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1985 (9) TMI 211
The Departmental Representative contended that the appeals do not involve any dispute related to duty rates or goods value for assessment. The Special Bench found that the orders did not determine duty rate or assessable value issues. The appeals were deemed outside the Special Bench's jurisdiction and referred to the President for directions.
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1985 (9) TMI 210
Issues:
Time-barred demand due to delay in issuing show cause notice, applicability of Notification No. 120/75 for invoice assessment, inclusion of free-supplied inserts in assessable value.
Analysis:
The appeal was filed against an order confirming a demand of Rs. 2,76,033.60 by the Assistant Collector of Central Excise. The appellants, manufacturers of monoblock prestressed concrete sleepers, opted for invoice assessment under Notification No. 120/75-CE. The demand was based on the value of four cost malleable cast iron inserts supplied free of cost by the Railway Authorities. The Superintendent issued a show cause notice beyond six months, alleging duty payment on the inserts fixed in sleepers cleared to the Railways. The appellants argued that the demand was time-barred, as no facts were suppressed, and the contracts were known to department officers. They contended that invoice price was the sole consideration for assessment under the notification.
The Collector found merit in the appellant's argument that the demand was time-barred, as the department failed to substantiate any suppression of facts. The lower authority did not establish any contravention of Notification No. 120/75. The appellants were entitled to avail themselves of assessment at the invoice price, as the contract was not influenced by any other relationship. Additionally, the free-supplied inserts could not be included in the assessable value. The Collector referenced judgments from the High Court of Andhra Pradesh and the Collector of Central Excise (Appeals), Calcutta, supporting the appellant's position.
Consequently, the appeal succeeded on both time-barred grounds and merits. The order of the Assistant Collector was set aside, and directions were given for granting consequential relief to the appellants.
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1985 (9) TMI 205
Issues:
1. Time limit for raising demand of duty - 5 years or 6 months
2. Classification of parts of cash registering machines under Tariff Item 68 or 33-D
3. Determination of duty under Rule 9A(5) or Rule 9A(1)(ii)
Analysis:
1. Time Limit for Raising Demand of Duty:
The main issue in this appeal was whether the time limit for raising the demand of duty should be extended to 5 years or remain at the shorter limit of 6 months. The Collector (Appeals) argued that the extended time limit of 5 years should apply due to the appellant's insistence that the goods fell under Tariff Item 33-D instead of Tariff Item 68. However, the Tribunal disagreed with this interpretation, stating that the appellant's claim did not constitute a mis-statement or willful mis-statement under Section 11A of the Act. The Tribunal held that the time limit applicable in such a situation would be the shorter time limit of 6 months.
2. Classification of Parts of Cash Registering Machines:
The dispute revolved around the classification of parts of cash registering machines under Tariff Item 68 or Tariff Item 33-D. The Department contended that the parts should be classified under Tariff Item 68, while the appellants argued for classification under Tariff Item 33-D. The Collector (Appeals) had invoked the extended time limit of 5 years based on the appellant's classification claim. However, the Tribunal found that the appellant's classification claim did not amount to a mis-statement, and the Department could have raised demands within the regular time limit. Therefore, the Tribunal held that the appellant cannot be held guilty of willful mis-statement and classified the parts under Tariff Item 33-D.
3. Determination of Duty under Rule 9A(5) or Rule 9A(1)(ii):
The final issue concerned the determination of duty under Rule 9A(5) or Rule 9A(1)(ii) of the Central Excise Rules, 1944. The appellants argued that duty should be determined under Rule 9A(1)(ii), which provides for the rate of duty and tariff valuation on the date of actual removal of goods from the factory. The Tribunal agreed with the appellants, stating that the facts of the case did not warrant the application of Rule 9A(5) and that Rule 9A(1)(ii) should be applied. Consequently, the demand of duty from the appellants was restricted to a period of six months, and the appeal was disposed of in favor of the appellants.
In conclusion, the Tribunal ruled in favor of the appellants on all three issues, determining the time limit for raising the demand of duty, classifying the parts of cash registering machines under Tariff Item 33-D, and applying Rule 9A(1)(ii) for the determination of duty.
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1985 (9) TMI 204
Issues:
1. Classification of imported goods under Customs Tariff Act, 1975.
2. Barred by time - Service of show cause notices.
Classification of imported goods under Customs Tariff Act, 1975:
The case involved two notices of short-levy demand issued to the appellants concerning two separate imports covered by Bills of Entry. The Department contended that the goods, initially declared as "Raw wool from other animal hair," were classifiable under a different heading of the Customs Tariff Act, making them ineligible for the exemption under Notification No. 154/79. The Assistant Collector and the Collector (Appeals) upheld this view, leading to an appeal before the Tribunal. The appellants argued that the goods, identified as "Kid Mohair Wool," should be classified differently. The Tribunal considered the nature of the imported goods and the term "wool" under the Customs Tariff Act, ultimately allowing the appeal based on the issue of the notices being barred by time.
Barred by time - Service of show cause notices:
The appellants raised an objection regarding the time limit for the issuance of the show cause notices, contending that the notices were served beyond the normal six-month period as allowed under Section 28 of the Customs Act, 1962. The Tribunal examined the timeline of the notices and the service of the same on the appellants. The respondent conceded that the second notice was clearly beyond the time limit, but argued that the first notice, issued within six months of the duty payment, was not barred by time. The appellants, however, maintained that the actual service of the notice occurred after the six-month period, rendering it time-barred. The Tribunal, after considering the provisions of Section 28(1) of the Act and the principles of the General Clauses Act, concluded that the notices were indeed served beyond the permissible time limit, leading to the allowance of the appeal solely on this ground.
