TMI Blog2005 (12) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... e. No error in the concurrent findings recorded by the Commissioner and by the Tribunal. In the present case, a penalty of ₹ 10 lacs was imposed by the Commissioner. On appeal, it has been reduced to ₹ 7.5 lacs. No reasons have been given for imposing the penalty. The matter has arisen at the stage of assessment. The appellant has succeeded in showing that the cost of rubber rings (p.p. rings) was not includible in the assessable value of the m.s. galvanized pipes. The matter was, therefore, arguable. Hence, we set aside the penalty of ₹ 7.5 lakhs. Assessee's appeal partly allowed. - 4247-4248 of 2000 - - - Dated:- 16-12-2005 - Ashok Bhan and S.H. Kapadia, JJ. [Judgment per : S.H. Kapadia, J.]. - The sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to the appellant, the process of galvanization took place after completion of the manufacture of the m.s. pipes, which were cleared on payment of duty and since the process of galvanization took place after completion of m.s. pipes and since galvanization did not amount to manufacture, the department was not entitled to load the cost of galvanization on the normal price of m.s. pipes. 4.Shri Joseph Vellapally, learned Senior Counsel appearing on behalf of the assessee submitted that the process of galvanization did not amount to manufacture, both on general principles as well as under Section 2(f) of the said Act. He submitted that in the matter of levy of excise duty, the taxable event takes place at the point were the goods are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different shed. According to the assessee, in the galvanizing section, the fully finished m.s. pipes were galvanized. They were washed in running water and dipped in molten zinc. According to the assessee, galvanization of pipes and tubes was done in order to protect the pipes from rusting. Apart from this, the assessee also purchased from the market fully finished black pipes, which were also subjected to process of galvanization in the galvanizing section and thereafter sold as m.s. galvanized pipes. Learned Counsel urged that galvanization did not amount to manufacture and since 70% of the assessee's production of black pipes was transferred to the galvanizing section and since it was not disputed that black pipes were in fully fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m.s. galvanized pipes has got to be taken into account. Learned Counsel submitted that per se the process of galvanization may not amount to manufacture. However, if such a process was incidental or ancillary to the manufacture of m.s. galvanized pipes then the cost of galvanization has got to be included in its assessable value. In this connection, learned Counsel relied upon the judgment of this Court in the case of Sidhartha Tubes Ltd. v. Collector of Central Excise reported in 2000 (115) E.L.T. 32; and the decision in the case of Procter Gamble Hygiene Health Care Ltd. v. Commissioner of Central Excise, Bhopal reported in 2005 (9) Scale 559. 6.In the present case, the Commissioner on facts found that the assessee was clearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts incurred by the assessee for galvanization had to be loaded on to the sale price of the pipes. Therefore, the cost had to be included in the assessable value of m.s. galvanized pipes. We do not find any error in the reasoning of the adjudicating authority. 8.In the case of Union of India Others v. Bombay Tyre International Ltd. reported in AIR 1984 SC 420, this Court observed as follows : ...... the price of an article is related to its value, and into that value one has to pour several components, including those which enrich the value of the product and which give to an article its marketability in the trade. Therefore, the expenses incurred on account of the several factors, which have contributed to the value of the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article and which give to the article its marketability in the trade. Therefore, the expenses incurred on such factors inter alia have to be included in the assessable value of the article up to the date of the sale, which was the date of delivery. In the case of Sidhartha Tubes Ltd. v. Collector of Central Excise reported in 2000 (115) E.L.T. 32, this court held that the process of galvanization, though did not amount to manufacture , resulted in value addition and, therefore, the galvanization charges were includible in the assessable value of the M.S. black pipe. The concepts of manufacture and valuation are two different and distinct concepts. In the present case, we are concerned with valuation. Value is the function of pric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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