9911796707
TMI Blog2004 (4) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... eady paid by M/s. CDC Carboline (I) (P) Limited, in the duty confirmed above]. The balance shall be paid forthwith. (b) I also demand interest on the duty confirmed as above under Section 11AB of the Central Excise Act, 1944. (c) I impose on M/s. CDC Carboline (I) (P) Limited a Penalty of Rs. 7,35,384 (Rupees seven lakhs thirty-five thousand three hundred and eighty-four only) under Section 11AC of Central Excise Act, 1944. (d) I also impose a penalty on M/s. CDC Carboline (I) (P) Limited of Rs. 10,00,000 (Rupees ten lakhs only) under Rule 173Q(1) of the Central Excise Rules, 1944. (e) I impose a penalty of Rs. 5,00,000 (Rupees five lakhs only) on Shri Daniel Chittayagam, MD, M/s. CDC Carboline (I) (P) Limited under Rule 209A of the Central Excise Rules, 1944. (f) I order expungement of Modvat credit of Rs. 1,29,917/- (Rupees one lakh twenty-nine thousand nine hundred and seventeen only) wrongly availed on packing material used in the manufacture of und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from M/s. Crystal Chemicals, Mumbai in plastic drums of 200 litres capacity without any label which was being diverted to M/s. CDC. In his further statement dated 25-9-97 Shri Hariprasad referred to an agreement with M/s. CDC for supply of thinner from April, 1996 to 1997. He has also stated that documents were only issued on the direction of Shri Daniel Chittayagam, MD of M/s. CDC and that the transaction was only for mutual benefit. Since the agreement was only to issue documents without supply of materials for a commission of 2% of the sale of thinners, he used to return money to Daniel Chittayagam on encashment of the cheque after deducting the commission. Enquiry made by the Mumbai Central Excise vide their letter No. V/P1/12/13 Gr-C/97/201, dated 9-10-1997 reported that there was no company by name M/s. Crystal Chemicals at 203/B Prakash Nagar, Off Mougal Lane, Mahim Mumbai-16 and that the premises were the residential premises of one Ms. Deepak Govankar, a Senior Clerk in Bank of Baroda for the past 20 years. Statement was also recorded from Daniel Chittayagam on 1-10-97 in which he admitted manufacture of thinner was not made in the declaration made to the Department. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Counsel. Further, all the removals were covered by Gate Passes and RT 12 returns have been periodically filed. Thus longer period of limitation, therefore, cannot be invoked. In support of his plea he has pressed into service the order of the Tribunal in the case of SD Kemex Industries v. CCE, Calcutta reported in 1995 (75) E.L.T. 377. It was argued that activity of re-packing the thinner was not an activity of manufacture till 1-3-97 i.e. the date on which Chapter Note 5 to Chapter 38 was inserted vide Finance Act, 1997. Therefore, the question of invoking the longer period up to 31-3-97 does not arise and thus the order is not sustainable. 4.1 So far as the period from 1-4-97 is concerned, the learned Counsel submitted that even though the activity was shifted outside the factory, there was no suppression inasmuch as they were under the bona fide belief that they were not liable to pay duty. The demand for the said period works out to Rs. 3,47,875/- and the appellants have already paid the same which fact is not in dispute. It was further submitted that the show cause notice is for the period 1993-97 and the demand was based on the statement of the one Hariprasad of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked prior to its introduction. 7. Shri C. Mani, appearing on behalf of the Revenue referred to the grounds wherein it is inter alia stated as under : (a) Even though the Commissioner has found that the assessees were clearing thinner without declaring the same to the department and hence longer period of limitation is invocable for demand of duty and that confiscation of plant and machinery was also warranted, yet the Commissioner while confirming the duty demand has arrived at the assessable value considering the invoice price as cum- duty price. Acceptance of the assessees' prayer for taking the value of clearances as cum-duty price is not correct. The Commissioner should not have allowed abatement of excise duty from the total aggregate value of clearances for each year from 1993-94 to 1997-98. (b) In terms of Section 4(4)(d)(ii), value does not include the amount of duty of excise, sales tax and other taxes, if any, payable on the goods. Therefore, such taxes claimed as abatements are indeed payable and abatements will not apply to goods cleared without payment of any taxes. Further, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thinners and were clearing