TMI Blog2005 (2) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... jee Wadia and Sons Limited were two of them. It is not necessary that in God s scheme of things only the poor should suffer His wrath all the time. The two said companies and M/s. Asmita Enterprises their job workers are the appellants. 2.M/s. Bombay Dyeing Mfg. Company Limited and M/s. Nowrosjee export textile made ups. In that effort they clear base fabrics, required in the manufacture of made-ups, to their job workers, M/s. Asmita Enterprises under Rule 13(1)(b) of the Central Excise Rules read with Notification No. 47/94-C.E. (N.T.), dated 22-9-94, without payment of duty. The latter convert the fabrics so brought into made-ups. Such made-ups are exported by M/s. Bombay Dyeing and Mfg. Co. Ltd. It takes considerable effort to make goods for export in India and on top of it these rains! 3.A little explanation is called for to elucidate the procedure involved. The fabrics on which no duty is paid has to move under bond from M/s. Bombay Dyeing Mfg. Company Limited to M/s. Asmita. Once they are safely ensconced in the latter's premises, the bond under which the goods have moved is either cancelled or credited depending on whether M/s. Bombay Dyeing Mfg. Company Limited executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p over for export goods. But none asked such a question we may let it go. 7.Rain waters have tendency to enter low lying areas, then seep into the bales/packages in which made-up or for that matter any goods are improperly packed and seriously damage them. That is what they did to the appellants' goods. Keeping export goods for so long in a low lying godown in packages, which are not waterproof, is asking for trouble. 8.M/s. Bombay Dyeing Mfg. Co. Ltd. and M/s. Nowrosejee Wadia and Sons Ltd. (another merchant manufacturer) shot off letters dated 13-7-2000 (the very next day) to the Assistant Commissioner, Powai Division narrating their woes. They specifically mentioned that it would take some time to assess the damage and in the meanwhile a competent Officer may be deputed immediately for verification of damaged goods. Such an Officer in the form of Range Superintendent visited the scene of occurrence and directed M/s. Bombay Dyeing and Mfg. Co. Ltd. to produce a detailed list/inventory of damaged goods. This was on 14-7-2000. On 29-8-2000, M/s. Bombay Dyeing and Mfg. Co. Limited gave details of damaged goods and intimated to the Deputy Commissioner their desire to dispose off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e avowed purpose of making made ups for export which never got exported). He also demanded another Rs. 12,80,453/- from M/s. Bombay Dyeing and Mfg. Co. Ltd. being the duty on the made-ups, which were not exported minus the duty paid on the damaged goods (The appellants paid duty on the damaged goods while disposing them off. For good measure he imposed a penalty of Rs. 2.00 lakhs each on M/s. Bombay Dyeing and Mfg. Co. Ltd., M/s. Asmita Enterprises and M/s. Nowrosejee Wadia Sons Ltd. (The last named is also a merchant manufacturer who failed to export the made-ups). 12.The Commissioner's order is like rubbing a lot of salt on the wounds inflicted by rains, according to the appellants. 13.The ld. Advocate Shri M.H. Patil's arguments are on familiar grounds. Duty on base fabrics cannot be demanded from M/s. Bombay Dyeing and Mfg. Co. Ltd. as such fabrics were sent to M/s. Asmita Enterprises following Chapter X procedure. Once the goods are duly warehoused at the other end, if any demand is to be made, it should be made on M/s. Asmita Enterprises under Rule 196 of Central Excise Rules. In regard to demand on the made-up, he argued that appropriate duty leviable under Section 3 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.The issue involved is two fold the Commissioner says (1) Non-payment of duty on the inputs i.e. base fabrics received under bond under Rule 13(1)(b) for further manufacture and export but not exported. Duty involved on the base fabrics is Rs. 1,29,59,531/- (ii) Non-payment of duty on the finished made-ups which were originally cleared for export under bond under Rule 13(1)(b) but diverted for local clearance without following the procedure and condition laid down. Duty involved on the made-up is Rs. 12,80,453/-. 18.The show cause notice says that the M/s. Asmita Enterprises are the assessees who were permitted under F.NOV 13(1)(b) 18-106197, dated 22-8-97 by the Commissioner, to obtain base fabrics under Chapter X procedure for the manufacture of made-ups for export. It follows that duty on such fabrics should be paid by them in the event of non-fulfilment of the condition under which duty free receipts of fabrics is permitted. The Commissioner however demands duty from M/s. Bombay Dyeing and Mfg. Co. Ltd. on the plea that they have jointly executed a bond with M/s. Asmita Enterprises (B8). One look at Rule 196 (Chapter X) would indicate that duty on such fabrics has to be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under B1 bond executed by a manufacturer but in that case the goods for export should be cleared under AR4 filed by the manufacturer. In this case the AR4 is filed by the Merchant exporter. 23.The Commissioner agrees that as per instructions contained in the above cited circular, value of diverted goods has to be determined under Section 4. This is the view held in Rajasthan Spinning Weaving Mills [2000 (121) E.L.T. 790]. But he does not follow the ratio because he says that in the case before the Tribunal permission to divert the goods into local market was obtained whereas in the present case no such permission was obtained. We have already mentioned that the appellants (M/s. Bombay Dyeing and Mfg. Co. Ltd.) have informed their intention to dispose off the goods (damaged/salvaged) locally on as is where is basis to the Jurisdictional Officer. They have even requested the Deputy Commissioner, Central Excise for remission of duty if any on the value difference i.e. value declared in AR4 and the value at which damaged goods are to be sold (letter dated 29-8-2000). The Department was aware that the appellants intended to divert and were seeking their approval. The record does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w is in confirmity with the Tribunal's decision in Rajasthan Spinning Mills. We observe that Rajasthan Spinning Mills decision does not say that the price to be adopted is the ex-factory price at the time of removal. It only says that value has to be determined in terms of Section 4 of Central Excise Act. The export goods were removed during 1998-99 under AR4s of the merchant exporter. In J.K. Papers Ltd. the Tribunal was dealing with a manufacturer exporter. The date of determination of duty and tariff valuation under Rule 9A(3) which was in vogue when the goods were removed for export but which were subsequently diverted for home consumption is the rate and valuation in force on the date on which duty is paid. The appellants paid the duty on the diverted goods at the rate prevailing on the date of payment. So, there is no quarrel on the rate of duty. 26.The next question pertains to valuation. In Rajasthan Spinning Mills cited supra the Tribunal remanded the matter directing the lower authority to determine the value of diverted goods in accordance with the Provisions of Section 4. In the appeal before the Tribunal in that case, the lower authorities adopted AR4 value as the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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