Customs, Excise and Gold Tribunal - Delhi
M/S. Bhansali Engg. Polymers Ltd. vs Cce, Bhopal on 3 April, 2001
ORDER
C.N. B. Nair
1. The appeal is directed against demand of duty of Rs.4,98,011/-, imposition of penalty of Rs.5,000/- and demand of interest in respect of the duty. The duty demand is in respect of about 111 M.T. of Waste ABS Polymer.
2. The appellants are manufacturers of ABS Polymers. A portion of the polymers manufactured turns out to be waste. The appellants used about 111 M.T. of such waste ABS Polymers for the manufacture of re-processed granules. The granules so manufactured are in turn cleared duty free under Notification No.4/97. In the impugned proceedings, duty demand has been confirmed on the ground that waste ABS Polymers is liable to duty under Chapter 39. The appellants have contested their duty demand on the ground that waste ABS Polymers is not goods inasmuch as it is not marketable. During the argument of the case the learned Counsel representing the appellant stressed that it was for the Revenue to establish that the waste ABS polymers was a marketable product. As against this, the learned DR has submitted that the impugned order in original as well as the order in appeal have held that waste ABS Polymer is sold in the market and the same is used for reclaiming polyester granuels, as done by the appellants themselves.
3. It is the common finding in both the impugned orders in original and the order in appeal that waste ABS polymer is used for re-processing into granules and that waste ABS Polymers is sold in the market. The appellants have not adduced any material to show that, on account of any peculiar characteristics, ABS Polymer waste remains not marketable. That the appellant himself is not selling the goods in the market is of no relevance for determining the marketability of a product. The appellants have not produced any material in support of their contentions that the goods in question is not marketable. Therefore, this plea of the appellant has to fail.
4. The appellants have also submitted that the goods have been (SIC)valued and that the amount of duty demanded is much higher than the duty correctly payable. Their objection to the valuation is that ABS Polymer waste has been assessed at the value applicable to processed granules. This submission merits acceptance. Reprocessed granules is the final product and ABS Polymer waste is the input for the manufacture of the final product. Re-processing involves costs. Therefore, the appellants are right in their contention that the value of ABS Poly waste should have been fixed after allowing adequate deduction (towards cost of processing) from the value of the final product. In this connection they have pointed out that the Asstt. Commissioner had allowed a deduction of Rs.5 per Kg. towards cost of re-processing under his earlier order in original No.10/CL/97 dated 28.2.97. We find no justification for denying the deduction of Rs.5/- per Kg. in the present case as it could not be that for later period a cost of input and finished product could be the same. Therefore, the deduction of Rs.5 per Kg. towards reprocessing cost should have been allowed in the present case also.
5. The appellants have further submitted that there was no justification for imposition of penalty in the instant case inasmuch as the appellants had not carried out any fraudulent evasion of duty. They were paying duty on the ABC Polymers manufactured by them and were entitled to duty free clearance of the reprocessed granules. They had not suppressed any of the relevant facts from the Department. With regard to his submission, we find that this is a case of short levy and show cause notice had been issued within the within the usual period of six months. No allegation of suppression of facts with intent to evade payment of duty has been made. There is nothing clandestine about the appellants' activities. In these circumstances, we do not consider the penalty justified.
6. With regard to the demand for interest, it is the appellants' submission that no such demand had been raised in the show cause notice and the claim for interest cannot be sustained as the same goes beyond the scope of the show cause notice. This submission of the appellant is required to be accepted, as demands under an adjudication order cannot be in excess of the claim raised in the show cause notice. Therefore, the demand for interest also cannot be sustained.
7. In view of what has been stated above the appeal is allowed with regard to penalty and demand for interest and both penalty and demand for interest are set aside. In respect of duty amount, we order that the same shall be recomputed after allowing deduction of Rs.5/- per Kg. towards cost of reprocessing. For doing the same the case is remitted to the Jurisdictional Dy. Commissioner. Since appellant had already deposited the full duty demand of Rs.4,98,011/-, they shall be returned the amount found to be paid in excess of the correct amount of duty payable.