the same from their factory. The dispute in the present appeals relates to the item "thinner". The allegation of the department is that the appellants have clandestinely manufactured and cleared thinner and held back information in this regard from the department and hence longer period of limitation is invocable for demand of duty. They were showing clearance of thinners in their Central Excise records, GP1, invoice and RT 12 returns. The contention of the appellants was that re-packing and re-labelling thinners for the period from 1-3-94 to 31-3-96 did not amount to manufacture as for the said period as the matter is covered by the judgment of the Tribunal in the case of Hindustan Petroleum Corporation v. CE reported in 1985 (19) E.L.T. 425, wherein it was held that re-packing of duty paid goods does not amount to manufacture. We observe that the tariff entry was amended in 2/97 under Chapter 38, the effect of which is that the process of re-packing and re-labelling of thinner amounted to manufacture. For the period from 1-4-97, the contention of the appellants was that their activity was shifted outside their premises there was no suppression involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustan Petroleum Ltd. v. CCE reported in 1985 (19) E.L.T. 425 has held that re-packing of duty paid goods does not amount to manufacture. Similar view has been taken in the case of Indrol Lubricants & Specialities Ltd. v. CCE reported in 1999 (111) E.L.T. 544, Aero Pack Products v. CCE reported in 2002 (142) E.L.T. 577. As for the period from 1-3-1997 is concerned, the appellants have shifted the activity of re-packing out side their factory premises and this claim is not disputed by the Revenue. The basis of the allegation of the department is that one Shri Hariprasad of M/s. Y. Chem Agencies has stated in his statement dated 25-9-97 that he never supplied thinners but had only raised Modvatable invoices in the name of appellants for a commission. The appellants have produced purchase orders, invoice and delivery challans of the said M/s. Y. Chem Agencies apart from payment of bill to the said supplier for the supply effected. The point is, in the face of this material evidence like, purchase orders, payment of bill by means of Cheque, can the statement of the proprietor of M/s. Crystal Chemicals be taken to be true. As noted above, the allegation of the department is based on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation in terms of proviso to Section 11A(1) cannot be invoked in this case as the Revenue has failed to bring home the charge of suppression of fact against the appellants. Therefore, mandatory penalty of Rs. 7,35,384/- imposed on the appellants under Section 11AC is not sustainable and is set aside. Even otherwise the provision for mandatory penalty came into force with effect from 28-9-96. It is well settled by the ruling of the Hon'ble Apex Court that this provision cannot be applied retrospectively. Demand of interest under Section 11AB is also thus not sustainable and is set aside. (e) Penalty under Rule 173Q. We find force in the submission of the learned Counsel for the appellants that there was no proposal in the show cause notice for imposition of penalty under Rule 173Q. Therefore, penalty imposed under Rule 173Q is set aside. (f) Penalty under Rule 209A on Managing Director. We have held above that the Department has fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1AC. As regards the first ground, we find that this issue is no longer res integra as the issue as has already been decided in favour of the assessee by the Hon'ble Apex Court in the case of CCE, Delhi v. Maruti Udyog Ltd. reported in 2002 (141) E.L.T. 3 (S.C.) wherein it was held that cum-duty price when charged, then in arriving at the excisable value of the goods the element of duty which is payable has to be excluded. It was also held therein that wholesale price which is charged is deemed to be the value for the purpose of levy of excise duty under Section 4 of the Act, but the element of excise duty, sales tax or other taxes which is included in the wholesale price is to be excluded in arriving at the assessable value. It was also held by the Apex Court that sale price realised by the assessee is to be regarded as the entire price inclusive of duty when he has by necessary implication, taken on the liability to pay all taxes on the goods sold and has not sought to realise any sum in addition to the price obtained by it from the purchaser and that purchaser is under no obligation to pay any amount in excess of what had already been paid as the price of the goods. As regards th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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