In conclusion, the Tribunal allowed the appeal on the basis that both demands were liable to be struck down due to the show cause notices being issued beyond the permitted time limit. The detailed analysis of the classification of imported goods under the Customs Tariff Act, 1975, and the issue of the notices being barred by time formed the crux of the judgment, ultimately resulting in the appeal being allowed solely on the latter ground.
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1985 (9) TMI 203
Issues Involved:
1. Classification of the product 'Keora Golap Paner Dokta' under the Central Excise Tariff.
2. Effective date for the classification of the product.
3. Refund claim for the period from 26-12-1981 to 23-6-1983.
Detailed Analysis:
1. Classification of the Product 'Keora Golap Paner Dokta':
The central issue in both appeals is whether 'Keora Golap Paner Dokta' should be classified under item 4-II(5) 'Chewing Tobacco' or under residuary item 68 of the Central Excise Tariff. The product 'Dokta' was explicitly included in item 4-II(5) by the Finance Bill of 1984 effective from 1-3-1984, but the dispute pertains to the period before this date.
The appellants described the manufacturing process of 'Dokta' involving tobacco leaves, various spices, and oils, resulting in a product used with Pan (Betel leaves) as Paner Dokta or Pan Masala (mouth flavor). They argued that their product, with only 38.0% tobacco content, was a Paan Masala or Mouth Freshener, not chewing tobacco. They cited technical and judicial authorities distinguishing 'Dokta' from chewing tobacco, emphasizing that chewing tobacco must have tobacco as its principal ingredient.
The department's representative contested the methodology of the National Test House, Alipore, Calcutta, which determined the tobacco content. However, the department did not provide an alternative method or evidence to establish the classification under item 4-II(5).
The Tribunal concluded that 'Dokta' containing around 38% tobacco could not be considered chewing tobacco before 1-3-1984. The Board's own advices and judicial authorities consistently held that a product must have tobacco as its main ingredient to be classified as chewing tobacco. Thus, 'Dokta' should be assessed under residuary item 68 of the tariff for the period prior to 1-3-1984.
2. Effective Date for the Classification of the Product:
The appellants argued that the classification should be effective from 12-9-1975, the date of the first tariff advice, and not from 3-9-1981 as determined by the Assistant Collector. They contended that the appeal process should not worsen their position, and the remand order should not negate the benefit accrued from the Assistant Collector's first order.
However, the Tribunal noted that the precise period for which the refund should be granted could not be determined from the facts on record. The revised classification list and the protest letter mentioned by the appellants were not on record. Therefore, the Tribunal left the determination of the refund period to the Assistant Collector.
3. Refund Claim for the Period from 26-12-1981 to 23-6-1983:
The appellants filed a refund claim for Rs. 4,58,089.91 for the period 26-12-1981 to 23-6-1983, following the Assistant Collector's order. They accepted that any refund would be subject to the limitation contained in Section 11B of the Central Excises and Salt Act, 1944.
The Tribunal ordered the classification of 'Dokta' under item 68 for the period prior to 1-3-1984 and directed that the consequential refund, subject to the limitation of Section 11B, be granted to the appellants. The precise period for the refund was left to be determined by the Assistant Collector based on the available records.
Conclusion:
The Tribunal allowed the appeals, ordering the classification of 'Dokta' under item 68 for the period prior to 1-3-1984 and directed the consequential refund, subject to the limitation of Section 11B, to be granted to the appellants. The determination of the precise refund period was left to the Assistant Collector.
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1985 (9) TMI 202
Issues:
Interpretation of exemption notification for cess under Section 9 of Industries (Development and Regulation) Act, 1951 based on investment in fixed assets. Calculation of value of plant and machinery for determining eligibility for exemption. Application of guidelines for determining value of plant and machinery.
Analysis:
The Central Government imposed a cess on paper and paperboard under Section 9 of the Industries (Development and Regulation) Act, 1951, exempting industrial undertakings with investments not exceeding Rs. 20 lakhs through a retrospective notification issued on 3-2-1981. The dispute centered around whether the respondents qualified for this exemption.
The Assistant Collector calculated the value of plant and machinery in the respondent's factory to be Rs. 20.51 lakhs, exceeding the exemption limit. The Appellate Collector ruled in favor of the respondents, leading to the department's appeal. The department contended that all costs related to machinery installation should be included in the calculation, emphasizing the significance of the notification's wording and the industry-specific nature of the cess.
The respondents argued that guidelines from 1975 excluded certain costs like transport and erection charges from the value calculation, citing relevant orders from the Tribunal. They maintained that the value of accessories and certain materials should not be included in determining eligibility for exemption, focusing on the original value of machinery.
The Tribunal considered the historical context of small scale unit concessions and the uniformity of approach in value calculation norms set by the Central Government in 1975. The Tribunal noted that the State Government of Tamil Nadu followed these norms, registering the respondents as a small scale unit. By excluding specific elements from the value calculation, the original value fell below the exemption limit, entitling the respondents to the exemption.
In conclusion, the Tribunal rejected the department's appeal, upholding the Appellate Collector's decision in favor of the respondents. The Tribunal emphasized the adherence to established norms and the exclusion of certain costs in determining the eligibility for exemption, providing consequential relief to the respondents.
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1985 (9) TMI 201
Issues:
1. Importation of contraband goods in a brown suit case
2. Importation of gold jewellery without declaration
3. Opportunity for re-export of gold jewellery
4. Denial of baggage allowance and confiscation of goods
5. Validity of penalty imposed
Analysis:
Issue 1: Importation of contraband goods in a brown suit case
The judgment details a case where a passenger landed in India with undeclared goods in his possession. The passenger was found with gold jewellery and tape recorder heads concealed in his baggage. The Tribunal considered whether the passenger could be held liable for importing contraband goods in a brown suit case that was not in his name. The Tribunal examined the circumstances of the case, including the passenger's statement about carrying the goods for someone else. The Additional Collector had passed an order seizing the goods, which was upheld by the Tribunal in a previous appeal. The applicant raised the issue of whether he could be held responsible for the goods in the brown suit case.
