Customs, Excise and Gold Tribunal - Bangalore
Vamshi Rubber Ltd. vs Commissioner Of Central Excise on 28 May, 2004
Equivalent citations: 2004(96)ECC135, 2004(171)ELT391(TRI-BANG)
ORDER K.C. Mamgain, Member (T)
1. This appeal is filed by M/s. Vamshi Rubber Ltd. against the Order-in-Appeal No. 157/2001 (H-III)-C.E., dated 20-8-2001, passed by the Commissioner of Customs & Central Excise (Appeals), Hyderabad.
2. The appellants are manufacturers of rubber products falling under Chapter 40 and vulcanizing solution falling under Chapter 35 of Central Excise Tariff Act, 1985. They opted for the concessional rate of duty under Notification No. 19/95-C.E., dated 16-3-95 during the relevant period 1995-96 and 1996-97. It was found that during the year 1995-96, the appellants have cleared the goods valued at 1,60,08,122.56 (i.e. exceeded the exemption value limit of Rs. 150 lakhs during the year 1995-96). Therefore they are not eligible for concessional rate of duty during the year 1995-96 for the clearances in excess of 150 lakhs and they are liable to pay differential duty of Rs. 1/00,812/-. They are also not eligible for concessional rate of duty under Notification No. 19/95-C.E., dated 16-3-95 during 1996-97 and consequently they had to pay differential duty of Rs. 3,41,032/-in the year 1996-97 (up to 31-5-96). It was also found that the appellant has classified Bonding Gum under sub-heading 4006.90 w.e.f. 1-12-95 and availed exemption under Notification No. 1/93. The department has considered it as falling under sub-heading 4006.10 and held that they are not eligible for the exemption under Notification No. 1/93. Therefore duty of Rs. 1,76,853/- was payable for the year 1995-96 and 1996-97 (up to 31-5-96). Accordingly a show cause notice was issued to them demanding the differential duty and proposing imposition of penalty on them. The case was adjudicated by the Deputy Commissioner of Central Excise who confirmed the duty demand of Rs. 4,41,844/- disallowing concessional rate of duty under Notification No. 19/95, and classified the Bonding Gum/Repair Gum under sub-heading 4006.10 and confirmed duty demand of Rs. 1,76,853/- for the year 1995-96 and 1996-97 (up to 31-5-96). On appeal, the Commissioner (Appeals) upheld the order of the Deputy Commissioner and rejected the appeal.
3. Shri H.S. Srinivasa, learned Advocate appearing for the appellants pleaded that in the year 1994, the appellants had filed classification list effective from 18-10-94 for claiming exemption under Notification No. 18/94-C.E., dated 1-3-94 for the items classifiable under sub-heading 4006.10. The ld. Assistant Collector of Central Excise passed Order-in-Original No. 10/95, dated 31-3-95 holding that Bonding Gum and Repair Gum are different from Cushion Gum and disallowed concessional rate of duty to their products under Notification No. 18/94-C.E., dated 1-3-94. Since the ld. Assistant Commissioner has denied the benefit of concessional rate of duty for Bonding Gum and Repair Gum on the ground that these products are not specified in the Notification No. 18/94-C.E., therefore the appellants filed classification declaration under Rule 173B of erstwhile Central Excise Rules, 1944, effective from 1-12-95 classifying Bonding Gum under Chapter sub-heading 4006.90 and claimed exemption under Notification No. 1/93-C.E., dated 28-2-93.
4. The impugned show cause notice was issued to the appellants proposing to classify the Bonding Gum under Chapter sub-heading 4006.10 and denying the benefit of SSI exemption under Notification No. 1/93 and demanding duty of Rs. 1,76,853/- for the clearance made in 1995-96 and 1996-97 (up to 31-5-96). The appellants submitted before the adjudicating authority as well as the appellate authority that Calcium Carbonate is used in the manufacture of Bonding Gum unlike in the case of Cushion Gum and the Cushion Gum is used in re-treading industry at temperature ranging at 100°C whereas Bonding Gum is used at higher temperatures ranging at 150°C. The ld. Commissioner (Appeals) failed to appreciate the difference in manufacturing process of Cushion Gum falling under Chapter sub-heading 4006.10 and Bonding Gum, falling under Chapter sub-heading 4006.90. The Bonding Gum therefore cannot be treated to be Cushion Gum because of its usage for a specified purpose and having distinct and separate identity in the market. The Chapter sub-heading 40,06.90 is eligible for SSI exemption under Notification No. 1/93, dated 1-3-93 and they are not liable for duty amount of Rs. 1/76/853/- as upheld by the Commissioner. He relied on the following decision in respect of the classification of Bonding Gum -
(i) MRF Ltd. v. CCE - 1993 (68) E.L.T. 876 (T) wherein it was held that all other forms of unvulcanised rubber falling under Heading 40.06 which are not specifically covered by sub-heading 4006.10 would-fall under residuary sub-heading 4006.90.
