TMI Blog1989 (7) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... cast iron inserts which were supplied, free of cost by the Railways for fixing as integral part of the sleepers manufactured by the respondents. Show cause notice was issued to the respondents. The learned Assistant Collector had confirmed the demands of Rs. 4,44,428.80 and Rs. 1,95,480.00 totalling Rs. 6,40,108.80. The respondents had taken the plea that the value of the malleable cast iron inserts which were supplied free of cost for fixing as integral part of the sleepers manufactured by them was not includible in the assessable value and that they did not have the correct information regarding the actual price paid by the Railways for each insert to the inserts manufacturers. The respondents had relied on the decision of the Andhra Pradesh High Court in the case of Messrs Mysore Structurals Ltd. v. Assistant Collector of Central Excise, Hyderabad reported in 1985 ECR 216 = 1985 (19) E.L.T. 60 decided on 26th October, 1984. The respondents have also disputed the value adopted by the Superintendent at Rs. 18.00. The value of the goods supplied as per the instructions of the Railways was Rs.11.50 + 4% and the demands were worked out on the excess value. The learned Assistant Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Ltd. reported in 1983 (14) E.L.T. 1896 (SC) and has argued that intrinsic value has to be taken for assessable purposes and the value has to be taken under Section 4 of the Central Excises and Salt Act, 1944. He has referred to the judgment of the Hon'ble Supreme Court in the case of Empire Industries Ltd. v. Union of India and others reported in 1985 (20) E.L.T. 179 (SC) where the Hon'ble Supreme Court had held that: "Value of the entire end-product to be taken into account and not only the difference in value resulting because of process and the value of processed fabrics would include value of 'grey fabrics' supplied to the independent processors for processing and the hardship is irrelevant in taxing statutes and the courts cannot grant concessions or benefits in the case of taxation" Shri Doiphode, the learned SDR has pleaded that the value has to be taken under Section 4 of the Central Excises Salt Act, 1944. He has pleaded that the cost of the inserts should be added. In support of his argument, he has referred to the following judgments: 1985 (22) E.L.T. 159 Collector of Central Excise, Chandigarh v. M/s. Oswal Agro Mill Ltd., Ludhiana, where the Tribunal had held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while determining the valuation of monoblock sleeper for charging the duty the excise authorities were quite justified in adding the cost of inserts and fasteners Under Section 4 of the Central Excises and Salt Act, 1944. Shri Doiphode, the learned SDR has stated that the judgment of the Allahabad High Court is correct and the Andhra Pradesh High Court Judgment was discussed by the Hon'ble Allahabad High Court in the case of Jay Prestressed Products Ltd. v. Union of India and Others reported in 1986 (26) E.L.T. 913. 6. On the time bar, Shri Doiphode has aruged that there was suppression of facts on the part of the respondents and extended period of limitation was applicable and the respondents had not brought the contract to the knowledge of the Department. He has pleaded for the acceptance of the appeal of the Department. 7. In reply Shri Dave, the learned Advocate who has appeared on behalf of the respondents has referred to Notification No. 120/75-C.E. and has aruged that the Notification is independent to the provisions of Section 4 and the exemption notification was issued under Rule 8 of the Central Excise Rules, 1944 and duty is to be charged on the invoice price. Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the railways had supplied materials free of cost to the manufacturer and in the invoice price there was reference of contracts". The Tribunal had held that the value of the materials supplied by the Railways could not be included in the assessable value. He has pleaded for the dismissal of the appeal. Alternatively, he has pleaded that in case the Revenue's plea is accepted, then the matter may be remanded to the lower authorities and in the case of Empire Industries Ltd. v. Union of India and Others reported in 1985 (20) E.L.T. 179 (S.C.) review petition is pending before the Supreme Court. 8. In reply Shri V.M. Doiphode, the learned SDR has argued that the judgment of the Andhra Pradesh High Court gets over-ruled by the Supreme Court judgment in the case of Empire Industries Ltd. v. Union of India reported in 1985 (20) E.L.T. 179 (S.C.). Shri Doiphode has pleaded for the acceptance of the appeal. 