Issue 2: Importation of gold jewellery without declaration
The Tribunal also addressed the issue of the passenger importing gold jewellery without declaring it. The passenger had not declared the gold jewellery weighing 385 gms, which was found in his possession during a baggage examination. The Tribunal considered whether the passenger had the opportunity to declare the goods before they were seized and whether the seizure was justified under the Customs law. The applicant questioned the validity of the seizure and the lack of declaration for the gold jewellery.
Issue 3: Opportunity for re-export of gold jewellery
Another issue raised was whether the passenger should have been given the opportunity to re-export the gold jewellery instead of facing confiscation. The Tribunal examined the circumstances of the case, including the passenger's statement about being approached to carry the goods for a reward. The applicant contended that he should have been allowed to re-export the goods, citing legal provisions under the Customs Act. The Tribunal considered the legal implications of re-export in such cases.
Issue 4: Denial of baggage allowance and confiscation of goods
The Tribunal reviewed the denial of baggage allowance to the passenger and the confiscation of goods valued at Rs. 4,417. The applicant challenged the denial of baggage allowance and the confiscation of goods, arguing that the actions were not justified. The Tribunal analyzed the facts and circumstances surrounding the seizure and confiscation of the goods to determine the legality and justification of the actions taken by the Customs authorities.
Issue 5: Validity of penalty imposed
Lastly, the Tribunal examined the validity of the penalty of Rs. 20,000 imposed on the applicant. The applicant questioned the legality and validity of the penalty, seeking clarification on the basis for such a significant penalty. The Tribunal considered whether the penalty was justified based on the findings and circumstances of the case. The Tribunal's decision on the penalty was a crucial aspect of the judgment, determining the financial liability of the applicant in addition to the confiscation of goods.
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1985 (9) TMI 200
Issues:
Appeal against rejection of refund claims for duty paid on Compreg, jurisdiction to grant refund under Rule 11, applicability of Limitation Act to quasi-judicial proceedings, interpretation of duty under Rule 2(v), time-bar under Rule 11 for refund claims.
Analysis:
The judgment involves the disposal of three Orders-in-Original by the Appellate Collector concerning refund claims for duty paid on Compreg. The appellants manufactured plywood and Compreg, with the department seeking to charge excise duty on Compreg under Item 16-B of the Central Excise Tariff. The appellants protested this classification, leading to a series of appeals and legal actions. The Central Government later clarified that Compreg was not excisable, prompting the appellants to seek refunds for duty paid from 1962 to December 1973. The Asstt. Collector rejected the refund claims, citing various grounds, including the non-applicability of the Limitation Act to quasi-judicial proceedings and the absence of provisions for refund of non-excisable items.
The appellate Collector upheld the rejection, emphasizing that the amendment removing Compreg from the concessional list was not retrospective. The appellants pursued additional legal remedies, including a writ petition in the Kerala High Court. During the proceedings, both parties agreed that Compreg was not excisable during the relevant period. The department's main objection was that amounts collected on Compreg could not be refunded as they did not constitute "duty" under Rule 11 or the Act. The department relied on a Mysore High Court judgment and Rule 2(v) to support its stance.
The Tribunal deliberated on the issue, considering the department's arguments and the appellants' contentions regarding the refund. The Tribunal noted that the department's collection of duty on Compreg was due to an erroneous interpretation, making it a case of error or misconstruction. The Tribunal differentiated the present case from the Mysore High Court judgment, emphasizing the unique circumstances. Additionally, the Tribunal addressed the time-bar under Rule 11, allowing refunds only from the date of the protest letter in 1963 onwards, deeming claims before that time as time-barred.
In the final decision, the Tribunal allowed the appeals, granting relief to the appellants from 8-7-1963 onwards. The judgment highlighted the jurisdiction and competence of the Asstt. Collector to grant refunds under Rule 11, considering the factual and legal complexities of the case.
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1985 (9) TMI 199
Issues Involved:
1. Classification of imported coconut oil as refined or unrefined.
2. Eligibility for duty exemption under Notification No. 33/63.
3. Validity of the Chemical Examiner's report.
4. Burden of proof for claiming exemption.
Issue-wise Detailed Analysis:
1. Classification of Imported Coconut Oil as Refined or Unrefined:
The appellants imported a consignment of coconut oil described as "white coconut oil, unrefined." The Assistant Collector of Customs, based on a chemical test, classified the oil as refined, thus liable for additional duty. The appellants contested this classification, presenting various documents, including the supplier's invoice, bill of lading, and certificates from the Port Health Officer and suppliers, all indicating the oil was unrefined. The department relied solely on the Chemical Examiner's report, which noted the acid value within the limit for refined oil but admitted the inability to determine bleaching through chemical tests. The Tribunal found the evidence from the appellants more credible, noting the Chemical Examiner's report was merely an opinion without a solid foundation.
2. Eligibility for Duty Exemption under Notification No. 33/63:
Notification No. 33/63 exempts all sorts of Vegetable Non-Essential Oils (V.N.E. oils) other than processed V.N.E. oils. The appellants argued that their imported oil did not qualify as "processed" under the notification. The Tribunal referred to previous cases, including the Godrej Soap case, where it was established that good quality raw coconut oil could be very low in fatty acid content and water-white without being processed. The Tribunal concluded that the imported oil was unprocessed and thus eligible for the duty exemption.
