TMI Blog1993 (4) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... otice dated 5-5-1989, the appellants were asked to explain as to why Central Excise duty of Rs. 1,432.11 on 7 reams and 265 sheets of carbonless paper valued at Rs. 3,409.89 should not be recovered under Rule 9(2) read with Section 11A of the Act and why the seized 1236 rolls of carbonless paper valued at Rs. 25,89,894.00 should not be confiscated under Rule 173Q and why a sum of Rs. 1,99,151.61 should not be recovered under Rule 9(2) as excise duty on printing charges incurred on paper printed on behalf of customers after clearance from the factory. The appellants were also asked to show cause as to why penalty should not be imposed on the Directors and Administrative Officer under Rule 9(2) read with Rule 173Q of the Central Excise Rules. The appellants in reply to the show cause notice and also during the personal hearing denied the allegation in the show cause notice. However, by the impugned order the Collector rejected the contentions of the appellants and confirmed the demand. He also ordered the confiscation of the detained goods valued at Rs. 25,89,894.00 and in lieu of confiscation imposed a fine of Rs. 6,47,473.50. He also imposed a penalty of Rs. 1 lakh each on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting charges paid to independent printers to whom self-copying paper was sent for printing according to the requirements of particular customers was erroneous and not sustainable. He stated that printing of paper under Chapter 49 of the Tariff was exempt but whenever self-copying paper was sent for printing under Rule 57F(2) and the goods were finally cleared from the factory in printed form, the appellants were paying duty on the value of goods inclusive of printing charges. He contended that printing of papers by an independent printer after clearance of self-copying paper on payment of duty from the appellants factory could not affect the assessable value of the appellants products and even if it is assumed that printing of paper amounts to manufacture under Section 2(f) of the Act, no duty liability could be fastened to the appellants since it is well settled that the person who undertakes job-work to carry out any process has to pay duty. He argued that in any case the demand was time-barred since the appellants as well as the departmental officers had entertained the bona fide belief that printing charges which were reimbursed by the customer after the clearance of the sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were cleared by them on 24-11-1988 on payment of duty, is not backed by any documentary evidence, such as extracts from the records relating to the stocks in the bonded store room. We hold that the appellants having failed to satisfactorily account for the goods in question were liable to pay the duty leviable thereon. 6. The appellants have further contended that the Collector s order confiscating 1236 rolls of self-copying paper weighing 47,668 kgs. valued at Rs. 25,89,894.00 and imposing penalties on the company, its Director and the Administrative Officer on the ground that the goods had not been entered in the RG-1 is erroneous and not sustainable. In this regard they have submitted that self-copying paper which at all times is required to be protected from light, humidity and outside temperature can be considered as fully manufactured only when on receipt of a firm order, it is put in deliverable state by placement of rolls in special corrugated boxes after wrapping in three layers of bituminised kraft paper and providing plugs on either side of the rolls to avoid collapsing. They have contended that the goods in question, even though covered by single ply kraft paper to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are completely manufactured to buyers specification and stage of accountal can only be decided when facts of manufacture are verified. In this case the commodity involved is self copy paper and if stage of accountal is allowed as per buyers specification then there will be numerous sections in the RG-1 and there cannot be any co-relation between the raw material consumed and finished goods manufactured. The accountal stage in RG-1 will differ commodity to commodity. I also find from the records of the case that the party has filed classification list showing unit qty rolls, sheets, and reams; there is also evidence that the party had cleared similar type of non-printed paper on payment of Central Excise duty and in this case considering the classification of description, the nature of goods and the fact of marketability as such, it is clear that the goods were in fully manufactured stage and ready for despatch, but unaccounted for, and the party s plea is nothing but to escape the liability and consequences of unaccounting. Therefore, I hold that the party failed to account for 1236 rolls of self-copy paper weighing 47,668 kgs. valued at Rs. 25,89,894.00 and thereby contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the removal of the goods in question in contravention of the provisions of the Rules, Rule 173Q(a) was not attracted. Under these circumstances, the judgment of the Andhra Pradesh High Court cited by the appellants is not relevant. We find that in the case of Collector of Central Excise, Madras v. Ultra Marine and Pigments Ltd. reported in 1985 (22) E.L.T. 413, the Tribunal held that non-conformity with Rules 53 and 173G(4) would attract the provisions of Rule 173Q(b) and mens rea is not necessary ingredient for an offence under Rule 173Q(b). Under these circumstances, we do not find any force in the appellants contention that non-accountal of the seized goods in RG-1 was a mere technical breach. We, therefore, hold that there was no infirmity in the Collector s order holding 1236 rolls of self-copying paper which was not accounted for in the RG-1 register as liable to confiscation and imposing penalty on the appellants. However, having regard to the fact, that there is no allegation of clandestine removal, we are of the view that on this count, the appellants deserved some leniency. 8. The next point to be considered is whether duty was recoverable on the printing charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore orders to supply printed self-copy paper and in fact they have supplied printed stationery and also recovered printing charges from the customers to the extent of Rs. 4,74,170.51. The party was bound to include the printing charges in the assessable value of self-copy paper sold after printing whether under Rule 57F(2) or through outside party even after payment of duty on imprinted paper. This was necessary because the printing is done on manufacturers instance and not by the Customers after receipt of the self-copy paper cleared from the factory. I therefore hold that the party is liable to pay Central Excise duty on the printing charges so recovered during the period 15-7-1987 to 24-11-1988. From the Collector s findings in the impugned order in regard to 1236 rolls of self-copying paper which was seized on account of not having been accounted for in the RG-1 register, we find that imprinted self-copying paper in the form of rolls having outer covering of kraft paper bearing the manufacturers monogram, and other details such as weight, width, etc. was being treated as fully manufactured and was being cleared on payment of duty in terms of the approved classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no liability can be fastened on him unless the department is able to show as to how and to what extent a particular Director is liable . Since there is no finding in the impugned order that the Directors and the Administrative Officer on whom penalties have been imposed were knowingly concerned with any evasion of duty by reason of fraud, collusion or wilful mis-statement or suppression of facts or contravention of the provisions of the Act and the Rules made thereunder, we hold that the penalties imposed on three Directors and the Administrative Officer of the company are not legally sustainable. 12. In view of the foregoing, we see no reason to interfere with the Collector s order confirming the demand of duty on 7.265 reams of self-copying paper valued at Rs. 3,409.80 found short in the Bonded Store Room and also the order holding the unaccounted 1236 rolls of self-copying paper valued at Rs. 25,89,894.00 as liable to confiscation under Rule 173Q. The order confirming the demand of duty of Rs. 1,99,151.00 on printing charges incurred on duty-paid self-copying paper during the period 15-7-1987 to 24-11-1988 is, however, set aside. We also set aside the penalty of Rs. 1 lakh ea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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