tribunal allowed the appeals, holding that the activities of slitting, rolling, and painting aluminum sheets did not amount to manufacture. Consequently, M/s. Aldec Corporation was not liable for Central Excise duty, and the show cause notices were time-barred. The Tribunal also found that the classification of the finished product under Chapter Sub-Heading 7616.90 was incorrect.
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2004 (5) TMI 181
Issues:
Assessable value of cement - Inclusion of packing charges and handling charges.
Analysis:
The appeal involves M/s Panyam Cements & Mineral Industries Ltd. challenging the assessment done by the Commissioner of Customs & Central Excise. The appellants collected packing and handling charges from customers, which the department added to the assessable value of cement. The appellants argued that the packing charges were for returnable gunny bags and should be deducted. The Supreme Court remanded the matter back for disposal based on relevant principles. The Assistant Commissioner decided to add the cost of gunny bags to the assessable value. The appeal against this decision was rejected by the Commissioner (Appeals).
Shri V.K. Dorairaj, representing the appellants, argued that the gunny bags were durable and returnable, citing a CEGAT decision. He emphasized the requirement for returnability to be a term of sale, supported by evidence of the Cement Control Release Order and ledger entries showing purchase of second-hand gunny bags. The Commissioner (Appeals) rejected this argument, stating lack of evidence of bag returns or packing charge refunds.
On the other hand, Shri P.M. Saleem for the Revenue supported the Commissioner (Appeals) decision, referencing Supreme Court judgments on packing charges. The Commissioner (Appeals) highlighted the necessity of packing for marketability and the absence of return obligation for buyers. The ownership of cement and gunny bags passed to buyers, making the bags non-returnable. The Commissioner (Appeals) found no evidence of bag returns or packing charge refunds, upholding the rejection of the appeal.
The Appellate Tribunal upheld the Commissioner (Appeals) decision, emphasizing the principles laid down by the Supreme Court. They noted that the ownership of cement and bags transferred to buyers, with no obligation for return. The Tribunal found no evidence of an agreement for bag returns or packing charge refunds, supporting the rejection of the appeal. The order of the Commissioner (Appeals) was upheld, and the appeal was rejected.
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2004 (5) TMI 179
Issues:
- Denial of exemption under Notification No. 9/99-C.E. for the period 1-4-1999 to 6-4-1999
- Denial of exemption under Notification No. 9/2000-C.E. for the period 1-4-2000 to 3-4-2000
- Challenge against penalty imposed under Rule 173Q of the Central Excise Rules, 1944
Analysis:
- The appellants were engaged in the manufacture of excisable goods specified for SSI exemption under Notification No. 9/2003-C.E. The dispute arose due to the failure of the appellants to exercise their option for availing the exemption under the relevant notifications at the beginning of the financial year. The authorities confirmed demands of duty against the appellants for not complying with the conditions of Para 2 of the notifications.
- The appellants argued that they had been availing the benefit of the predecessor-Notification in a bona fide manner and had filed Rule 173B declarations, which they contended should be considered as an exercise of option under the notifications. They relied on a previous Tribunal decision to support their argument. However, the Departmental Representative (DR) contended that the conditions in Para 2 of the notification were substantive requirements and not merely procedural. The DR emphasized that the declarations filed by the appellants for the previous financial year could not substitute for the required option exercise for the relevant financial years.
- The Tribunal endorsed the position taken by the DR, emphasizing that the declarations filed by the appellants for the previous financial year did not have any effect beyond that financial year's end. Therefore, they could not be considered as a valid exercise of option for the succeeding financial years. The demands of duty for the periods in question were upheld due to the appellants' failure to comply with the notification requirements.
- Regarding the penalty imposed on one of the appellants, the Tribunal found no mala fide intention and noted that the belated exercise of option was due to a bona fide mistake. As a result, the penalty was vacated for that appellant. The penalty on other appellants was not imposed, considering similar circumstances. Appeal No. E/526/2003 was disposed of by upholding the demands, while Appeal Nos. E/527 & 528/2003 were dismissed.