3. Validity of the Chemical Examiner's Report:
The Chemical Examiner's report indicated the oil could be considered processed based on the acid value but acknowledged the inability to detect bleaching. The Tribunal cited the Gujarat High Court decision in Steadfast Paper Mills, which held that the Chemical Examiner should only provide test results, not opinions on tariff classification. The Tribunal found the report insufficient to classify the oil as processed, especially in light of the comprehensive evidence provided by the appellants.
4. Burden of Proof for Claiming Exemption:
The Departmental Representative argued that the onus was on the importer to prove eligibility for the exemption. The Tribunal noted that the appellants had provided substantial evidence, including certificates and analysis reports, supporting their claim. The Tribunal emphasized that in the absence of contrary evidence from the department, the benefit of doubt should go to the appellants, as established in previous rulings and the Central Government's quasi-judicial order.
Conclusion:
The Tribunal held that the imported coconut oil was unprocessed and eligible for the duty exemption under Notification No. 33/63. The impugned order was set aside, and the appeal allowed, reaffirming the principle that quality control standards (like IS specifications) are not decisive for tariff classifications.
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1985 (9) TMI 198
Issues:
Classification of cotton tyre cord warp sheets as cotton fabrics under T.I. 19, CET; Demand for duty for the period from 1-4-1975 to 18-8-1975 and subsequent period; Bar on issuing show cause notice during pendency of writ petitions; Validity of demand raised after vacation of court injunction order; Applicability of Section 11A or Rule 10 of the Central Excise Rules.
Analysis:
The appeal concerned the classification of cotton tyre cord warp sheets as cotton fabrics under T.I. 19, CET. The appellants initially paid duty under T.I. 18A but were later directed by the Department to classify the sheets as fabrics under T.I. 19. The dispute arose when a show cause notice was issued demanding duty for the period from 1-4-1975 to 18-8-1975. The appellants challenged this notice in the High Court of Karnataka, obtaining stay orders against the demand. However, after the Supreme Court decision and subsequent High Court judgment, the demand was confirmed for the mentioned period and extended to cover clearances up to 23-2-1981.
During the appeal process, the Collector (Appeals), Madras, rejected the appeals and upheld the demand for the period from 1-4-1975 to 18-8-1975. The appellants then argued that the demand for the subsequent period was time-barred, as they had paid duty under protest until 19-6-1976 and stopped payment thereafter due to the High Court's interim order. They contended that the show cause notice issued on 20-5-1982 for the period from 20-6-1976 to 23-2-1981 was invalid due to being time-barred.
The Department argued that the demand for the subsequent period was not time-barred as it was raised before under an earlier notice. They maintained that the show cause notice issued post the High Court's vacation of the stay order was valid and not subject to the limitations under Section 11A or Rule 10 of the Central Excise Rules. The Department cited legal precedents to support their stance that the provisions of Section 11A or Rule 10 would not apply in cases of demands raised after the vacation of a court injunction order.
The Tribunal, after considering the arguments presented, affirmed the decision of the Collector (Appeals), Madras. They held that the demand raised for the period from 20-6-1976 to 23-2-1981 was not time-barred, as it was a continuation of an earlier notice and issued after the High Court's vacation of the stay order. The Tribunal concluded that the show cause notice dated 20-5-1982 was not subject to the limitations under Section 11A or Rule 10 of the Central Excise Rules, as the issue of classification had been conclusively determined by the High Court's judgment. Therefore, the Tribunal dismissed the appeal and upheld the findings of the Collector (Appeals), Madras.
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1985 (9) TMI 197
Issues Involved:
1. Classification of gas lighters under Central Excise Tariff Item 39.
2. Applicability of exemption from duty under Notification No. 176/77-C.E.
3. Compliance with procedural requirements for classification list submission.
4. Validity of the Assistant Collector's order and subsequent appeals.
Issue-wise Detailed Analysis:
1. Classification of Gas Lighters under Central Excise Tariff Item 39:
The primary issue in this appeal was whether the gas lighters manufactured by the appellants, which work on the Piezo-electric principle and are referred to as "Electronic Lighters," were classifiable under Item 39 of the Central Excise Tariff. The description of Item 39 at the relevant time was "Mechanical Lighters," which included any mechanical or chemical contrivance for causing ignition. The appellants argued that their lighters did not contain any mechanism such as stone, flint, file, or spring, nor did they use gas or petrol for ignition, thus not conforming to the description of mechanical lighters in T.I. 39. The Collector (Appeals) observed that the lighters used piezoelectric crystals to create an electrical charge, which ignited the gas. Despite this, the Collector (Appeals) concluded that the lighters were mechanical contrivances because the electrical charge was induced by mechanical action. The Tribunal found this reasoning fallacious, stating that the mechanical action only initiated an electrical phenomenon, and thus, the lighters could not be termed mechanical contrivances. The Tribunal concluded that the lighters were electronic and not mechanical, and thus, not classifiable under Item 39 as it stood at the relevant time. The Tribunal noted that the Central Board of Excise and Customs had also accepted this position in its Tariff Advice No. 71/81, and the amendment to Item 39 in 1982 to include electrical and electronic lighters further supported this view.
2. Applicability of Exemption from Duty under Notification No. 176/77-C.E.:
The appellants had argued that their capital investment on machinery and equipment was below Rs. 10 lakhs, and they had not cleared any excisable goods during the preceding year, making them eligible for exemption from duty under Notification No. 176/77-C.E. The Tribunal did not delve into this issue, stating that the appeal was solely concerned with the classification of the goods, and any relief regarding exemption from duty would have to be sought in separate proceedings.