9. We have heard both the sides and have gone through the facts and circumstances of the case. The value of the goods has to be taken for the purpose of assessment in terms of provisions of Section 4(4)(d) of the Central Excises and Salt Act, 1944, the same is reproduced below :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give full and complete effect to such exemption. The respondents have claimed the benefit of Notification No. 120/75-C.E., dated 30th April, 1975. For the proper appreciation of the terms of the notification, the notification is reproduced below :- "120/75-C.E., dated 30-4-1975 For goods falling under this item, assessable value would be their invoice price. In exercise of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944, the Central Government, hereby exempts goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), cleared from the factory of manufacture, on sale, from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the invoice price (excluding duty and local taxes, if any, included in such price) charged by the manufacturer from the sale of such goods : Provided that the aforesaid exemption shall be admissible only if :- (i) the manufacturer files with the Superintendent of Central Excise having jurisdiction a written declaration to the effect that he opts to avail of the said exemption; (ii) the manufacturer avail of the said exemption uniform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yderabad and another reported in 1987(27) E.L.T. 273 (A.P.) had held that "Exemption notification - Interpretation of - Not to be construed liberally but to be construed to effectuate object of notification". Relevant extract from para No. 15 from the said judgment is reproduced below:- ; "...While we agree that an exemption notification should be so construed as to effectuate its object and underlying intent, we are unable to agree with the learned counsel for the petitioner that the exemption notification should be construed liberally. These notifications should not be so construed as to travel beyond their confines and as covering items which were never intended to be covered by the authority issuing the notification. In this behalf, the scheme of the Act, the tariff entry and the language of the notification have all to be taken into consideration." In the matter before us, before the benefit of Notification No. 120/75-C.E., dated 30th April, 1975 can be extended, the respondents have to satisfy that they satisfy the conditions laid down in the Notification. A simple reading of proviso (iii) and (iv) of the Notification No. 120/75-C.E., dated 30th April, 1975 shows that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount or on job charges basis, the value of the purposes of assessment under Section 4 of the Central Excise Act will not be the processing charges alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold for the first time in the wholesale market. That is the effect of Section 4 of the Act. The value would naturally include the value of grey fabrics supplied to the independent processors for the processing. However, excise duty, if any, paid on the grey fabrics will be given proforma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the Rule 56A or 96D of the Central Excise Rules, as the case may be. 48. Read in that context and in the context of the prevalent practice followed so long until the decision of the Gujarat High Court in Real Honest case, there is no hardship and no injustice to the petitioners or the manufacturers of grey fabrics. The fact that the petitioners are not the owners of the end product is irrelevant. Taxable event is manufacture not ownership. See in re The Bill to amend Section 20 of the Sea Customs Act, 1978 and Section 3 of the Central Excises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fasteners. In fact, in the present case, under the contract the petitioner was not to supply any parts of the monoblock sleepers but was to supply the finished monoblock sleepers in which inserts and fasteners were to be embedded at the time of the manufacture of these sleepers, because, the plain concrete slab without containing the inserts and fasteners could not be used as railway sleeper as it would not hold the rails on it. Therefore, while determining the valuation of monoblock sleeper for charging the duty the excise authorities were quite justified in adding the cost of inserts and fasteners under Section 4 of the Central Excises and Salt Act. (1983 E.L.T. 733 relied upon; 1985 (20) E.L.T. 60 dissented.) "If the petitioner did not supply the value of inserts, despite persistent demands, the Department could rightly take the view that there has been a wilful suppression of facts for the purposes of evading payment of excise duty and accordingly, the extended period of five years for issue of show cause notice will apply and the show cause notice was within time. This view cannot be said to be either based on no evidence or perverse so as to require interference under A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of six months. This is a question of fact. It was found by the Tribunal that it was not possible for the appellant to contend that the appellant had made a correct statement. The Tribunal noted that the appellant could hardly contend that it discharged the onus of making correct declaration, if it had withheld the description which was commonly used in respect of the goods not only by itself, but also by those from whom it bought or to whom it sold the products. The appellant itself was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end-fittings in the declaration to the Department. It may be noted that in the declaration it was so described. The Tribunal was of the view, and it cannot be said not without justification that these goods should have been described as nuts because the appellant itself had treated these as nuts. Therefore, from this conduct suppression is established. The facts that the Department visited the factory of the appellant and they should have been aware of the production of the goods in question, were no reason for the appellant not to truly and properly to describe these goods. As a matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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