TMI Blog1999 (9) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... the slab to a breakage in the middle of the slab. Such broken slabs are not sold and are dumped in the factory premises itself, claim the appellants. For making tiles, irregular slabs are subjected to the process of cutting to the desired sizes and in the manufacture of tiles also wastages occur and these wastages are also dumped in the factory premises itself, according to the appellants. Officers of Central Excise visited the appellants factory premises on 6-10-1994 and conducted stock verification. The Officers verified the stock of irregular polished granite slabs, polished granite tiles and unpolished granite slabs. RG 1 Registers for the said products were also verified. As a result, the Officers found a shortage of 7917.1598 sq. mts. of irregular polished granite slabs. A panchanama was also prepared. Statement of Vice President of the appellant Company Shri R.S. Mangal, was taken on 7-10-1994 in which he stated that the appellants had not conducted periodical stock taking of the products and the shortage found may be for the reason of cumulative effect of measurement errors and that some of the goods produced may have been lost as breakages during handling, etc. On the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors had stated that the stocks of finished goods, stores and spare parts and raw material of the company had been physically verified by the Management during the year. He, therefore, concluded that the shortage of 7917.1598 sq. mts. of irregular polished granite slabs was clandestinely removed without payment of duty. As regards the contention of the appellants that cutting of slabs from blocks does not amount to manufacture and therefore, excise duty cannot be levied, Commissioner relied on the Supreme Court decision in Empire Industries Ltd. Others v. Union of India Others [1985 (20) E.L.T. 179 (S.C.)] holding that where there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, manufacturing takes place and duty liability would arise. The Commissioner observed that in the instant case granite block extracted from mines in the form of huge irregular lumps is subjected to the process of sawing and polishing into polished slabs and tiles. Since granite blocks are different from granite polished slabs and tiles and they were different in form, uses and price and are known in the market distinctl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of Rules 4 to 6 of the Valuation Rules was available, the value could be determined only with reference to Rule 8. He observed that during the period 6-3-1992 to 5-10-1994, appellants had charged an average export price of Rs. 2,590/- per sq. mt. for polished granite slabs of various varieties including the black variety. Further, during the years 1992-93 and 1993-94, black polished irregular slabs had been sold by the appellants at the export price of Rs. 2,898.30 per sq. mt. Besides black and galaxy varieties had been cleared in the Domestic Tariff Area (DTA) @ Rs. 1076/- per sq. mt. and Rs. 1721.60 per sq.mt. by another 100% EOU. Basing the said price as reasonable and correct price in terms of Rule 8 of the Customs (Valuation) Rules, Commissioner held Rs. 1721.60 per sq. mt. as the price of the goods manufactured by the appellants. Commissioner also dealt with the argument of the appellants that their case is not covered by the proviso to Section 3(1) of the Central Excise Act since they had not sought any permission from the Development Commissioner of the EOU for sale of their goods to DTA. Commissioner held that proviso to Section 3(1) was a charging Section for 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest as determined under Section 11AB would be recoverable. 5. Ld. Counsel for the appellants, Shri G. Shiv Das contended that the alleged shortage of 7917.1598 sq. mts. of irregular polished granite slabs was based on the premise that on verification of stock taken by the Officers on 6-10-1994, there was a difference between the stock of irregular polished granite slabs and the quantity shown in the RG 1 Register. They had not taken into account or shown in the Panchanama, the breakages and wastages which occur during the process of polishing the granite slabs. Such breakages/wastages were dumped in the factory premises itself but had not been taken note of by the Officers. He referred to the cross examination of the Officers who had conducted the stock verification. The Officers had accepted that they did not notice the RG 1 Register maintained by the appellants for wastage. The Officers had also accepted the fact that for purposes of comparing during the stock verification, only the finished goods lying in the place of production was taken into account and not the waste lying elsewhere in the factory. He submitted that the RG 1 Register maintained by the appellants at the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured by Coromandel Granites Ltd. were of a much superior quality of black and galaxy varieties than those manufactured by the appellants. Further, the quantum of black variety manufactured and sold by the appellants was less than 2%. The Commissioner had also failed to consider the invoice produced by the appellants indicating the local price of the product similar to the product manufactured by them. Further, the affidavits of dealers confirming that the products manufactured were comparable to their products had also been ignored. As regards valuation, ld. Counsel contended that the findings in the impugned order were not based on the correct value of products after taking into account the various varieties of the products. Reliance placed on the price of products of Coromandel Granites Ltd. was inapplicable since the variety and quality of the products manufactured by the appellants was different. The Department had not produced any evidence to show that the goods manufactured by another EOU was comparable with the goods manufactured by the appellants. The appellants also claimed the benefit of Notification No. 2/95 and submitted that no countervailing duty can be levied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considered view, since existence and accountal of such breakages/wastages are verifiable facts, especially when the appellants have repeatedly claimed that the quantity of wastage was still lying in the factory premises, we consider this as a fit case for remand so far as the alleged shortage of the quantity of 7917.1598 sq. mts. of slabs is concerned. The RG 1 Register meant for wastages, which the appellants claim had not been considered by the Commissioner can be taken as the basis for examining the quantity claimed by the appellants as breakages for the relevant period. 9. On the question of valuation, we find that the appellants have disputed the basis of arriving at the assessable value and have claimed that neither the type/quality of the goods taken by the Commissioner as identical or similar goods for purposes of the Valuation Rules nor their price were comparable to the goods manufactured by the appellants. They have also made a grievance of reliance being placed on the sale invoice of Coromandel Granites by the Commissioner without giving them an opportunity for verification. Since we are remanding the case to the jurisdictional Commissioner to examine the question o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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