He accordingly pleaded that the demand of duty amounting to Rs. 1,76,853/- is liable to be set aside.
5. The learned Counsel also stated that during the year 1995-96, the appellants had claimed concessional rate of duty for the goods covered under Notification No. 19/95-C.E., dated 16-3-95 and accordingly filed classification declaration under Rule 173B for the period from 1-3-96 to 31-3-97. They claimed exemption for Bonding Gum/Repair Gum classifiable under sub-heading 4006.90 under Notification No. 1/93. However under the impugned Show Cause Notice, the Department has classified Bonding Gum/Repair Gum under sub-heading 4006.10 and denied exemption to them and clubbed the value of clearances of these products with the value of other products for determining the value of clearances under Notification No. 19/95 and consequently demanding differential duty. It was pleaded that since the Bonding Gum falling under Chapter subheading 4006.90 was cleared under Notification No. 1/93 value of its clearance cannot be clubbed with the clearance under Notification No. 19/95-C.E., dated 16-3-95 and accordingly, the differential duty amount of Rs. 1,00,812/- is not recoverable from them during the year 1995-96. They had not exceeded the clearance value of Rs. 150 lakhs during 1995-96 and accordingly differential duty demanded for the year 1996-97 (up to 31-5-96) amounting to Rs. 3,41,032/- is not recoverable as they continue under the concessional rate of duty.
6. The learned Advocate also contested the aggregate value of clearances under Notification No. 19/95 on the ground that they filed price declaration under Rule 173C of Central Excise Rules, 1944 and declared the price for their factory gate sales and also for the Depot sales. In doing so, they took the actual price as they had cleared the goods from the factory gate and from their depot. For computing the assessable value of the goods sold from the depot, the value of the goods should be the price at which such goods are sold at the factory gate. Accordingly they submitted that the aggregate value of the clearance of goods cleared under Chapter 40 for the purpose of arriving at the aggregate value of clearances of all excisable goods for availing the benefit of Notification No. 19/95-C.E., dated 16-3-95 would be less than the value on which they have paid the duty. He pleaded that although they had paid duty at higher value at depot by taking sale price at the depot for assessment, however, they are not, asking for any refund for an extra duty paid on sale price at the depot. They are now claiming that the assessable value of the goods which were sold from the depot should be the assessable value of those goods as was at the factory gate and accordingly the aggregate value of the clearance from the factory should be worked out which according to them works out to Rs. 1/47,91,888.45 for the year 1995-96. He pleaded that during the relevant period, i.e. 1995-96 and 1996-97, Section 4(1) of Central Excise Act was relevant for valuation of the goods. According to which the assessable value of the goods for the purpose of charging duty is the price charged at the factory gate. He relied on the Apex Court decision in case of Indian Oxygen Ltd. v. CCE - 1988 (36) E.L.T. 723 (S.C.) wherein it was held that where the goods are partly sold from depots and partly sold from factory gate and ex-factory price is ascertainable, then ex-factory price should be the value under Section 4 of the Central Excises and Salt Act even for goods sold from depot. Similar views were taken in the following decisions -
(i) A P. Scooters Ltd, v. CCE - 1992 (57) E.L.T. 326 (T) (ii) Triveni Sheet Glass Works Ltd. v. CCE, Allahabad - 2000 (121) E.L.T. 630 (T) (iii) Escorts Yamaha Motor Ltd. v. CCE, Meerut - 2000 (122) E.L.T. 592 (T) (iv) CCE, Nagpur v. DCL Polyester Ltd. - 2001 (131) E.L.T. 290 (Tri.-Mum.) (v) J.K. Helene Curtis Ltd. v. CCE, Mumbai-III - 2003 (153) ELT 440 (Tri.-Mum.) (vi) CCE, Chandigarh v. Bharati Telecom Ltd. - 2003 (161) E.L.T. 784 (Tri. -Del.)