3. Compliance with Procedural Requirements for Classification List Submission:
The appellants had initially filed a classification list under protest, declaring the goods under T.I. 39, to obtain clearance until the excisability question was determined. The Assistant Collector had directed the appellants to file a classification list for "electrical gas lighter," but no speaking and appealable order was passed. The appellants appealed to the Appellate Collector, who entertained the appeal and passed an order on it. The Tribunal noted that the appellants were entitled to appeal against the Assistant Collector's decision without filing a classification list again, and since the Appellate Collector had entertained the appeal, it was too late to argue that the appellants should not have appealed.
4. Validity of the Assistant Collector's Order and Subsequent Appeals:
The Assistant Collector had concluded that the product was a mechanical lighter falling under T.I. 39. The appellants requested a speaking order, which was not provided, leading them to appeal to the Appellate Collector. The Appellate Collector upheld the classification under T.I. 39, but the Tribunal found this reasoning erroneous. The Tribunal concluded that the lighters were classifiable under Item 68, not Item 39, and allowed the appeal accordingly.
Conclusion:
The Tribunal allowed the appeal, concluding that the gas lighters were classifiable under Item 68 of the Central Excise Tariff, not Item 39, as they were electronic and not mechanical contrivances. The Tribunal did not address the issue of exemption from duty under Notification No. 176/77-C.E., as it was beyond the scope of the current appeal.
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1985 (9) TMI 196
Issues: Classification under Central Excise Tariff - Manufacture or not; Eligibility for exemption under Notification No. 176/77-Central Excises, dated 18-6-1977
Classification under Central Excise Tariff - Manufacture or not:
The appeals involved a common dispute regarding the classification of products under Item 68 of the Central Excise Tariff. The respondents purchased raw bones, processed them into various products, and exported some while selling the rest in India. The Assistant Collector initially held the goods dutiable under Item 68, but the Appellate Collector ruled in favor of the respondents, stating that the processing did not amount to manufacture. The Central Government challenged this decision, leading to the matter being brought before the Tribunal. The respondents argued that their process did not constitute manufacture, citing examples from sales tax cases. However, the department contended that the processes transformed raw bones into distinct commercial products, relying on judgments emphasizing the end result's distinct name, character, and use. The Tribunal, following the Supreme Court's test, held that the processes amounted to manufacture, as the products had distinct commercial value and usage, different from raw bones.
Eligibility for exemption under Notification No. 176/77-Central Excises, dated 18-6-1977:
The respondents also claimed exemption under Notification No. 176/77-Central Excises, dated 18-6-1977. They argued that their total clearances and machinery values fell within the exemption limits. The department, however, contended that the notification did not differentiate between export and local clearances, making the respondents ineligible due to including export values. The Tribunal noted that the lower authorities had not fully examined the exemption conditions, as the Appellate Collector had ruled in favor of the respondents on the substantive issue. Therefore, the Tribunal directed the Assistant Collector to reassess the respondents' eligibility for exemption under the notification.
In conclusion, the Tribunal set aside the Appellate Collector's orders, restoring the Assistant Collector's decision on the classification issue. The Tribunal allowed the appeals, emphasizing that the respondents' processes constituted manufacture under the Central Excise Tariff. The matter of exemption under Notification No. 176/77-Central Excises, dated 18-6-1977 was remanded back to the lower authorities for a comprehensive evaluation.
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1985 (9) TMI 195
Issues Involved:
1. Jurisdiction of the Collector of Central Excise, Madras.
2. Reliability of statements with contradictions.
3. Reliability of evidence based on labels.
4. Anomalies in the orders regarding penalties.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Collector of Central Excise, Madras:
The primary issue was whether the Collector of Central Excise, Madras, had jurisdiction to adjudicate the case regarding the seizure of matchboxes in Yadameri Village, Chittoor District, which falls under the jurisdiction of the Collector of Central Excise, Hyderabad. The applicants argued that only the Collector of Central Excise, Hyderabad, had jurisdiction, referring to Section 33 of the Central Excises and Salt Act and Rule 2(ii)(A) of the Central Excise Rules. The Tribunal, however, found that the factories from which the matches were allegedly removed were within the jurisdiction of the Collector of Central Excise, Madras, and therefore, he had the jurisdiction to adjudicate the case. The Tribunal noted that the licensing, excise control, and submission of returns were all under the Madras Collectorate. The Tribunal also pointed out that there could be situations where more than one authority might have jurisdiction, drawing an analogy with Section 178 of the Criminal Procedure Code. The Tribunal concluded that there was no substance in the argument that the proceedings were vitiated by lack of jurisdiction.
2. Reliability of Statements with Contradictions:
Although the Tribunal did not find it necessary to delve into the arguments regarding the contradictions in the statements of the persons concerned, it was one of the points raised by the applicants. They contended that due to the contradictions between the initial and subsequent statements, none of these statements should have been relied upon.
3. Reliability of Evidence Based on Labels:
The applicants also argued that the evidence based on the labels of the appellants was unreliable and should not have been relied upon. However, the Tribunal did not address this point in detail in the present context.
4. Anomalies in the Orders Regarding Penalties:
The applicants pointed out anomalies in the orders passed by the Board on the question of penalties. The Tribunal, however, did not find it necessary to set out the arguments regarding the penalties in the present context.
Separate Judgments Delivered by Judges:
The Tribunal's order was delivered per S. Venkatesan, Senior Vice-President, and there were no separate judgments delivered by different judges.
Reference to High Court:
The Tribunal decided to refer the question of law regarding the jurisdiction to the High Court, reformulated as: "Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the proceedings before the Collector of Central Excise, Madras, leading to his order dated 29-3-1973, were not vitiated by lack of jurisdiction on the part of the adjudicating officer." Both parties agreed to this reformulation, and the reference was finalized and sent to the High Court for a decision.
This comprehensive summary covers all the relevant issues and maintains the legal terminology and significant phrases from the original judgment.
