Customs, Excise and Gold Tribunal - Mumbai
P & P Containers (P) Ltd. vs Cce on 16 April, 1998
Equivalent citations: 1998(77)ECR277(TRI.-MUMBAI)
ORDER
U.L. Bhat, J. (President)
1. Appellant is absent in spite of notice, but has furnished written submissions for decision of the appeal on merits. We have heard Shri K. Srivastava, SDR and perused the papers.
2. Appellant, engaged in the manufacture of P & P Containers, was purchasing printing blocks from the respective manufacturers, the cost of which was being reimbursed by the customers of the appellant. However, appellant was paying duty on the basis of the price charged from the buyers without including the cost of printing blocks in the assessable value. The period in dispute is from 1.1.1987 to 30.4.1990. Show cause notice dated 24.1.1992 was issued stating that the cost of printing blocks was ultimately met by the buyers though it was the responsibility of the appellant and therefore, such cost should have been included in the assessable value and duty paid accordingly. Notice proposed demand of differential duty on this basis. Though appellant resisted the notice, the Additional Collector confirmed the demand and imposed penalty of Rs. 5000/-. This order is now being challenged.
3. The manufacture of P & P containers cannot be completed without printing the necessary material on the container and printing could be effected only using printing blocks. If the printing blocks are to be manufactured or procured at appellant's cost, the same would have been taken into consideration in fixing the price of P & P containers recoverable from the buyers. This did not happen in the present case since the cost of printing blocks was not met by the appellant but by the buyers. Therefore, the view taken by the lower authority that the cost element should be part of the assessable value is correct. This view is supported by the decision in Flex Industries Ltd. . According to the decision which dealt with cylinders used in the manufacture of printed HDPE pouches, a set of cylinders can be used spread over a considerable period and over a large quantity or number of finished products and therefore, what is to be added to the assessable value would be only the proportionate cost of the cylinders depending upon its expected life and capacity. We are of the opinion that the lower authority should have followed this principle in determining the assessable value.
4. The Chief Executive of the appellant submitted before the Additional Collector that on an average the printing blocks had been used by the appellant to the extent of 70% to 80% of their capacity. The Additional Collector did not controvert this statement though he got over the consequence of the statement by indicating that the printing blocks cannot be regarded as being capable of further use since the price, design preference and other aspects could have changed meanwhile. The show cause notice did not contain any such allegation. In these circumstances, we direct that the assessable value should be determined on the basis that the appellant had used the printing blocks to the extent of 75% of their capacity since 75% represents the mean of the range admitted by the appellant. The demand has to be reduced proportionately. The matter has to go back for redetermination of the assessable value and requantification of the correct duty demand. In the circumstances, we hold that this is not a fit case for imposition of penalty. We make it clear that except the quantification, no other aspects arise for consideration by the adjudicating authority.
5. For the reasons indicated above, we set aside the impugned order and remand the case to the jurisdictional adjudicating authority after giving appellant an opportunity of personal hearing.
6. Appeal is allowed.