He also relied on the Circular No. 3/90-CX. 1, dated 25-1-90 issued by the CBEC, wherein it was clarified in Para 5 that in case of transfer of goods to regional sales depots, factory gate price will apply provided it is a genuine price. He therefore pleaded that the Commissioner (Appeals) has erred in holding that the appellants themselves had declared the price and have not challenged the assessments finalised by the competent authority, the ex-factory price was not adoptable for depot sales.
7. He finally prayed that in the event, the appellants are held liable for payment of differential duty, the duty is to be computed on the principles of Cum-duty Price. He relied on the following decisions -
(i) CCE, Delhi v. Maruthi Udyog Ltd. - 2002 (141) E.L.T. 3 (S.C.)
(ii) Standard Tarpaul Industries v. CCE - 2001 (129) E.L.T. 736 (T)
(iii) Span Diagnostics v. CCE & CMS. - 2002 (145) E.L.T. 127 (T)
(iv) Triply Drinks (P) Ltd. v. CCE & Cus. - 2002 (147) E.L.T. 586 (T)
8. Shri M.K. Madhyastha, learned JDR appearing for the Revenue pleaded that the appellants had themselves classified the Bonding Gum under sub-heading 4006.10 in their classification list for the year 1994-95. Only when the Assistant Commissioner had disallowed the concessional rate of duty on Bonding Gum to them under Notification No. 18/94, under order No. 10/95, they filed revised classification list under sub-heading 4006.90. The Assistant Commissioner had not changed classification of Bonding Gum under Order-in-Original No. 10/95, dated 31-3-95. The impugned show cause notice was issued and other demands were raised on their changing classification of Bonding Gum. He stated that the Notification No. 19/95-C.E., dated 16-3-95 exempts tread rubber compound, tread, rubber, camel back, cushion compound, cushion gum, tread gum and tread packing strips falling under Chapter 40 of the Schedule to Central Excise Tariff Act up to first clearance of an aggregate value not exceeding 150 lakhs as in the excess of amount calculated at the rate of 15% Adv. The Bonding Gum is not mentioned in this Notification, therefore, the Assistant Commissioner did not allow them to avail the exemption Notification. However, he did not change the classification of the product from sub-headings 4006.10 to 4006.90. Bonding Gum continued to fall under sub-heading 4006.10 as the process of manufacture of this product is more or less the same as that of Cushion Gum. He also pleaded that even if the Bonding Gum is taken as classifiable under sub-heading 4006.90, its clearance value is still to be added for computing aggregate value of clearance under Notification No. 19/95-C.E., dated 16-3-95, as per explanation (ii) to the said notification. He therefore, pleaded that irrespective of the fact whether Bonding Gum falls under Chapter sub-heading 4006.10 or 4006.90, the clearance value of Bonding Gum has to be taken into account under Notification No. 19/95-C.E., dated 16-3-95.
9. Regarding re-determination of the aggregate value of clearance under Notification No. 19/95, he stated that since the assessments were finalized and the appellants have not disputed the assessments at any stage nor the assessable value of the clearance as declared by them at any stage, they cannot come up with the plea now, that they have paid higher duty for the clearance from the depot and value prevalent at the factory gate should be taken for determining the aggregate value of clearances under Notification No. 19/95-C.E. If the appellants had any dispute on the value, they should have contested it before the proper officer. The declared value which was never contested by them cannot be modified at this stage for revising the aggregate value of the clearance.
10. He further pleaded that since the department has classified the product, Bonding Gum under Chapter sub-heading 4006.10 which is a correct classification of the product, therefore, the demand of Rs. 1,76,853/- has been correctly confirmed.
11. We have carefully considered the submissions made by both the sides. There are two issues involved in this appeal. The first issue is classification of Bonding Gum/Repair Gum. The plea of the Department is that the appellants were classifying the Bonding Gum/Repair Gum under sub-heading 4006.10. However they have challenged the classification w.e.f. 1-12-95 to sub-heading 4006.90 on the ground that the Assistant Commissioner in his order No. 10/95, dated 31-3-95 had disallowed concessional rate of duty under Notification No. 18/94 to them, considering that Bonding Gum/Repair Gum is not covered by the said Notification. It was pleaded that since Notification No. 18/94 specifies the products which were eligible for concessional rate of duty and in that Bonding Gum/Repair Gum was not specified, therefore, concessional rate of duty was not allowed.
12. We find that in Notification No. 18/94, the concessional rate of duty is available to the following products -
"tread rubber compound, tread rubber, camel back, cushion compound, cushion gum, tread gum and tread packing strips".
