Customs, Excise and Gold Tribunal - Delhi
Art Plywood Industries Ltd. vs Collector Of C. Excise on 21 October, 1994
Equivalent citations: 1995(75)ELT908(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. M/s. Art Plywood Industries Ltd. have filed this appeal being aggrieved by the order of the Addl. Collector. The Addl. Collector in his order had held :-
"I have studied the case carefully and have concluded that the case of the department is proved decisively. According to the details of the case records it is very clear how in each despatch case the party was wilfully mis-declaring the plywood cleared by them. I am convinced that the party was deliberately with full knowledge of the gains and consequences removing Shuttering plywood under the guise of commercial plywood.
I therefore direct the party to pay the differential duty of Rs. 44,902.13.1 also impose a penalty of Rs. 30,000/- (Rupees Thirty Thousand) for having resorted with deliberate intent to defraud the Govt."
2. Before dealing with the case proper the ld. Advocate for the appellants submitted that by an order dated 6-2-1990, the Hon'ble High Court at Calcutta has been pleased to sanction the scheme of arrangement for amalgamation and the appellant M/s. Art Plywood Industries Ltd., has been merged with M/s. Kitply Industries Ltd. The ld. Counsel, therefore, prayed that in view of the said amalgamation the applicant prays that the title of the appellant in the said appeal be taken as M/s. Kitply Industries Ltd., the applicant herein. The ld. DR has no objection in amending the title of the appeal. After hearing both sides, the request of the appellant for amendment in title is allowed.
3. Briefly stated the facts of the case are that the appellant is engaged in the manufacture of plywood of different varieties and quality including plywood of BWR grade and ISI specification IS. 303/1975 in terms of para 6.1.1. of the ISS Page No. 8. It was noticed that the appellant was distinguishing such plywood as shuttering plywood. Central Excise Officers visited the factory on 5/6th April, 1984 and seized their private records. On scrutiny of the private records it was found that the appellant was manufacturing Shuttering plywood but declared it as Commercial plywood for purpose of payment of Central Excise duty. The Department was of the view that this Shuttering plywood was a distinct and different product and was classifiable as Structural plywood and therefore was assessable to duty at a higher rate than Commercial plywood. Accordingly, a show cause notice was issued to the appellant asking them to explain as to why duty on the plywood cleared by them as Commercial plywood but described as Shuttering plywood in their internal documents and statements to the Bank should not be classified as structural plywood and charged to duty at a higher rate than the rate applicable to Commercial plywood.
4. The appellant in his grounds of appeal submitted that what they were manufacturing and describing as Shuttering plywood was nothing but plywood conforming to ISI specification I.S. 303/1975; that they were describing it as Shuttering plywood in their internal financial statements to distinguish it from other plywood for higher management control; that most of their goods were being supplied to the Govt. departments under DCS & D rate contract; that under Notification No. 55/79, dated 1-3-1979 as amended all varieties of plywood except the eight items mentioned in the explanation of the Notification were commercial plywood; that the variety of plywood (Shuttering Plywood) manufactured by them was not the excluded variety mentioned in the explanation and would legitimately fall under the term "Commercial Plywood" for purpose of the Notification No. 55/79 as amended; that when tariff values were fixed for various varieties of plywood under Notification No. 8/79, dated 13-1-1979, the plywood described by them as Shuttering plywood Was nothing but commercial plywood; that the Addl. Collector passed the impugned order without complying with the procedure and provisions of CESA, 1944; that the order was not a speaking one in as much as the various contentions that were raised by the appellant in defence were not dealt with at all; that the quantity shown as Shuttering plywood column of the internal records-cum-returns consisted of commercial plywood of different grades and not structural plywood.
