TMI Blog1991 (1) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... central excise licence for manufacture of the goods as they were under the impression that it was not an excisable commodity. Due to labour problems, they discontinued the manufacture of the goods and sold the factory to M/s. Sri Ram Chemical Complex (the appellants) who carried on manufacture without licence and without payment of duty. On the basis of a letter dated 27-7-81 from the appellants in which they stated that the cost paid by them for plant and machinery was Rs. 9 lakhs, the Department made enquiries and arrived at the conclusion that the value of plant and machinery in respect of factory exceeded Rs. 10 lakhs and accordingly, the appellants are not entitled to exemption from duty in terms of Notification No. 176/77 dated 18-6-77 under which exemption is available only if the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the goods under clearance are manufactured is below Rs. 10 lakhs. A show cause notice was issued on 27-1-82 and an adjudication order was passed on 8-1-82 demanding duty of Rs. 7.95 lakhs for the period from 15-7-79 (the date on which the appellants purchased the industrial unit) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is not the correct value as it does not represent the investment made on plant and machinery by the appellant herein. According to the appellant, the value is below Rs. 10 lakhs even if the cost of generating transformer is added, but excluding repair and replacement charges which according to him, should be excluded. 5. In reply, the learned DR submits that the extended period of limitation applies to this case - the letter of 27-7-81 is not relevant for attributing knowledge to the Department in respect of a prior period i.e. 15th July, 1977 to 30th April, 1981 for which period, the duty has been demanded. He submits that Rule 9(2) applies to this case as otherwise the appellants can never be made liable to duty because Section 11A will not apply except in cases of assessment (it will not apply to non-licensees such as the appellants). Regarding the merits, he emphasises that the notification distinguishes between the factory and the manufacturer and makes it clear that the value of the capital investment made from time to time on plant and machinery in the industrial unit (emphasis supplied) will be the relevant criterion. He also submits that the Department was correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer i.e. it is not the value of a particular owner s investment that should be applied for computing the value of the capital investment made from time to lime on the plant and machinery installed in the industrial unit in which the goods are manufactured. Therefore, the question of considering purchase value of the appellants herein does not arise. The Collector has taken the value of plant and machinery as Rs. 8,66,162.06 as on 18-6-77 (the date on which Notification 176/77 came into force) and we see no infirmity in adopting such value. However, the cost of generating transformers i.e. Rs. 1,95,988.35 has been added, taking the value of plant and machinery beyond Rs. 10 lakhs which is beyond the maximum prescribed in Notification 176/77. In view of the decision reported in the case of Collector of Central Excise v. General Cement Private Limited [1989 (39) E.L.T. 76], we are of the view that the value of generating sets is to be excluded from the value of plant and machinery for the purpose of determining eligibility to exemption under Notn. 176/77. Our views also supported by the clarification issued on 19-5-75 by the Department of Industrial Development, Ministry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) M.S. Plates (b) M.S. Sheets (c) B.P. Sheets (iv) Parts of machinery (a) Pumpset parts (b) Drill stand parts (v) Bolts and Nuts and Screws and Bearings (vi) Other items (a) Cement sheets, Rigid sheets, Graphic sheets (b) Cable and Electrical goods (c) Spares etc. After the study of the process of manufacture of animal glue and the plant and machinery installed in the factory, the following observations are made. (1) The Galvanised Iron Pipes (G.I. Pipes) are used for carrying water from the overhead tank to the air washing vats. The cleaning and washing of the animal skins is an important process to be carried out in the manufacture of Animal Glue. The G.I. Pipes are mainly used for such purposes and hence it is felt that they are to be treated as part of cleaning and washing unit. (2) The steel pipes are used for carrying the steam from the boiler to the boiling tanks and evaporators and hence it is felt that the steel pipes used for such purpose should be treated as part of Boiler and Steam plant unit. (3) The copper pipes are mainly used in the Evaporators and hence it is felt that the copper pipes are to be treated as part of Evaporator unit. (4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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