This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, and the Tribunal's decision on each issue, providing a comprehensive understanding of the legal reasoning and outcome of the case.
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2004 (5) TMI 174
Cenvat/Modvat - Inputs - demand of duty on converted HDPE - Confiscation of goods - Non-accountal of goods - Penalty - HELD THAT:- In the present case, the goods in the changed primary forms are admittedly mixed condition and the marketability thereof is not established. They are not the consequence of 'a deliberate skilful manipulation of the inputs or the raw materials'. The converted form are neither marketable nor sale-ability thereof established & relying upon CCE v. tube Co Ltd. [1999 (3) TMI 76 - SC ORDER], the alleged converted forms, in this case, are to be held as out of excise net.
When goods allegedly manufactured have been kept in the BSR (the abbreviation for the term and place 'Bonded Store Room), in the licensed premises, where all manufactured goods are to be kept pending clearance on payment of duty, the non-accountal thereof in the production records, as prescribed viz. RG 1, would only be a technical/clerical omission and not a substantial violation to call for ordering the confiscation under the provision of the Central Excise Rules, 173Q(1), 210, 226.
Since no intention of or evasion of duty could be established, as no attempt to remove the goods is established and concluded, following the catena of decisions of this Tribunal after Bhillai Conductors' case [2000 (1) TMI 105 - CEGAT, NEW DELHI] confiscation cannot be upheld even those goods are held to be exigable and manufactured. The confiscation arrived at is therefore to be set aside, as goods are not excisable, even if exigible, they are not liable to warrant a confiscation.
When confiscation liability is not upheld, the penal liability cannot be upheld. Since goods are not exigible, no liability could arise. If goods are exigible, the penal liability under Rule 210 being maximum Rs. 1000/- and rule 226 of Rs. 2,000/- the penalty of Rs. 40,000/- arrived at without showing the break up cannot be upheld.
Since goods are found to be non-exigible, no duty liability would arise. In fact when they are found in the BSR, therefore, even if exigible, duty liability would arise only on clearance i.e. removal ex BSR and not when they are in BSR as per Rules. Duty demand as made cannot be therefore sustained.
Thus, the order is required to be set aside.
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2004 (5) TMI 172
Import of second-hand machinery - Undervaluation - Second-hand machinery - confiscation u/s 111 - penalty - HELD THAT:- We find that the transaction value was supported by the foreign supplier's Chartered Engineer's Certificate, which evidence was rejected by the Commissioner for reasons which are not convincing. The department had no case that the foreign supplier's Chartered Engineer's Certificate was not genuine or authentic or that it was obtained fraudulently or that it was not relevant. The evidence in support of the transaction value, furnished by the importer through the said Certificate, has been rejected by the Commissioner on the basis of a subsequent opinion of another expert, which is not justifiable. The opinion of one expert cannot be rejected on the basis of that of another expert unless there is sufficient independent reason for such rejection. In this case, there is no such reason for rejecting the foreign supplier's Chartered Engineer's Certificate.
It is also pertinent to note that, even after obtaining the domestic Chartered Engineer's opinion, the department made market enquiries, in which it was found that the value of the subject goods could be Rs. 14 lakhs as at the time of its manufacture. It is not known as to why the Commissioner did not rely on the market enquiry results to doubt the correctness of the domestic Chartered Engineer's valuation.
In the result, we hold that the declaration, by the appellants, of year of manufacture as well as of the value of the imported second-hand machinery is liable to be accepted for all purposes. The declared value (transaction value) is liable to be accepted in terms of Section 14 of the Customs Act for assessment of the goods for duty of Customs. There being no misdeclaration on the part of the appellants, the order of confiscation and penalty cannot be sustained. Accordingly, the order of the Commissioner is set aside and this appeal is allowed.
