TMI Blog1985 (4) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... are the manufacturers of corrugated boxes falling under Item No. 68 of the Central Excise Tariff. For the manufacture of corrugated boxes, the appellants used to supply kraft paper to M/s. Bliss Enterprises, Bombay and got corrugated sheets manufactured from them. M/s. Bliss Pack, the appellants, as well as M/s. Bliss Enterprises are situated in the adjacent premises and are partnership concerns. the partners in both the concerns are related. Shri Harish Keshavlal Shah who is an active partner is common in both the concerns. 3. M/s. Bliss Pack, the appellants, have obtained Central Excise Licence L-4 for the manufacture of corrugated boxes and were clearing such corrugated boxes without payment of Central Excise duty by claiming exemption under Notification No. 89/79, dated 1-3-1979. 4. On verification of the records of both the concerns, it was found that the value of the corrugated boxes manufactured and cleared in the name of M/s. Bliss Pack and M/s. Bliss Enterprises together exceeded ₹ 30 lakhs on 22-1-1979. It was also found that M/s. Bliss Pack, the appellants had installed the machinery only for the manufacture of corrugated boxes and M/s. Bliss Enterprises had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise, Bombay-1, on the basis of evidence available on record decided that the appellants had exceeded the total clearances of corrugated boxes of ₹ 30 lakhs on 22-1-1979 and they should have discharged duty liability on corrugated boxes manufactured and cleared from 22-1-1979 to 3-6-1979. The Collector did not accept the plea of the appellants that the appellants had manufactured corrugated boxes on behalf of M/s. Bliss Enterprises on job work basis and that they were eligible for exemption under Notification No. 89/79 as corrugated boxes manufactured on behalf of M/s. Bliss Enterprises may not be computed for total clearance of the appellants. 8. Being aggrieved with the said order passed by the Collector of Central Excise, Bombay, M/s. Bliss Pack the appellants filed this appeal before this Tribunal alleging therein, inter alia, that the Collector has erred in holding that the appellants had exceeded a total clearance of ₹ 30 lakhs value during the year 1978-79 and ought not to have clubbed the clearances of job work done on behalf of M/s. Bliss Enterprises. M/s. Bliss Pack, the appellants and M/s. Bliss Enterprises are two distinct legal entities and the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case even if the value of clearances of both the units is taken then it falls within the exempted limit. He cited a decision of Calcutta High Court in the case of Associated Pigments v. Collector of Central Excises, Calcutta (1983 E.L.T. 876) in support of his contention that vide Notification No. 119/75, dated 30-4-1975, excise duty should be charged only for the job work done and not on the total value of the articles when it leaves the factory of the job workers. He also cited a decision of the Bombay High Court in Narendra Engineering Works v. Union of India and others (1981 E.L.T. 859) in support of his contention that while computing the value of clearances of a job worker, it is only the cost which is incurred by him in relation to the manufacture of excisable goods can be taken into account and therefore, the value of raw material supplied by the customers to the job workers would not be taken into account while computing the real value of the goods manufactured on the job work basis. 12. Shri Kelawala, the learned Counsel further argued that the duty amounting to ₹ 1,17,285 demanded from the appellants is with respect to the clearances of the goods effective from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in both the units was recorded on 29-5-1979. In the said statement, he inter alia stated that the raw material for the manufacture of corrugated sheets such as Kraft paper are purchased by M/s. Bliss Pack, Bombay, the appellants and got converted into corrugated sheets from M/s. Bliss Enterprises on job work basis. Thereafter, M/s. Bliss Pack manufactured corrugated boxed from such corrugated sheets received from M/s. Bliss Enterprises and supplied such corrugated boxes to various customers as per their orders. During the period from November, 1978 to March, 1979, M/s. Bliss Enterprises themselves purchased kraft paper, manufactured corrugated sheets therefrom and got the corrugated boxes manufactured from M/s. Bliss Pack and supplied such corrugated boxes to \ the same customers to whom the corrugated boxes were supplied by M/s. Bliss Pack. According to Shri Verma, it is pertinent to note that Shri Harish Keshavlal Shah when called upon to explain was not able to give any explanation as to why M/s. Bliss Enterprises chose to get the corrugated boxes manufactured on their behalf from M/s. Bliss Pack during the aforesaid 5 months and again stopped such arrangement from April 1979 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrugated sheets from M/s. Bliss Enterprises on job work basis. Thereafter, M/s. Bliss . Pack, the appellants, manufactured corrugated boxes from such corrugated sheets received from M/s. Bliss Enterprises and supplied such corrugated boxes to various customers as per their orders. During the period from November, 1978 to March, 1979 the earlier procedure was discarded and as per the case of the appellants M/s. Bliss Enterprises themselves purchased kraft paper, manufactured corrugated sheets therefrom and got the corrugated boxes manufactured from Bliss Pack, the appellants and supplied such corrugated boxes to the customers to whom corrugated boxes were used to be supplied by M/s. Bliss Pack. No explanation of any kind was given by the appellants as to why the earlier procedure was discarded for this particular period because after March, 1979 the parties again reverted to the earlier procedure. This fact is sufficient to show that actually the appellants were the manufacturers of the corrugated boxes and not Bliss Enterprises as claimed by the appellants. Even otherwise if we accept the contention of the appellants that the raw material for the manufacture of the corrugated boxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... job worker to the supplier after the article has undergone the intended manufacturing process. This is not the case here. The appellants actually manufactured the corrugated boxes out of the corrugated sheets alleged to have been supplied by M/s. Bliss Enterprises. New articles have emerged after manufacturing process and these are entirely different from the corrugated sheets alleged to have been supplied by M/s. Bliss Enterprises. The appellants cannot be termed as job workers in this case. We find support in our findings from a decision of C Bench of this Tribunal in the case of Securipax India Private Limited v. Collector of Central Excise [Order No. 276/85-C, dated 29-3-85 in Appeal No. ED(SB) 22/81-C]. 20. The case law cited by the learned Counsel of the appellants relating to the Calcutta High Court judgment in M/s. Associated Pigments Limited v. Collector of Central Excise (1983 E.L.T. 876) and Bombay High Court judgment in Narindera Engineering Works v. Union of India (1981 E.L.T. 859) itself proves that the appellants M/s. Bliss Pack are not entitled to the benefit of Notification No. 119/75. Had the appellants been job workers, payment of excise duty would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri Keshavlal Shah, the Partner of the appellant firm, also proves the same that the appellants adopted a dubious method of organising the manufacturing activity of the corrugated boxes for a particular period from November, 1978 to March, 1979. They cleared the goods without payment of duty and, therefore, the Collector of Central Excise has correctly found the appellants guilty and liable to payment of duty under Rule 173Q read with Rule 9(2) of the Central Excise Rules. The method adopted by the appellants clearly manifests the malafide intention on the part of the appellants. Keeping in view the amount of duty evaded, we do not feel that the penalty to the extent of ₹ 25,000/- is disproportionate or excessive. 24. We confirm the order of the authority below on this point also. 25. Regarding the confiscation of the plant and machinery installed in the factory of the appellants, provisions of Rule 173Q(2)(a) are aptly applicable in the present case. As held above, the appellants adopted a dubious method of organising the manufacturing activity of the corrugated boxes for a particular period from November, 1978 to March, 1979 and they cleared the goods w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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