Customs, Excise and Gold Tribunal - Delhi
Protech Engg. Inds. Pvt. Ltd. vs Commissioner Of Central Excise, Delhi on 16 April, 2002
Equivalent citations: 2002ECR246(TRI.-DELHI), 2002(144)ELT442(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. The appellant manufactures printed aluminium foils which is liable to Central Excise duty as applicable to goods falling under Heading 7607 of the Central Excise Tariff. These aluminium foils are sold to pharmaceutical companies who use them to pack medicine (tablets). The foils are printed with the name of the drug, the name of its manufacturer and other particulars, as ordered to be printed by the pharmaceutical company. For the purpose of printing such particulars, the appellant procures printing cylinders/rollers. Each such cylinder/roller is separately designed as per requirement of the customer. A cylinder can be used for printing a large quantity (10,000 kg.) of aluminium foils. The cost of a cylinder varied from Rs. 800 to Rs. 1500 in the appenant's case. The appellant recovered the cost of the cylinder separately from their customers, and not as a part of the invoice value of the aluminium foils. Consequently, the cost of the cylinders used in the printing of the aluminium foils came to be excluded from the assessable value of aluminium foils when the appellant paid Central Excise duty on the aluminium foils treating invoice price as the assessable value of the aluminium foils, on account of exclusion of the cost of printing attributable to the rollers. Accordingly, show cause notice was issued in March, 1997 proposing to recover the duty short paid in respect of the aluminium foils cleared during the period 1993 to October, 1996. The proceedings culminated in the impugned order demanding duty of over Rs. 8 lakhs from the appellant and imposing penalty of Rs. 2.5 lakhs. The impugned order imposed a further penalty of Rs. 1 lakh on Shri Surinder Mehra. Authorised Signatory of the appellant manufacturer.
2. The present appeals do not contest the principle of valuation, i.e. the value of the rollers was required to be included in the assessable value of the aluminium foils. It has, however, been submitted that the method adopted for computing short levy was erroneous. The error pointed out is that the impugned order has treated the entire value of cylinders used by the appellant as liable to be includible in the assessable value of aluminium foils. The appellant has contended that the authorities should have made only a proportionate addition towards the cost of the rollers, on the amortisation principles as the rollers are for long, repeated use. During the hearing of the case, learned Counsel for the appellant referred us to the decision of this Tribunal in the case of Flex Industries Ltd. v. Commissioner of Central Excise, Meerut [1997 (91) E.L.T. 120] and submitted that the principle of valuation on the amortisation basis remains confirmed by this order. The learned Counsel pointed out that as against the duty demand of over Rs. 8 lakhs made in the impugned order, the total duty payable would be only Rs. 63,000/-, if the short levy is worked out on the principle laid down in the Tribunal's decision. He also pointed out that this amount already remains deposited with the department.
3. On the question of penalties, it is the submission of the appellants that the omission to include the cost of cylinders in the assessable value was not the result of any intent to evade payment of duty. It occurred on account of doubt regarding the inclusion or the cost of the rollers. Learned Counsel pointed out that uncertainty on the principle of valuation got settled only by the decision of this Tribunal in the case of Flex Industries Ltd. He, therefore, submitted that imposition of penalty was not justified. It was further submitted that there is no ground at all for imposing a separate penalty on Shri Surinder Mehra inasmuch as he had no personal responsibility with regard to short levy. Learned Counsel for the appellant pointed out that the order has imposed penalty on Shri Surinder Mehra for simple reason that he was responsible for all the excise matters of the company. We have heard the learned SDR also.
4. The method of valuation to be followed in respect of value of cylinders used in the manufacture of aluminium foils remains settled by the decision of this Tribunal in the aforesaid case of Flex Industries. Therefore, short levy to be made good by the appellant is to be worked out in accordance with the principle of amortisation laid down in that decision. The appellant had worked out the short levy at Rs. 63,000/- and they had stated so when their connected stay petition was heard before this Tribunal. This amount is not disputed by the Revenue.
5. Admittedly, a short levy of Rs. 63,000/- has taken place in the present case. Accordingly, we confirm the duty demand to this extent. Rest of the duty demand made in the impugned order is set aside. We are not able to agree with the appellant's submission that short levy occurred on account of doubts about the includibility of the cost of cylinder in the valuation of aluminium foils. Roller is an essential item used in the manufacture of printed aluminium foils. Therefore, there could be no doubt that it should constitute a part of the cost of manufacture of the aluminium foils. What was in doubt was only the method of apportionment of the cost of the cylinder while computing the assessable value of the aluminium foils. In these circumstances, the imposition of penalty cannot be treated as unwarranted. However, keeping in view the amount of duty actually short levied and other factors, we reduce the penalty on the appellant manufacturer to Rs. 10,000/-. The impugned order does not mention any specific reason for imposing penalty on Shri Surinder Mehra. Penalty has been imposed merely for the reason that he was incharge of the excise matters of the appellant-company. This is no sustainable ground for the imposition of penalty. Accordingly, the penalty imposed on Shri Surinder Mehra is required to be set aside. We do so.
6. In the result, Appeal No. E/2549/2001-A of M/s. Protech Engg. Inds. Pvt. Ltd. is partially allowed by way of modification of the amount of duty demand and penalty and Appeal No. E/2550/2001-A of Shri Surinder Mehra is allowed.