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2004 (5) TMI 171
Issues: Excisability of gun metal scrap and rubber scrap
In this appeal, the issue pertains to the excisability of gun metal scrap and rubber scrap. The adjudicating authority had confirmed the duty demand against the appellants for these items. The appellants contested the excisability of gun metal scrap, arguing that it did not arise from capital goods on which Modvat credit was availed. The authority invoked Rule 57-S(2)(c) and Rule 57AB(1)(b) of the Central Excise Rules, which the appellants disputed. The Tribunal reviewed the records and found merit in the appellants' contention. It was noted that the gun metal scrap did not arise from the shaft bush, a capital good on which credit was availed. Gun metal, being a tin alloy with zinc, was used by the appellants for castings and was considered an essential component of machinery/equipment. The Tribunal concluded that the provisions of Rule 57-S(2)(c) and Rule 57AB(2)(b) were incorrectly applied as the gun metal scrap was not sold as waste and scrap, and no credit was availed for it. Therefore, the order holding the gun metal scrap as excisable was set aside.
Regarding the conveyor belt scrap/rubber scrap, their excisability was not disputed as they had arisen from capital goods on which Modvat credit was availed. Hence, the order demanding duty for these scraps was upheld. However, considering the circumstances and issues involved, the imposition of penalty on the appellants was deemed unwarranted and set aside. Consequently, the impugned order was modified, with the appeal of the appellants being disposed of accordingly.
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2004 (5) TMI 170
Issues involved: Appeals against penalty imposed under Section 114 and Section 117 of the Customs Act, suspension of CHA license, waiver of pre-deposit of penalty, and early disposal of appeal.
In the present case, two appeals and two miscellaneous applications were before the Appellate Tribunal CESTAT, CHENNAI. Appeal No. C/13/2004 challenged a penalty of Rs. 1,00,000/- imposed on the appellants by the Commissioner of Customs under Section 114(i) and (iii) and Section 117 of the Customs Act. Another appeal, C/73/2004, was against the Commissioner's order suspending the CHA license with immediate effect.
Regarding the penalty imposed under Section 114 and Section 117, the appellant argued that the penalty was not sustainable on facts or in law. It was contended that the goods exported were not prohibited, and the penalty under Section 114 was wrongly invoked. The appellant also challenged the penalty under Section 117, stating it was not warranted in the facts of the case.
After careful consideration of the submissions, the Tribunal found that the penalty imposed under Section 114 was illegal as the goods exported were not prohibited. Additionally, Section 117 was deemed to be wrongly invoked. Referring to a previous Final Order, the Tribunal held that no penalty could be imposed under Section 114 when the clearing agent had no knowledge of the exporter's illegal acts. As the Commissioner's order did not establish any connivance or knowledge of illegal acts by the CHA, the penalty under Section 114 was set aside. Similarly, since Section 117 was incorrectly applied, the penalizing order was overturned, and Appeal No. C/13/2004 was allowed.
In the case of Appeal No. C/73/2004, challenging the suspension of the CHA license under Regulation No. 20 of the CHA Licensing Regulations, 1984, the Tribunal found that Regulation No. 20 did not authorize such suspension. Consequently, the suspension of the license was deemed unauthorized, and the order of the Commissioner of Customs was set aside, allowing the appeal.
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2004 (5) TMI 166
Issues:
- Challenge to order passed by Commissioner of Central Excise
- Allegations of evasion of central excise duty and Modvat credit
- Use of term 'replacement' in the trade
- Reliance on statements and correspondence as evidence
- Cross-examination of witnesses
- Interpretation of purchase order clauses
- Misinterpretation of statements by witnesses
- Insurance claim for broken goods
- Reversal of Modvat credit
- Excess production and loss of electron guns
- Barred by limitation
- Clandestine removal of goods
- Denial of Modvat on electron gun
- Imposition of penalty
Analysis:
The case involves an appeal challenging the order of the Commissioner of Central Excise, which upheld a duty demand against the appellant for alleged evasion of central excise duty and Modvat credit. The appellant, engaged in manufacturing colour picture tubes (CPTs), faced accusations of replacing defective CPTs with new ones under the warranty clause without paying duty. The Commissioner relied on correspondence and statements to support the allegations.