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1985 (9) TMI 194
Issues:
1. Seizure of art silk fabrics with incorrect composition.
2. Confiscation, duty difference, and penalty imposition.
3. Dispute over fabric composition and brand name.
4. Interpretation of "manufacture" under Central Excises and Salt Act, 1944.
5. Application of Section 5(3) of the Ordinance.
6. Violation of principles of natural justice in withholding evidence.
Analysis:
1. The case involved the seizure of art silk fabrics by the appellants, initially declared as viscose X viscose but later found to be nylon X viscose, leading to higher tariff values and central excise duty. The fabrics were seized at Surat and Ahmedabad, with irregularities noticed in the appellants' factory.
2. The Collector confiscated the fabrics, demanded differential duty, and imposed a penalty under Rule 173Q of the Central Excise Rules. The Central Board of Excise & Customs upheld the Collector's decision, citing mala fides on the appellants' part.
3. The appellants contested the fabric composition at Ahmedabad, arguing that the seized fabrics were viscose X viscose, not nylon X viscose. They claimed the department withheld crucial evidence, violating natural justice principles.
4. The appellants invoked a Gujarat High Court judgment regarding the definition of "manufacture," seeking the benefit of an Ordinance that exempted penalties for past processing duties. However, the Tribunal referred to a Supreme Court judgment, ruling that processing of fabrics constituted manufacture, justifying the penalty imposition based on violations.
5. The Tribunal found the penalty justified due to proven mis-declarations and violations, despite the appellants' arguments regarding the Ordinance's provisions on penalties for past processing duties.
6. Notably, the Tribunal highlighted the department's failure to disclose crucial test reports and traders' statements regarding the fabrics seized at Ahmedabad, deeming it a violation of natural justice. Consequently, the Tribunal set aside the confiscation and duty demand for the fabrics seized at Ahmedabad, emphasizing the importance of upholding principles of natural justice in legal proceedings.
In conclusion, the Tribunal confirmed the Collector's and Board's orders, except for the modifications regarding the fabrics seized at Ahmedabad, emphasizing the significance of transparency and adherence to natural justice principles in legal proceedings.
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1985 (9) TMI 193
Issues Involved:
1. Classification and excisability of coke oven gas.
2. Applicability of Notification No. 179/77 regarding exemption from excise duty.
3. Validity of the demand for excise duty and the period of limitation.
4. Imposition and quantum of penalty under Rule 173Q of the Central Excise Rules, 1944.
Detailed Analysis:
1. Classification and Excisability of Coke Oven Gas:
The appellant, M/s. Tata Iron & Steel Company Ltd., Jamshedpur, argued that coke oven gas was a by-product and not the result of a manufacturing activity. They contended that it was not known in the market as coke oven gas and was mostly used within their own factory. However, the Revenue authorities countered that the coke oven gas underwent various processes, including the use of electric power for purification and separation of other products, making it a manufactured product under Section 2(f) of the Central Excises and Salt Act, 1944. The Tribunal upheld the Revenue's view, stating that all processes from the coke oven stage till the gas is ready for delivery are incidental or ancillary to the manufacture of the final product, making the coke oven gas excisable under Tariff Item 68.
2. Applicability of Notification No. 179/77:
The appellant claimed exemption from excise duty under Notification No. 179/77, arguing that coke oven gas was manufactured without the aid of power. However, the Tribunal found that electricity was used at various stages of the manufacturing process, including primary coolers, deep coolers, and the refrigeration plant. Therefore, the appellant was not entitled to the benefit of the said notification.
3. Validity of the Demand for Excise Duty and the Period of Limitation:
The appellant argued that the demand was time-barred under Section 11A of the Central Excises and Salt Act, 1944, as it was raised after six months from the date of cause of action. The Tribunal observed that the show cause notice issued by the Revenue did not mention the demand for duty, which is a statutory requirement under Rule 10 of the Central Excise Rules, 1944. Consequently, the demand notices issued separately were invalid. The Tribunal also noted that the appellant had filed classification lists claiming exemption, which were initially accepted by the Revenue authorities, indicating no suppression of facts or clandestine removal. Thus, the six-month period of limitation was applicable, and the demand from 1-3-1975 to 19-3-1979 was quashed as time-barred.
4. Imposition and Quantum of Penalty:
The Tribunal found that the appellant should have paid the excise duty voluntarily after the Revenue authorities rejected their claim of exemption in subsequent classification lists. However, the penalty of Rs. 6 lakhs imposed by the Collector of Central Excise was deemed highly excessive. The Tribunal emphasized the principle that punishment must be proportionate to the offense and reduced the penalty to Rs. 50,000, considering the gravity of the offense and the absence of clandestine removal.
Conclusion:
The Tribunal held that coke oven gas is excisable under Tariff Item 68 and not eligible for exemption under Notification No. 179/77 due to the use of electric power in its manufacturing process. The demand for excise duty was quashed due to the absence of a proper show cause notice and the applicability of the six-month limitation period. The penalty was reduced from Rs. 6 lakhs to Rs. 50,000, making the appeal partly accepted.
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1985 (9) TMI 192
Issues:
1. Transfer of application to the Tribunal treated as an appeal.
2. Discrepancy in cause title jurisdiction.
3. Show cause notices issued for duty demand.
4. Appeal based on limitation of show cause notice.
5. Respondent's argument on the issuance of show cause notice.
6. Lack of reference to earlier demand notices in the show cause notice.
7. Interpretation of the show cause notice as a fresh starting point.
8. Decision based on limitation without delving into the merits of the case.
Analysis:
1. The original application transferred to the Tribunal is treated as an appeal against the order passed by the Appellate Collector of Central Excise, Madras. The matter involves the transfer of jurisdiction and cause title discrepancies, which were resolved by confirming no need for a change.
