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M/s O.K. Play (India) Ltd. Versus CCE, Delhi

2017 (9) TMI 152 - CESTAT CHANDIGARH

Manufacture - conversion of granules into moulding powder - penalty - Held that: - the question of whether the powdering of Low Density Polyethylene (LDPE) and High Density Polyethylene (HDPE) granules into moulding powder would amount to manufacture went for determination right up to before the Hon’ble Supreme Court when it was determined by the Hon’ble Apex Court that as a consequence of new definition of manufacture in terms of Section 2(f), the activity which otherwise do not amount to manuf .....

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inst the impugned order. 2. The brief facts of the case are that the appellants are registered with the Central Excise Department for manufacture of plastic toys, storage tanks and other items for use by children. On 24.04.1997, their factory was visited by Central Excise Officers and it was noticed that they had installed injection, moulding, extruding and pulverizing machines operated with electric power to handle plastic inputs and produce moulded shapes for manufacturing toys, water storage .....

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constituted manufacture . The adjudicating authority confirmed the show cause notice under Rule 9 read with Section 11A of the Central Excise Act, 1944. By the aforesaid orders, the Commissioner upheld the invocation of extended period of limitation under show cause notice dt. 04.11.1997. The appellants went in appeal before CEGAT against the said order and the Hon ble Tribunal vide their Final order No. 322-323/2000/C DT. 18.07.2000 confirmed that the activity relating to conversion of granule .....

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Supreme Court ordered as follow:- For the aforesaid reasons, we hold that the process of pulverization under which granules are converted into moulding powder constitutes manufacture ; that the moulding powder produced by the aforestated process was marketable; that the show cause notice dt. 04.11.1997 was beyond limitation; that the Commissioner (Adjudication) will decide the question of valuation under rule 6(b)(ii) of the Central Excise (Valuation ) Rules, 1975, in the light of the Circulars .....

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gned order wherein he has confirmed the duty demand of ₹ 4,37,276/- and imposed a penalty of ₹ 4,37,276/- under Rule 173-Q of the Central Excise Rules, 1944. Aggrieved from the imposition of penalty, the appellants have filed this appeal. The appellants are not contesting the liability of the duty alongwith interest. Their only prayer is to set aside the penalty. 3. The Ld. Advocate for the appellants submits that the direction of Hon ble Supreme Court in its remand order was only to .....

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the show cause notice, which is based on the same set of facts and everything was in the knowledge of the Department. There was no intention to evade the duty. Ld. Advocate also submitted that moulding powder was not accounted for in RG-1 register as it was not required to because it is not a finished product. He also relied on the following case laws:- 1. O.K. Play (India) Ltd. Vs. CCE, Delhi-III, Gurgaon 2005 (180) ELT 300 (SC). 2. O.K. Play (India) Ltd. Vs. CCE, Delhi-III, Gurgaon 2004 (171) .....

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plicable and valuation of the moulding powder were remanded by the Hon ble Supreme Court to be examined by the adjudicating authority. The adjudicating authority has after examining both the issues has also imposed the penalty on the appellants. The appellants first argument is that the adjudicating authority has gone beyond the remand order of the Hon ble Supreme Court. In this regard, I find that if as a consequence of examining the issues remanded by the Hon ble Supreme Court, the question of .....

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authority is that the appellants have been purchasing moulding powder from outside and availing credit of duty paid on the same and were fully aware that this product was excisable and dutiable but did not take registration and did not file the classification list. In this regard, I find that the question of whether the powdering of Low Density Polyethylene (LDPE) and High Density Polyethylene (HDPE) granules into moulding powder would amount to manufacture went for determination right up to be .....

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