The appellant contended that the term 'replacement' in the trade is loosely used and repair processes do not amount to manufacturing. The Commissioner's reliance on certain statements and correspondence was challenged, emphasizing misinterpretation and ignoring crucial clauses in purchase orders. The appellant argued that the repair work was evident from the reversal of Modvat credit and absence of excess production evidence.
Regarding the denial of Modvat on electron guns, the appellant presented evidence to justify the loss in the manufacturing process, refuting the excessive demand. The Tribunal noted settled law that repair of picture tubes does not constitute manufacturing. Insufficient proof of clandestine removal and adherence to Rule 57F(4)/173H procedures led to the Tribunal setting aside the Commissioner's order.
Ultimately, the Tribunal ruled in favor of the appellant, overturning the impugned order and allowing the appeal. The demand of duty was deemed unsustainable, leading to the rejection of the penalty imposition as well. The judgment highlighted the importance of proper evidence and adherence to procedural requirements in excise duty cases.
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2004 (5) TMI 165
Issues:
1. Denial of exemption benefit due to the use of a trade name belonging to another company.
2. Imposition of penalty under Section 11AC prior to its promulgation.
3. Interpretation of house marks as different from trade marks and suppression of facts by the appellant.
Issue 1: The appellant's exemption benefit was denied as they used a trade name belonging to another company, Voltarc Electrodes Pvt. Ltd., engaged in manufacturing welding electrodes under the brand name 'VOLTARC'. The Commissioner confirmed duty due to the alleged suppression of using the trade name 'VOLTARC' during the relevant period. The Revenue also filed an appeal on this ground.
Issue 2: The Revenue's appeal seeking enhancement of penalty under Section 11AC was rejected as the Apex Court had previously held that such penalty prior to 28-8-1996 was not imposable. The issue was considered settled by the Apex Court, and hence, the Revenue's appeal was dismissed.
Issue 3: The appellant contended that the house marks of both companies, Voltarc India Pvt. Ltd. and Voltarc Electrodes Pvt. Ltd., were different. They argued that the marks were not identical and were house marks, not trade marks. The appellant provided evidence showing the differences in the house marks, emphasizing that the name 'VOLTARC' was only a company name and not a brand name. They claimed that all relevant facts were disclosed to the Department and that the demands were time-barred. The Tribunal, after careful consideration, found that the house marks were indeed different, not affixed on the goods, and were in the nature of house marks, not trade marks. The Tribunal concluded that the appellant had not suppressed any facts to avail the benefit of the notification. The judgments cited by the appellant supported their case, and based on the evidence presented, the Tribunal allowed the appellant's appeal and dismissed the Revenue's appeal.
In conclusion, the Tribunal set aside the impugned order, allowed the appellant's appeal, and dismissed the Revenue's appeal based on the interpretation of house marks, the absence of suppression of facts, and the applicability of relevant judgments.
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2004 (5) TMI 164
Refund claim - Limitation - eligibility for concessional rate of duty - unjust enrichment - HELD THAT:-The application was made by the appellant consequent to the Commissioner (Appeals) allowing the claim that it was eligible for concessional rate of duty in respect of naphtha procured during the period 1996-97 to 1998-99. The period of limitation prescribed under Section 11B may not be as such applicable in the case of the appellant. It is also relevant to note that the authorities below were not computing the period of limitation from the date of payment by the appellant. Apart from the above, the appellant is only justified in contending that it was under the bona fide belief that the application for refund has to be filed before the Assistant Commissioner, Sitapur and therefore, the date of the application, namely, 7-12-1998 should be taken into consideration for the purpose of computing the period of limitation even if the period of limitation prescribed under 11B is applicable in this case. The ratio of the decision of this Tribunal in Poulose & Matthen v. Collector of Central Excise [1985 (6) TMI 159 - CEGAT, NEW DELHI] would support the appellant. The view taken by the Tribunal on the above issue was affirmed by the Supreme Court in Collector v. Poulose & Matthen [1997 (1) TMI 538 - SC ORDER]. Therefore, we hold that the application for refund made by the appellant cannot be rejected.
