Customs, Excise and Gold Tribunal - Mumbai
M/S. Beekay Textile Mills P. Ltd. vs Commissioner Of Cen. Excise & Customs, ... on 1 May, 2001
ORDER J.H. Joglekar, Member (T)
1. The appellants were not present in spite of notice. The record shows that they have continuously failed to appear in spite of notices. This appeal is, therefore, being disposed of on perusal of the records and after hearing the departmental representative.
2. The appellants undertook processing of grey man made fabrics supplied by traders. Duty was paid on the cost construction formula based on the data given by the traders in their declaration. On investigation the concerned officers found that the traders had sold the processed fabrics at a price higher than at which it was cleared from the factory of the present appellants. It was also determined that on the cost construction method the value of the grey fabrics should have been at a much higher rate than at which it was quoted by the traders. Show cause notices were issued to the processors and the traders. After hearing the noticees, the Collector passed the impugned order confirming differential duty amounting to Rs. 9,41,782.50; confiscating land, building etc but giving option to redeem the same on payment of fine and imposing penalties on the present appellants as wells as on 10 traders. The present appeal by the present appellants is directed against the confirmation of the duty and imposition of penalty as well as confiscation of the land, building etc.
3. During the course of hearing before the Commissioner, the Supreme Court judgement in the case of M/s. Ujagar Prints & Others vs UOI [1988(38)ELT 493(S.C) was cited. He, however, continued to rely upon the contention of the show cause notice as to the depression of the value of the grey fabrics and confirmed the demand. He further observed that the law required the manufacturer to give a complete and correct information as to the price. He held that where the prices were wrongly declared, the removals have to be termed as clandestine removals and in that circumstances the invocation of Rule 9(2) of the Central Excise Rules 1944 was valid.
4. In the appeal memorandum, citing the same order of the Supreme Court, it was claimed that the profit to be earned by the traders on sale of the processed fabrics is not to be included in the assessable value. It was claimed that the difference in the value at which the goods had been sold by the traders and at which they were cleared from the processors' factory would not be taken into account for calculation of short levy. It was claimed that for the extended period to apply, the fraud etc. or mis-declaration had to be committed by the manufacturer. The show cause notice itself states that the wrong declaration was made by the owner of the grey fabrics and therefore, the extended period would not be invoked against the present appellants. The appellants have worked out on their own the duty, if at all chargeable, which comes to Rs. 3,89,571/-.
5. We have considered the submissions made and have seen the text of the cited judgements of the Supreme Court. The Supreme Court in directing the department not to take into account the profit earned by the traders had made it clear that the price charged by the traders in the market for the processed goods would be higher than at which the goods cleared from the processors' factory. The declaration of the value by the job worker is on the basis of the raw material supplied by the trader. At all time he is the manufacturer in terms of Sec.2(f) and the responsibility to pay the duty is fixed upon him. The assessee is correct in stating that if there is a mis-declaration on the basis of the data given to him, the extended period under Sec.11A could not be invoked. We find this submission to be valid and legal. We also find that in showing that the grey fabric was undervalued, a number of assumptions have been made which may not be the basis for calculation of differential duty.
6. In view of the above analysis, we find that the grounds for confirmation of the demand do not sustain.
7. As regards the levy of penalty, citation was made of the Delhi High Court judgement in the case of Pioner Silk Mills. In terms of this judgement, when the offence case was detected, the provisions of the Additional Duties of Excise (Goods of Special Importancce) Act 1957 was not sufficient to enable penalty to be imposed. Apart from the application of this judgement, in view of the finding that the charge of deliberate suppression etc. could not be sustained against the appellants, we allow this appeal with consequential benefits.
(Dictated in Court)