2. The case involves multiple show cause notices issued for duty demand for the years 1970 and 1971. The appellants contested the validity of a show cause notice dated 29-3-1978, claiming it as a fresh proceeding due to a lack of reference to earlier notices, arguing that the demand is time-barred.
3. The Department argued that the 1978 show cause notice was issued in pursuance of an Appellate Order from 1974 and referred to the same duty amount. The Department contended that the delay in issuing the notice was due to work pressure and asserted that the appellants had no merit in their case.
4. The Tribunal acknowledged that the 1978 show cause notice did not mention the earlier demand notices. It was established that treating the 1978 notice as the starting point for adjudication would render it time-barred under the Central Excises and Salt Act, 1944, and the Central Excises Rules, 1944.
5. Considering the lack of indication that the 1978 notice was issued in compliance with the 1974 Appellate Order, the Tribunal deemed it a fresh starting point for proceedings, concluding that the notice was time-barred. The appeal was allowed solely on the grounds of limitation without delving into the merits of the case.
6. The Tribunal's decision to allow the appeal based on limitation precluded a detailed examination of the case's merits. By focusing on the legal ground of limitation, the Tribunal resolved the issue without addressing the substantive aspects of the case.
This comprehensive analysis highlights the key legal issues, arguments presented by both parties, and the Tribunal's decision based on the limitation of the show cause notice, ultimately leading to the allowance of the appeal without delving into the case's merits.
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1985 (9) TMI 191
Issues:
1. Valuation of imported goods based on newspaper rates and deduced landed cost.
2. Applicability of Section 14(a) and 14(b) of the Customs Act, 1962.
3. Timeliness and verification of appeals filed.
4. Burden of proof regarding valuation and assessable value determination.
5. Legal nexus for determining value with reference to international trade.
Analysis:
Issue 1: Valuation of imported goods based on newspaper rates and deduced landed cost
The case involved importers of Apricot Dry/Pista Kernel/Figs Dry challenging the valuation of goods by the Assistant Collector based on wholesale market rates from newspapers. The Assistant Collector calculated deduced landed cost, leading to a significant difference between the assessed value and actual value paid by the importers. The Collector of Customs (Appeals) found no proof of manipulation in the invoices and questioned the comparability of goods priced in newspapers to those under assessment.
Issue 2: Applicability of Section 14(a) and 14(b) of the Customs Act, 1962
The appellant argued that if Section 14(a) was not applicable, Section 14(b) could be invoked, citing precedents where Custom House authorities used best judgment to fix values. The burden of proof and shifting onus in valuation disputes were discussed, emphasizing the need for specific findings before resorting to Section 14(b) for valuation.
Issue 3: Timeliness and verification of appeals filed
The respondents raised objections regarding the timeliness and verification of appeals, citing legal precedents. The Tribunal examined the verification process and relevant rules, ultimately ruling that the appeals were not liable to be rejected based on verification irregularities.
Issue 4: Burden of proof regarding valuation and assessable value determination
The main question revolved around the valuation of goods for customs duty purposes. The Tribunal emphasized the requirement for the sale to be in the course of international trade under Section 14(a) of the Customs Act. The concept of deduced landed cost was deemed irrelevant post-introduction of Section 14, with a focus on establishing the real value of imported goods through proper channels.
Issue 5: Legal nexus for determining value with reference to international trade
The Tribunal highlighted the necessity of proving the legal nexus for determining the value of imported goods with reference to international trade. It was noted that reliance solely on prices from financial journals without establishing comparability to international trade prices was insufficient. The Tribunal upheld the findings of the Collector of Customs (Appeals) regarding the valuation of goods and dismissed all appeals and cross-objections.
In conclusion, the Tribunal dismissed the appeals based on the valuation issues and legal considerations surrounding the determination of assessable value for imported goods, emphasizing the need for proper evidence and adherence to statutory provisions in customs valuation disputes.
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1985 (9) TMI 190
Issues:
1. Tariff classification and central excise duty rate for laminated jute bags.
2. Applicability of exemption notifications.
3. Limitation period for raising demand.
Issue 1: Tariff Classification and Central Excise Duty Rate
The dispute in this case revolves around the correct tariff classification and applicable central excise duty rate for laminated jute bags. The lower authorities classified the bags under the residuary item No. 68 of the Central Excise Tariff, while the appellants argued for classification under item 22A relating to jute manufactures. The appellants cited previous tribunal orders and challenged the reliance on Calcutta High Court judgments. However, the tribunal upheld the lower authorities' classification, stating that laminated jute bags correctly fell under item 68 for the relevant period.
Issue 2: Applicability of Exemption Notifications
The appellants also raised an alternative plea for exemption under notification No. 179/77-C.E., dated 18-6-1977, contending that no duty was payable due to the exemption since they did not use power in stitching the bags. The tribunal acknowledged this plea and directed the Assistant Collector to adjudicate on the exemption claim after a hearing. The tribunal emphasized the importance of verifying whether the bags were manufactured with manually operated machines to determine eligibility for the exemption.
Issue 3: Limitation Period for Raising Demand
Regarding the limitation period for raising the demand, the appellants argued that they were not guilty of suppression of information as their classification practice was known to the department. The tribunal agreed with the appellants, stating that they were entitled to the benefit of the six-month time limit under rule 10. The tribunal rejected the charge of suppression and directed a fresh adjudication considering the appellants' claim and the prevailing classification practice at the time.
In conclusion, the tribunal partially allowed the appeal by confirming the classification of laminated jute bags under item 68 for the relevant period, directing further examination of the exemption claim, and granting the benefit of the six-month time limit for any duty ultimately found payable after the fresh adjudication.