Urea fertilizers prices are controlled by the Ministry of Chemicals & Fertilizers. While fixing the price Ministry takes into account only the concessional rate of duty on the naphtha. Since the prices are fixed by the Government, the appellant can sell the fertilizer only at the prices fixed by the Government. Therefore, it is not possible for the appellant to pass on the higher duty burden on the naphtha to its customers.
This issue is covered by the ratio of the decision of the Supreme Court in State of Rajasthan v. Hindustan Copper Ltd. [1997 (11) TMI 516 - SUPREME COURT] In the above case Rectified Spirit was imported for use in the manufacture of copper. Price of copper is fixed by MMTC on the basis of the prevailing price fixed by the London Metal Exchange. Only such price could be charged from the consumers and no part of the excise duty paid on rectified spirit captively consumed in the manufacture of copper could be added to the price of copper which was fixed on the basis of LME prices. Supreme Court held that there is, therefore, no question of unjust unrichment.
Certificate issued by the Fertilizer Industry Co-ordination Committee would show that while fixing the price of fertilizer urea made from naphtha excise duty on naphtha is not taken into consideration. Under these circumstances, we hold that the appellant cannot be denied refund on the ground of unjust enrichment.
In the result, we set aside the order impugned and allow the appeal.
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2004 (5) TMI 163
Classification of DPC copper coils, demand of duty on transformers supplied to IGCAR - Manufacture -invocation of extended period of limitation - Dutiability - Transformers - imposition of penalties under Section 11AC and Rule 173Q - HELD THAT:- The Revenue has contended that the DPC copper coils are classifiable under sub-heading 8544.90 as insulated wires. But it has been held by this Tribunal in the case of CCE, Indore v. Gwalior Electrical Industries [2002 (4) TMI 983 - SC ORDER] that conversion of DPC wires into coils will not amount to 'manufacture' within the meaning of Section 2(f) of the Central Excise Act, 1944. In that case, M/s. Gwalior Electrical Industries were manufacturing power transformers and parts thereof and were also undertaking repairs of old transformers, for which they were using coils made from DPC wires. Following Punjab State Electricity Board [1996 (3) TMI 533 - SC ORDER] and East India Transformers & Switch Gears Pvt. Ltd. v. CCE [1989 (5) TMI 185 - CEGAT, NEW DELHI], the Tribunal held that neither the conversion of DPC wires into coils nor the repair of transformer amounted to 'manufacture'.
Demand of duty on transformers supplied to IGCAR during the material period is concerned, we have to examine the relevant Notification. Notification No. 10/97-C.E. ibid granted exemption to scientific equipments, instruments and apparatus used by research institutions working under the Atomic Energy Department, Government of India. The Revenue has no case that IGCAR is not a research institution under the AED or that the said institution did not use the transformers in question for research purposes. The transformers were actually cleared to IGCAR only on the basis of the requisite certificate issued by the Dy. Secretary to Government of India, AED, which certified that the transformers were to be used for research purposes by IGCAR, Kalpakkam. A transformer working on scientific, principles must squarely fall in the category of scientific equipments, apparatus, instruments, etc. The transformers in question, therefore, satisfied the conditions of the Notification. The benefit of exemption under the Notification was, therefore, clearly admissible to them.
We have found that both the demands of duly are unsustainable. No other issue survives. Therefore, we set aside the impugned order and allow this appeal.
