Customs, Excise and Gold Tribunal - Mumbai
Suntex Fabrics Pvt. Ltd. And Ors. vs Commissioner Of Customs And Central ... on 3 September, 2001
JUDGMENT
Gowri Shankar, Member(T)
1. The details of the duties demanded, penalties imposed and redemption fine determined form the each of these 25 applicants are set out in the annexure.
2. Ten of the applicants at Sr.No. 1,3,6,8,15,18,19,20,23 & 25 of the annexure are processors of textile fabrics. The duty has been demanded from them on the ground that the value of the grey fabrics supplied to these firms and the value referred by Nangalia Group of Companies at Sr.No. 5, 7,8,11,12 & 13 of the annexure was lower than it ought to have been. Consequently duty & penalties upon them, and penalties upon the suppliers of grey fabrics and employees and directors (listed at Sr.No.2, 4, 9, 16, 17, 21, 22 & 24 of the annexure) have also been imposed. The common notice dated 25.5.1989 demands duty for fabrics processed and cleared between April 1997 and December 1998 and invokes extended period contained in the proviso under Sub-section (a) of Section 11A.
3. The common contention of behalf of the processors are these. Each processor determines the value of each lot of grey fabrics that is received by it, in accordance withe the declaration that the supplier of the grey fabrics is required by the law (as contained in notification 27/92) to give. It is not practicable for a processor to verify the correctness of this declaration. Nor is there any legal requirement on it to do so. The decisions of the Tribunal in Paras Prints Pvt. Ltd. v. CCE 2000 (120) ELT 662, ITC Ltd. v. CCE 1998 (104) ELT 151 and others cited in support of this proposition. It is further contended that in any event the extended period limitation will not be applicable. T he show cause notice does not allege that the processors, being aware that the value was lower than it ought to have been, declared a lower value. It does not allege collusion between the supplier of the grey fabrics and the processor. It only alleges that the processor blindly accepted the value of grey fabrics declared by the supplier of the grey fabric. Each of the counsel offers to deposit 20% of the duty demanded from each processor as evidence of bona fides.
4. The arguments on behalf of the supplier of the grey fabrics, and their employees are these. The suppliers are themselves manufacturers and weaves of fabrics. They sell the prime quality of fabric in the open market. It is only the second or inferior quality that remains after such sale that is given for processing. It is therefore inappropriate to allege under declaration of value by comparing this value with the values of prime quality. The Supreme Court ion Ujagar Prints v. U.O.I. 1989 (39) ELT 439 contemplates, in the case of manufacturer of grey fabrics, the cost of manufacture to be the basis for determination of value and not the same price. In any event a sum of Rs. 25 lakhs nearly 50% has already been deposited.
5. The departmental representative reiterates the reasoning in the Commissioner's order.
6. On the facts before us, it is not, at this point, easy to say that the extended period of limitation will apply for demanding duty. The show cause notice does not appear to allege suppression by the processor of the knowledge, which the processor possessed or ought to have possessed, of the correct value of the fabrics. All that it seems to say is that the processors ought, on their own, to have verified the correctness of the declarations that the suppliers gave. On this aspect, apart from practical difficulties this would entail, the decisions of the Tribunal that have been cited, prima facie support the view that once the owner of the fabrics or other material, that is to be converted, declares the value to the job worker, he would normally go by that value. There is no collusion alleged between the supplier of the grey fabrics and the processors. Taking note of these facts, we accept the offer made for deposit of duty at 20%.
7. At this stage we do not find it possible to accept the contentions on behalf of the supplier of grey fabrics. It is accepted that, in the declaration that were given to the processors, there was no indication that the fabrics were of inferior quality, nor evidence was at any stage led before the department in support of the contention that the fabrics sent for processing were inferior or second quality fabrics. On the face of it, the Supreme Court's judgment in Ujagar Prints does not support the interpretation sought to be placed upon it. However, taking note of the fact that amounts slightly less than 50% of the penalties imposed, have already been deposited, we waive deposit of the remaining penalties and stay their recovery.
8. On deposit of the duties by the processors within a month from the receipt of the order, we waive deposit of remaining amount of duty and penalties and stay their recovery.
9. Compliance on 12.11.2001.