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1985 (9) TMI 189
Issues Involved:
1. Interpretation of the preferential rate of duty on cloves under Notification No. 431-Cus., dated 1-11-1976.
2. Validity of the Assistant Collector's order.
3. Consistency with the General Explanatory Note to the Customs Tariff Act.
4. Historical and economic basis for the preferential margin.
5. Potential anomalies in duty calculation.
Detailed Analysis:
1. Interpretation of the Preferential Rate of Duty on Cloves:
The core issue was whether the preferential rate of duty on cloves should be interpreted as "Rs. 20 per kg. less 7 1/2 % ad valorem" or "Rs. 20 per kg. less 7 1/2 % thereof." The respondents contended that it should be read as "Rs. 20 per kg. less 7 1/2 % ad valorem," while the Department argued for "Rs. 20 per kg. less 7 1/2 % thereof."
The Collector (Appeals) supported the respondents' interpretation, stating that the abbreviation "%" in the Customs Tariff Act refers to "ad valorem." The Collector (Appeals) reasoned that if the intention was to make the effective rate Rs. 18.50 per kg., it would have been directly indicated by the Government.
2. Validity of the Assistant Collector's Order:
The Assistant Collector's order was criticized for not being a "proper speaking order" and for lacking intelligibility. It did not clarify whether the 7% referred to the value or to Rs. 20/-. The Collector (Appeals) provided a detailed order, which was challenged by the Department but ultimately upheld by the Tribunal.
3. Consistency with the General Explanatory Note to the Customs Tariff Act:
The General Explanatory Note to the Customs Tariff Act clarified that the "%" sign indicates an ad valorem percentage. The Collector (Appeals) and the Tribunal emphasized that this interpretation should be consistently applied to the notification in question. The Tribunal also referred to the General Clauses Act, which supports the consistent use of expressions in subordinate legislation.
4. Historical and Economic Basis for the Preferential Margin:
The preferential margin of 7 1/2 % originated from the Imperial Preferences scheme and was retained in the Customs Tariff Act. The Tribunal noted that interpreting "7 1/2 %" as ad valorem aligns with the historical and economic context under the Customs Tariff Act and the Indian Tariff Act.
5. Potential Anomalies in Duty Calculation:
The Department argued that interpreting "7 1/2 %" as ad valorem could lead to a negative duty if the value of cloves exceeded Rs. 267 per kg. The Tribunal dismissed this concern, noting that the value of cloves at the relevant time was about Rs. 120 per kg., making such a situation unlikely. The Tribunal also pointed out that exemption notifications cannot result in a negative duty and that any drastic changes in trading conditions could be addressed through re-negotiations under the Bangkok Agreement.
Conclusion:
The Tribunal upheld the Collector (Appeals)'s interpretation that the preferential rate of duty on cloves under Notification No. 431-Cus., dated 1-11-1976, should be "Rs. 20 per kg. less 7 1/2 % ad valorem." The order of the Collector (Appeals) was confirmed, and the appeal of the Collector of Customs, Madras, was rejected.
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1985 (9) TMI 188
Issues Involved:
1. Whether printing on duty-paid aluminium foils done by the appellants on job work basis attracts levy of Central Excise duty.
2. If not, whether the appellant is the manufacturer in respect of such printed foils.
3. Whether the appellant is eligible for concession of proforma credit procedure u/r 56A without following the prescribed procedure.
4. Eligibility for benefit of exemption under Notification No. 71/72-C.E., dated 17-3-1972.
5. Eligibility for benefit of exemption under Notification No. 155/72 dated 15-6-1972, with duty being collectable only on quantity in excess of 5 MT.
6. Whether the special excise duty should have been calculated at the rate of 5% and not at the rate of 10%.
7. Legality and justification of imposition of penalty and redemption fine in respect of confiscated goods and confiscation of land, building, plant, machinery, and materials.
Summary:
1. Levy of Central Excise Duty on Printed Aluminium Foils:
The Tribunal held that printing on duty-paid aluminium foils does not constitute manufacture or a process of manufacture within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944. The Tribunal emphasized that duty cannot be levied again on aluminium foils that have already discharged duty liability at the initial stage. The Tribunal relied on the Supreme Court decision in Collector of Customs and Central Excise & Another v. Oriental Timber Industries [1985 (20) E.L.T. 202 SC], which stated that duty is leviable only once on the product.
2. Manufacturer Status of Appellant:
The Tribunal did not find it necessary to determine whether the appellant is the manufacturer since it was concluded that duty is not leviable again on printed aluminium foils.
3. Concession of Proforma Credit Procedure u/r 56A:
The Tribunal did not address this issue in detail as the primary contention regarding the non-levy of duty on printed foils was upheld.
4. Exemption under Notification No. 71/72-C.E.:
The Tribunal did not find it necessary to decide on the eligibility for exemption under Notification No. 71/72-C.E. as the primary issue of non-levy of duty was upheld.
5. Exemption under Notification No. 155/72:
Similar to the above, the Tribunal did not find it necessary to address the eligibility for exemption under Notification No. 155/72 due to the primary ruling on non-levy of duty.
6. Calculation of Special Excise Duty:
The Tribunal noted that the special excise duty should have been calculated at the rate of 5% and not at the rate of 10%, as stated by the respondent's representative.
7. Imposition of Penalty and Redemption Fine:
The Tribunal set aside the demand of duty, penalty, and redemption fine, holding that the appellants could not be called upon to pay duty on the job work of printing on duty-paid aluminium foils. Consequently, the imposition of penalty, confiscation, and redemption fine were also set aside.
Separate Judgment by H.R. Syiem, Member (T):
H.R. Syiem, Member (T), concurred with the decision, emphasizing that once duty has been recovered on an article, it cannot be recovered again. He reiterated that the aluminium foil, having paid duty once, cannot be subjected to the same duty a second time, even if it undergoes changes such as printing.
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