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2004 (5) TMI 160
Issues:
- Exemption eligibility of defibrillators under specific notifications
- Interpretation of defibrillator classification for internal use
- Dispute on limitation issue
Exemption Eligibility of Defibrillators:
The case involved a dispute regarding whether defibrillators manufactured by the appellant were entitled to exemption under Notification No. 8/96-C.E. and Notification No. 4/97-C.E. The appellant produced defibrillators without Recorder and with Recorder, classified under sub-heading No. 9018.00. The Superintendent of Central Excise directed the appellant to revise their classification declaration, leading to a show cause notice proposing duty demand. The Tribunal remanded the matter to the Commissioner for fresh adjudication, resulting in the order under challenge in the present appeal.
Interpretation of Defibrillator Classification for Internal Use:
The contention revolved around the interpretation of the notifications granting exemption to defibrillators. The appellant argued that their product, when fitted with internal paddles, could be used as an internal defibrillator during heart surgery, thus meeting the criteria for exemption under Notification Nos. 8/96 and 4/97. However, the adjudicating authority opined that defibrillators for internal use, along with pacemakers, included implanted internal defibrillators, not external defibrillators with optional internal paddles. The Revenue's argument was supported by references to internal cardioverter defibrillators and expert opinions distinguishing implantable defibrillators from internal defibrillators used during surgery.
Dispute on Limitation Issue:
The appellant raised a limitation issue, contending that there was no wilful misstatement or suppression of facts to evade duty payment. While the Member (Judicial) acknowledged the merit of this argument, the issue of limitation was not explicitly addressed by the Member (Technical). As a result, the President of the Tribunal refrained from ruling on the limitation matter and directed the appeal to be placed before the Regular Bench for further consideration and appropriate orders.
In conclusion, the judgment delved into the intricate details of the classification of defibrillators for exemption eligibility under specific notifications, emphasizing the distinction between internal and external use and the significance of optional accessories like internal paddles. The interpretation of the notifications, expert opinions, and the limitation issue were thoroughly analyzed to arrive at a decision regarding the appellant's entitlement to exemption benefits.
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2004 (5) TMI 158
Extended period of limitation - demand duty u/s 11A(1) - short payment of duty - HELD THAT:- Once the facts are known to the Department or are within the knowledge of the Department, the extended period of limitation for demanding the duty cannot be invoked because the same can be invoked only if the duty has not been levied or short-levied on account of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of Central Excise Act or Central Excise Rules with intent to evade payment of duty. The Commissioner (Appeals) under the impugned order has rightly held that once it came to the notice of the Department that the products were not P or P medicine, show cause notice for the subsequent period should have been issued from time to time within the normal limitation period.
The reliance of the Department on the decision in the case of Nizam Sugar [1999 (10) TMI 123 - CEGAT, NEW DELHI] does not help the Revenue's case since what was held by the Larger Bench in Nizam Sugar case was that "any show cause notice issued beyond the period of six months from the date of acquiring knowledge will not be barred by limitation, if the duty has not been levied or not paid or short-paid or short-levied or erroneously paid by reason of fraud, collusion, or wilful misstatement or suppression of facts .... and the show cause notice has been issued within 5 years from the relevant date as defined under sub-section (3) of Section 11A of the Central Excise Act."
This does not mean that the extended period of limitation remains invocable even if the facts have come to the knowledge of the Department. This was the view expressed by the Tribunal in the case of Rubicon Steels [2002 (12) TMI 351 - CEGAT, NEW DELHI] which has been confirmed by the Supreme Court also. We, therefore, find no reason to interfere with the impugned order passed by the Commissioner (Appeals). Accordingly, we reject the Appeal filed by the Revenue.