We find that at the relevant time, tariff entry under Heading 4006 was as under -
"Other forms (for example, rods, tubes and profile shapes) and articles (for example discs and rings), of unvulcanised rubber".
Sub-heading 4006.10 contains the following entries -
"Camel-back strip, tread rubber, tread rubber compound, cushion compound, cushion gum, tread gum, tread packing strip for resoling or repairing or retreading rubber tyres".
The goods covered by Heading 4006 but not covered by sub-heading 4006.10 will automatically go to sub-heading 4006.90. Since Bonding Gum/Repair Gum are not mentioned in sub-heading 4006.10, therefore, they will be correctly classifiable under sub-heading 4006.90, in view of the decision of the Tribunal in case of MRF Ltd. v. CCE - 1993 (68) E.L.T. 876. In view of this Bonding Gum/Repair Gum will be eligible for SSI exemption under Notification No. 1/93, dated 28-2-93 as has been claimed by the appellants. Therefore, demand of duty of Rs. 1,76,853/- is not sustainable.
13. The second issue in this appeal is regarding the determination of aggregate value of the clearance under Notification No. 19/95-C.E., dated 16-3-95. The appellants have claimed that the assessable value of the clearance from depot and factory gate may be re-determined and the value of the clearance of the Bonding Gum/Repair Gum should be excluded for determining the aggregate value of the clearances under Notification No. 19/95, dated 16-3-95. We find that the assessable value of the clearance for the products cannot be re-determined at this stage. The assessable value was declared by the appellants themselves and they have paid the duty on the said value without any dispute and the assessments were finalised. Therefore at this stage they cannot come up for re-opening an issue which is already settled. The Commissioner (Appeals) in his order has rightly given the findings which are as under -
"9. I have considered the submissions made by the appellants. I find that the assessable value of all the goods have been arrived at by the appellants themselves before hand and the Central Excise duty was paid by them accordingly. The assessments have also been finalized on the basis of the assessable values declared by the appellants. The appellants have never disputed the assessable values at the time of finalisation of the assessments. If the appellants had any grievance, they should have taken up the matter with the proper officer at the appropriate time for reconsideration citing the case laws and other relevant factors, who would have considered the same and would have passed appropriate orders in accordance with law. This, the appellants failed to do. It is now too late in the day for the appellants to turn around and dispute the assessable values which were declared only by themselves and on which the duty was paid by them voluntarily and the RT 12 returns have also been finalised accordingly by the Department. Therefore, for all practical and legal purposes, the issue for re-determination of assessable values is closed and cannot be reopened now. There cannot be a situation where one value is adopted for the purpose of assessment and another value is adopted for the purpose of computation of the aggregate value of the clearances. Legally, this untenable and impermissible besides being absurd. Therefore, the assessable values arrived at by the appellants under the provisions of Section 4 of the Central Excise Act, 1944, on which the duty has been paid by the appellants are the correct values for the purpose of computation of the aggregate value of clearances of the goods. By adding the values of all the clearances as per Explanation II of the Notification No. 19/95-C.E., dated 16-3-95, the appellants have crossed Rs. 150 lakhs in the year 1995-96. Hence, the appellants are liable to pay the differential duty amounting to (Rs. 1,00,812/- + Rs. 3,41,032.00) Rs. 4,41,844/- for the financial year 1995-96 and 1996-97 (upto 31-5-96). I uphold the Deputy Commissioner's order in this regard."
We are in full agreement with the findings of the Commissioner (Appeals) which are correct in law. We find that the value of the clearance of Bonding Gum/Repair Gum has been correctly included in the aggregate value of the clearances under Notification No. 19/95-C.E., dated 16-3-95 as per Explanation II to the said Notification. Therefore, the findings of the Commissioner (Appeals) as stated above are correct and duty of Rs. 4,41,844/- has been correctly demanded from the appellants. Once assessable value was accepted and declared by the appellants and was not disputed and assessments were finalised, now they cannot claim that additional demand on that value may be taken as cum-duty price. Therefore the decisions relied upon by them for taking the sale price as cum-duty price are not applicable on the facts and circumstances of the present case.
14. We therefore modify the order of the Commissioner (Appeals) to the extent that Bonding Gum/Repair Gum will be property classifiable under sub-heading 4006.90 and the appellants are eligible for SSI exemption under Notification No. 1/93 on the said product, Accordingly, the demand of Rs. 1,76,853/- is set aside and rest of the order of the Commissioner (Appeals) is upheld. The appeal is disposed of in the above terms.