TMI Blog2003 (2) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... erials were not raw material but were consumables and in an earlier case noticing the consumption facts benefits of Notification No. 8/97 had been granted. The CBEC had also permitted grant of benefit of this notification where imported consumables were used. It was claimed that the goods did not attract additional excise duty under the Special Importance Goods Act in terms of Notification No. 58/95-C.E., dated 25-7-1995. 3. In terms of Notification No. 8/97 the assessees attempted to distinguish the terms 'raw material' from 'inputs'. It was claimed that the Commissioner was prevented from arriving at a different conclusion in view of the earlier orders accepting their claim of benefit of Notification No. 8/97. It was claimed that in the absence of any intention penalty was not leviable. 4. The Commissioner passed orders holding that any materials or goods used in the manufacture qualified for the term 'raw material' and that the definition was not confined to yarn alone. He held that the Board's Circular No. 23/98-CX., dated 5-5-1998 permitted availment of the benefit of Notification No. 8/97 where apart from yarn, some "consumables" were used. It was his view that the contes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules. It is claimed that a hypothetical price be taken of the goods imported and from that certain deductions be made to arrive at an assessable value. As a last resort, deduction of duty is demanded citing Shri Chakra decision of the Larger Bench of the Tribunal [1999 (108) E.L.T. 361 (Tri. - LB)]. 11. We find that during the entire proceedings the aspect of valuation was not brought out at all however it has been raised in the miscellaneous applications. Since it is a point of law we allow the plea to be raised by allowing the applications and proceed to record our finding on this aspect. 12. The issue is whether duty is to be computed in terms of Notification Nos. 8/97 or 2/95. The first proviso to Section 3 reads as follows :- "Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, (i) In a free trade zone or a special economic zone and brought to any other place in India; or (ii) By a hundred per cent export oriented undertaking and brought to any other place in India. Shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exported cannot be adopted as clarified by the Board in the circular. They further submitted that their sales price to the customers in India is not the sales price in the course of international trade as contemplated under Section 14 of the Customs Act. Therefore the transaction value as contemplated under Rule 4 of the Customs Valuation Rules is not available. It was submitted that Rule 5 or 6 deals with the transaction value of identical goods or similar goods. The appellants manufacture fabrics. The variation in terms of quality of cotton, count of yarn, nature of dyes, design makes it nearly impossible for any person to substantiate the similarity or identical nature of the fabric. Therefore the provisions of Rules 5 and 6 are not applicable to the facts of the case. The Board of Central Excise and Customs has also in the circular accepted the said fact of certain difficulties in substantiation of the similar nature of the goods. In view of this the appellants submitted that the value shall be determined in terms of Rule 7 as provided in Rule 6A of the Customs Valuation Rules. Thus in order to determine the value under the Customs Act, the method provided under Rule 7 which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y also has considerable force. It is well known that the manufacturer is able to realize higher amount for sales made to developed countries like America, UK, France etc. and the same amount cannot be realized for identical goods when the exports are made to under developed countries like Bangladesh, Malaysia, Similarly the value under Rules 5 6 cannot be determined in view of the peculiar nature of the product. The value of the fabric not only depend upon the quality of yarn, count of yarn, but also on the design of fabric, colour etc. Therefore it is very difficult to establish the similarity of the imported fabrics and the fabrics manufactured by the appellants Rule 7 is meant for computing the value when the imported goods are sold in India. As per the provisions of the said rule form the sales price certain expenses and profit is required to be deducted. Further the duty and taxes payable by any importer in normal course of importation is required to be deducted. It is already observed in the above paras that additional duties under the Textiles and Textile Articles Act is not payable by the manufacturer of fabric in India. Therefore the same will not form part of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by him at the end of the paragraph also. He has observed that the assessees were harping on a wrong notion of such includibility. But this is not correct as the annexure to the show cause notice itself shows that such levy was also included and hence we are required to deal with this submission. 16. Section 3 of the Customs Tariff Act provides for levy of duty equal to the excise duty for the time being leviable on like articles produced or manufactured in India. The appellants are engaged in the manufacture of fabrics classifiable under chapter Heading 5207 of the Central Excise Tariff Act. The manufacturer of the similar goods in India other than manufacture in EOU is required to pay the following types of duty. (a) Basic excise duty leviable under Section 3 of the Central Excise Act. (b) Additional duty under the Additional Duties of Excise (Textiles and Textile Articles) Act. (c) Additional duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. (d) Cess under the Textile Committee Act, 1963. The additional duty leviable under the Additional Duties of Excise (Textiles and Textile Articles) Act is exempt under Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The value of the imported article determined under sub-section (1) of the said Section 14 or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (ii) Any duty of customs chargeable on that article under Section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to and in the same manner as, a duty of customs, but not including the duty referred to in sub-section. It will be evident from the above that only the duties that are chargeable on that article under Section 12 of the Customs Act are required to be added to the assessable value determined under Section 14 of the Customs Act. In the present case the appellants are required to pay 50% of the duty of the basic custom duty under Notification No. 2/95. Therefore only 50% of the basic custom duty is required to be added to the assessable value under Section 14 for the purpose of qualification of CVD. Therefore the method of computation by assessable value for the purpose of computing CVD adopted by Commissioner of Central Excise for February, 2000 is not correct. Only the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the CVD for the reason that it is duty of excise leviable on the fabric manufactured, by the appellants as per the provisions of Section 5A of the Textile Committee Act, 1963. 20. Penalty :- Lastly the appellants have submitted that no penalty should be levied on the ground that the Deputy Commissioner of Central Excise has for the period prior to May, 1998 allowed the benefit of Notification No. 8/97 to the appellants and has set aside the demand. In the case of Century Denim also, the Commissioner of Central Excise set aside the demand. However the Tribunal has in 2001 vide its order in the case of Century Denim held that the benefit of Notification 8/97 is not available when imported dyes or fixing agents have been used. The period under consideration is May, 1998 to August, 2000. During this period the appellant bona fide believed that they are entitled to the benefit of Notification No. 8/97. The appellants also relied upon the following judgments :- (a) Sona Wires Pvt. Ltd. - 1996 (87) E.L.T. 439 (T) (b) Polyfab Packaging Industries Ltd. - 1996 (88) E.L.T. 406 (T) (c) Man Industries Ltd. - 1996 (88) E.L.T. 178 (T). We find that during the period May, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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