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2004 (5) TMI 155
Issues:
1. Duty demand based on alleged clandestine removal of goods.
2. Penalty imposition by the adjudicating authority.
3. Contestation of duty demand on grounds of limitation.
4. Explanation provided by the appellants regarding stock discrepancies.
5. Verification of records and allegations of clandestine removal.
Analysis:
1. The case involved a duty demand against the appellants for alleged clandestine removal of goods from their factory. The demand was based on discrepancies found during stock verification, including empty tins stored in the Bonded Store Room (BSR) and shortages in stock. The Tribunal noted inconsistencies in the department's case, particularly regarding the logic of stock discrepancies and the absence of corroborative evidence for clandestine removal. The Tribunal held that the demand related to empty containers in the BSR lacked logic and could not be sustained without independent evidence of surreptitious removal.
2. The adjudicating authority had imposed a penalty along with the duty demand, which was challenged in the appeal. The Tribunal considered the grounds raised by the appellants, including claims of mistakes in record-keeping and labor unrest affecting production figures. While acknowledging the duty-paying obligations of the manufacturer, the Tribunal emphasized the need for corroborative evidence to support allegations of evasion. The Tribunal found the defense regarding record-keeping mistakes credible to some extent and emphasized the importance of a thorough review in cases where mistakes are alleged.
3. The appellants contested the duty demand on the grounds of limitation, as the show cause notice was issued beyond the prescribed period of 6 months. The Tribunal considered this argument but focused more on the substantive issues of clandestine removal and stock discrepancies. The Tribunal's decision to set aside the impugned order was primarily based on the lack of corroborative evidence for the allegations made by the department.
4. The appellants provided explanations for the stock discrepancies, attributing them to mistakes in record-keeping and labor unrest. The Tribunal acknowledged the possibility of errors in recording stock but stressed the need for independent corroboration to establish evasion conclusively. The Tribunal considered the credibility of the appellants' explanations in light of the overall circumstances and lack of concrete evidence supporting the allegations.
5. The Tribunal extensively analyzed the evidence and arguments presented by both sides regarding the alleged clandestine removal and stock shortages. Emphasizing the importance of corroborative evidence and the lack thereof in this case, the Tribunal concluded that the suspicions raised by the department were not sufficient to sustain the duty demand and penalty. The decision to set aside the impugned order and allow the appeal was based on the absence of concrete evidence supporting the allegations of evasion.
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2004 (5) TMI 153
Issues:
- Appeal against the grant of refund of customs duty
- Eligibility for refund after shortage of goods found post customs out-of-charge order
Analysis:
1. The appeal was filed by the department challenging the grant of a refund of customs duty to the respondents by the lower appellate authority. Despite notice, there was no representation from the respondents.
2. The case involved the import of cables in 1991 by the respondents, who later discovered a shortage of quantity compared to the declared quantity after the customs out-of-charge order was passed. Subsequently, they filed a claim for a refund of duty on the short-supplied goods, which was rejected by the original authority. However, the appeal filed by the respondents against the original authority's decision was allowed by the Collector (Appeals).
3. The Departmental Representative (DR) argued that based on previous Tribunal decisions, no refund of customs duty is admissible when a shortage of goods is discovered after the imported consignment has left customs charge. The DR cited the case of Uniferro International Ltd. v. Collector of Customs, Bombay, where a similar situation was addressed. Despite the foreign supplier providing free replenishment of the short-shipped goods, the Tribunal held that the importer was not eligible for a refund. The Tribunal in the current case found that the shortage was identified in the importer's premises after the consignment left customs charge, making it ineligible for a refund.
4. The Tribunal concluded that the refund claim of the respondents was rightly rejected by the original authority. The order of the Collector (Appeals) setting aside the original authority's decision was deemed unsustainable. Therefore, the appeal was allowed, and the impugned order was set aside.
This detailed analysis highlights the key legal arguments, precedents, and the ultimate decision of the Appellate Tribunal CESTAT, Chennai regarding the eligibility for a refund of customs duty in cases of shortages discovered post customs out-of-charge order.
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