TMI Blog1991 (5) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... ting under an L-4 licence issued to them by the Central Excise Department, and they also held a SSI registration certificate issued to them by the Directorate of Industries, Punjab. During the material period, under Notification No. 89/79-C.E., dated 1-3-1979 goods falling under Tariff Item 68 cleared for home consumption on or after 1st day of April in any financial year by or on behalf of a manufacturer from one or more factories were exempt from the payment of whole of the duty leviable thereon in the case of first clearance upto an aggregate value not exceeding Rs. 15 lakhs and clearances immediately following the first clearance of Rs. 15 lakhs were exempt from payment of duty in excess of 4% ad valorem. The exemption was subject to the condition that the sum total of the value of capital investment made from time to time on plant and machinery installed in the industrial unit was not more than Rs. 10 lakhs. Being under the impression that they were eligible, the appellants were availing the benefits in terms of Notification No. 89/79. On 31-10-1979 a team of Central Excise Officers visited the appellants factory and asked them to submit to the Assistant Collector a list of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-appeal No. 177B of 1982 set aside the same as being violative of the Principles of Natural Justice and remanded back the proceedings for de novo consideration. In the de novo proceedings the Collector after taking into account the written and oral submissions made by the appellants, passed an order dated 16-5-1984 in which he held that the value of plant and machinery installed in the appellants factory was Rs. 10,45,965.67 and confirmed the demand of duty amounting to Rs. 2,02,827.26. He also imposed a penalty of Rs. 1,00,000/. 5. The appellants filed an appeal against the order dated 16-5-84 to the Tribunal. The Tribunal remanded the case back to the Collector for re-adjudication in the light of the observations made in the order dated 19-12-87. In the de novo proceedings the appellants contested the valuation of the plant and machinery arrived at by the department and pleaded for re-appraisal of its face value on a rational basis. They contended that the value of 8 lathes, 2 drilling machines, one each of tapping and spot welding machines and 20 power presses as shown in enclosure to the show cause notice was inflated to the extent of Rs. 60,150/-. The appellants further ur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectronics and Wires Ltd. and Another v. Union of India reported in 1984 (16) E.L.T. 30, since in the appellants case the industrial unit and the factory were synonymous. He did not extend any benefit to the appellants on account of sale and segregation of machinery on the ground that these events were subsequent to the period to which the impugned demand related. 7. On behalf of the appellants we heard the learned Consultant Shri A.S. Sunder Rajan. He briefly traced the history of the case and the submissions made on each occasion by the appellants before the adjudicating authority. Referring to the impugned order of the Additional Collector he contended that the adjudicating authority had not kept in view the Tribunal s observations in the order dated 19-12-1987 remanding the case for de novo consideration. He stated that instead of attempting to determine the face value of the plant and machinery in accordance with the observations of the Tribunal the adjudicating authority had only reiterated the decisions arrived at by his predecessors in regard to the value of plant and machinery installed in the appellants factory on the basis of an arbitrary report of the departmental expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Rules, 1944 since the show cause notice was issued on 5-6-1981 in respect of clearances during the period 1-4-1979 to 28-4-1980. In this regard he also placed reliance on Madhya Pradesh High Court decision in the case of Ganga Steel RollingMills, Raipurand Others v. Union of India and Other reported in 1986 (23) E.L.T. 84. He argued that it was not permissible for the department to separately add Rs. 68,400/- on account of the prince of 130 electric motors for arriving at the aggregate value of the investment on plant and machinery since the value of dismantled machinery or parts of machinery could not be treated as part of the plant at the material time. In this regard he referred to the Tribunal s decision in the case of Vidharbha Ceramics Pvt. Ltd., Nagpur v. CCE, Nagpur [1985 (20) E.L.T. 326]. He also placed reliance on the Gujarat High Court decision in the case of Machine Products (T) Pvt. Ltd. v. Union of India and Another [1986 (23) E.L.T. 426] in which it was held that for working out whether the value of the installed plant and machinery, is more than Rs. 10 lakhs for the purpose of Notification No. 105/80 the value of the machinery not installed during any y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inspection of the plant and machinery installed in the factory. He stated that the appellants contention that the concerned officer was not made available for cross-examination at any stage was not correct since during the first adjudication proceedings the Collector had acceded to the appellant s request to make the concerned officer available for cross-examination. As regards the appellants claim that the demand was barred by limitation, Shri Arora argued that the Chartered Accountant s Certificate not having been found to be reliable, this was a case of wilful suppression and accordingly the extended period of 5 years was available to the department for recovery of short-levy. 9. Replying to the points made by the learned JDR, the learned Consultant Shri A.S. Sunder Rajan stated that none of the adjudicating authorities had doubted the veracity of the Chartered Accountant s Certificate. He reiterated his stand that the Trade Notice No. 152/77 issued by the Baroda Central Excise Collectorate requiring the acceptance of Chartered Accountant s Certificate as proof, of the face value of the plant and machinery installed in the factory was binding on the department. 10. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit, the appellants pointed out that their total investment on plant and machinery was Rs. 8,37,037.73 comprising of Rs. 3,78,136.70 invested on 1-6-1972 when the factory which had been in existence since 1949 was taken over and further investment of Rs. 4,58,901.03 made on plant and machinery acquired subsequently. The appellants claim that the investment on plant and machinery installed in their unit was less than Rs. 10 lakhs was supported by a Chartered Accountant s Certificate and also by the SSI registration certificate issued to them by the State Directorate of Industries. 12. The Department preferred to carry out an exercise to assess the investment on plant and machinery in the appellants factory. For this purpose physical verification of the items declared by the appellants was carried out by the Superintendent. Thereafter, the value of 78 machines for which purchase vouchers were available was worked out as Rs. 6,34,092.17. The value of the remaining items for which purchase vouchers were not available was estimated as Rs. 4,02,150/- either on the basis of the available purchase bills in respect of similar machines installed in the factory or their ascertained marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in this case a simple issue involving the determination of the investment on plant and machinery in the appellants factory has defied solution for over a decade. On each of the three occasions on which the case has been adjudicated, the concerned adjudicating authorities have upheld the assessment by the Suptd. of Central Excise of the value of a variety of old and used items of machinery for which the purchase invoices were not available with the appellants. The appellants claim that the values assessed in respect of these items which had been used extensively for a number of years were not realistic, was rejected on the grounds that in arriving at the value of each of the items in question on the basis of the ascertained market prices of similar goods, the departmental officers had made suitable allowances on account of factors such as condition of the equipment, its sophistication, and the period for which it had been in use. We are of the view that the valuation of old and used items of plant and machinery on the basis of the prevailing market price of similar goods was not relevant for the purpose of Notification No. 89/79, dated 1-3-1979. The proviso and the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old and had been in use even prior to the acquisition of the unit by the appellants in 1972. It has also been contended that the Collector while acting in quasi-judicial capacity was not bound by the trade notice. In this regard we are of the view that even though trade notices cannot be deemed as binding upon the departmental officers, in order to avoid discriminatory treatment in similar situations, they are expected to act according to such circulars, except in particular cases wherein there may be sufficiently strong reasons justifying a different view being taken. 14. Since the department has not led any evidence to suggest any manipulation of their records by the appellants and also in view of our finding that the value assessed by the department in respect of certain old and used items of machinery installed in the appellants factory was not relevant for the purpose of Notification No. 89/79, dated 1-3-1979, we hold that the declaration by the appellants in regard to the face value of the investment made on plant and machinery installed in their factory as confirmed by the Chartered Accountant s Certificate was acceptable for determining their eligibility to the benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, we hold that the extended period for issuing the demand was not available and the demand issued under Rule 10 on 5-6-1981 in respect of clearances effected during the period 1-4-1979 to 28-4-1980 was barred. 16. During his oral submissions Shri Sunder Rajan had also contended that 130 electric motors which were not installed and certain other items of machinery which were not usable in connection with the production of goods falling under Item 68 of the Central Excise Tariff ought to have been excluded. The appellants had also cited certain case law in support of their contention. In this regard it is seen that the adjudicating authority has held that in the appellants case the factory and the industrial unit have to be deemed as one and the same. He has also held that the appellants are engaged only in the manufacture of items falling under Item 68 of the Central Excise Tariff. He has, however, not given any finding in regard to 130 electric motors which according to the appellants were excludible while computing the investment on plant and machinery. Since the dispute in respect of these items persists, we would have been inclined in the normal course to remand t ..... 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