5. Shri K.K. Banerjee, the ld. Advocate appearing for the appellant submitted that the demand relates to the period 30-4-1979 to 27-2-1980 and 24-9-1981 to 21-5-1983; that the show cause notice was issued on 10-7-1985; that the above demand has been raised on the allegation that shuttering plywood is different from commercial plywood and hence was assessable to duty at a rate of 30% as against 20% on commercial plywood; that Notification No. 55/79 prescribes the rate of 20% or less for different types of commercial plywood except those mentioned in the explanation to the Notification; that the said explanation clarified that structural plywood is excluded from the variety known as commercial plywood; that the Deptt. has produced or brought on record no evidence to prove that shuttering plywood was nothing but structural plywood; that shuttering plywood and structural plywood were two different and distinct commodities as they had separate ISI specifications; mat for shuttering plywood the ISI specification was IS. 4990/1981 and for structural plywood the ISI specification was I.S. 1070/1983; that the Hon'ble Supreme Court in the case of C.C.E. v. Krishna Carbon Paper, reported in 1988 (37) E.L.T. 480 had held that where no trade evidence was available IS specification is to be relied upon that wherever trade parlance or common parlance in respect of certain commodities was not available ISI specifications may be relied upon as evidence for identifying the goods; that the Tribunal in the case of C.C.E. v. Sudarshan Plywood Industries, 1989 (41) E.L.T. 671 (Tri.) had held that :-
"5. We have carefully considered the pleas advanced on both sides. We observe that there is no merit in the appeal. On the basis of the advertisement itself relied upon by the appellant-Collector, it cannot be said that the respondent company has held out its product as structural plywood. The advertisement merely mentions that it is concrete shuttering plywood which can be reused twenty times and it helps to build modern Indian temples. Nowhere the advertisement says that it is structural plywood. Learned Advocate for the respondent company is on a very strong ground when she submits that different ISI specifications exists for structural plywood and shuttering plywood. Thus marking them out as two different products - known to the trade and industry. Her reliance on the judgments of Supreme Court and Calcutta High Court mentioned supra, is well founded. Reliance on dictionary meaning is not a safe guide for determining the trade and commercial parlance of the product as has been clearly held by the Hon'ble Supreme Court in the case of Krishna Carbon Papers Ltd. (supra)."
This decision of the Tribunal was further upheld in the case of Alok Udyog and Vanaspati Put. Ltd. v. CCE, reported in 1991 (56) E.L.T. 431.
"5. We have considered the submissions. From the record we find that there is no acceptable evidence on the record to hold that the appellants were manufacturing Concrete Shuttering Plywood and the findings of both the authorities below On this point appears to be based on presumption and conjectures. Even otherwise, in view of the decision rendered by this Tribunal in the case of Collector of Central Excise v. Sudershan Plywood Industries Ltd. supra, it cannot be held that the Shuttering Plywood or concrete Shuttering Plywood would fall in the category of Structural Plywood so as to attract higher Central Excise duty at the rate of 30% on the real value. In this view of the matter, we are not called upon to decide the alternative contentions raised by the ld. Consultant for the appellants."
Summing up his arguments on merits of the case the ld. Advocate submitted that their case was fully covered by the above two decisions of the Hon'ble Tribunal.
6. On the question of limitation the ld. Counsel submitted that the show cause notice was issued in 1985 whereas the period covered by the demand extends from 30-4-1979 to 21-5-1983 and thus the demand was much beyond the period of six months. As no positive proof of suppression or mis-statement has been brought on record the period of demand cannot be extended beyond 6 months and hence, the demand is time barred.
7. Shri R.K. Kapoor, the ld. SDR appearing for the respondents submitted that the appellant was clearing the goods as commercial plywood and was describing the goods as such in all the prescribed statutory documents; that it was on scrutiny of private records that it was found that some of commercial plywood manufactured by them was Shuttering plywood; that Tariff Advice No. 45/79, dated 28-9-1979 clarified that shuttering plywood was nothing but structural plywood; that structural plywood was excluded from the purview of Notification No. 55/79 and, therefore, was assessable to duty at a rate higher than the one applicable to commercial plywood, i.e. at 30% as against the normal rate of 20% applicable to commercial plywood. On the question of limitation the ld. SDR submitted that no classification list, price-list etc. was submitted in respect of shuttering plywood, therefore, clearly the appellant had suppressed the fact of production of the plywood known as shuttering plywood and so described by them in their internal financial statements as well as monthly statements submitted to the bank.
8. Heard the submissions of both sides.
On careful consideration of the arguments pleaded by both sides before us, we find that the short point for decision is whether the plywood described as shuttering plywood in their monthly internal financial statements and statements submitted to the bank is structural plywood attracting 30% or it was commercial plywood attracting 20%. From the evidence that structural plywood and shuttering plywood are recognised as two different commodities as is evident from two different ISI specifications for the two varieties as also that the question of shuttering plywood and structural plywood was gone into by the Tribunal in the two cases cited supra and it was held that these two varieties are different. We find that the present case is fully covered by the two decisions. We agree with the findings of this Tribunal in view of the detailed reasons given in the two paragraphs reproduced supra that these two items are different. Now coming to the question of applicability of the rate of duty whether on the goods mentioned as shuttering plywood by the appellant rate of 30% or 20% ad valorem under Notification No. 55/79 will be applicable, we find that in the explanation what has been excluded from the purview of commercial plywood is structural plywood. We have already held that the goods described by the appellant as shuttering plywood are not structural plywood. We, therefore, hold that shuttering plywood shall be liable to duty at the rate of 20% as Commercial -plywood.
9. In regard to limitation, we find that show cause notice does not allege suppression or mis-statement nor does it invoke the proviso to Rule 11-A and, therefore, even in this view of the matter the demand beyond six months is hit by the limitation.
10. In view of the above findings, we allow the appeal and set aside the impugned order.