Customs, Excise and Gold Tribunal - Delhi
Kapoor Engg. Works vs Collector Of Central Excise on 16 July, 1993
Equivalent citations: 1993ECR284(TRI.-DELHI), 1994(71)ELT398(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. M/s. Kapoor Engg. Works, Railway Road, Saharanpur (hereinafter referred to as the 'party'), were engaged in the manufacture of excisable goods - weigh bridges, weighing machines, sugar centrifugal machines, crystallizers, sulphur furnace, coal mixers, briquette presses etc., falling under Item No. 45 and Item No. 68 of the erstwhile Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Tariff').
2. It was observed as per notice to show cause No. V-45(15)75/81, dated 5-10-1981, issued by the Assistant Collector Central Excise, Saharanpur, that the Central Excise officers had visited the factory premises of the party, on 5-5-1981. It was found that since as per their declaration filed under Notification No. 111/78-C.E., dated 9-5-1978, the total value of all the excisable goods cleared by them in the financial year 1980-81 were Rs. 2009379, and thus had exceeded Rs. 20 lakhs they were not entitled, during the year 1981-82, for any exemption as per para 2(i) of the Notification No. 80/80-C.E., dated 19-6-1980 (as amended).
3. Accordingly, it was alleged that the party had removed without payment of Central Excise duty, excisable as under :-
(1) The value of the goods falling under Item No. 45 of the Tariff and exceeded the exemption limit of Rs. 5 lakhs during the year 1980-81, and the party was liable to pay excise duty on the goods valued at Rs. 101150, cleared by them during that year 1980-81, after crossing the exemption limit of Rs. 5 lakhs.
(2) During the year 1981-82 they were liable to pay excise duty on the goods falling under Item No. 45 of the Tariff, valued at Rs. 64300/-, as they were not entitled for any exemption in terms of para 2(i) of the Notification No. 80/80-C.E., dated 19-6-1980 (as amended).
4. The case was adjudicated by the Additional Collector, Central Excise, Meerut, vide Order-in-Original No. 18- Additional/Collector /82 from file No. V(15)(45)Off/Adj./116/81, dated 2-7-1983.
5. After detailing the submissions made by the party, the Additional Collector, Central Excise, Meerut rejected the claim of the party in respect of the goods falling under Item No. 45 and Item No. 68, for deductions, pleaded by them on account of packing and handling charges, supervision and erection charges, parts of weighing machines and bills cancelled.
6. As regards the goods falling under Item No. 68, he decided that the charges in respect of the parts received from outside, and added to those goods which were fabricated by the party, were to be taken into account for computing their total clearances.
7. He, however, accepted the contention of the party with regard to 'repairing charges'.
8. He confirmed the duty demanded in the show cause notice, and imposed a penalty of Rs. 10,000/- on the party.
9. In appeal, the party has pleaded that :-
(i) Packing and handling expenses incurred by them on customer's account, on their specific request, should be deducted from the aggregate value of their clearances during the year 1980-81;
(ii) The charges towards supervision/erection of machinery at site on specific request of the customer should be deducted;
(iii) The value of clearances relating to parts of weighing machines which were exempt under Notification No. 310/77-C.E., dated 1-11-1977, should have been deducted;
(iv) The amounts covered by 'bills cancelled' should have been deducted from the value of clearances. The value of the articles purchased by them should not have been added in the value of finished goods;
(v) The exempted goods could not be considered as 'excisable goods';
(vi) There is no mention of the seized goods in the adjudication order;
(vii) The penalty has been imposed under Rule 173Q of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules'), while there is no reference to Rule 173Q of the Rules in the Show Cause Notice.
10. The case was heard on 3-3-1993 when Shri Rameshwar Singh, Consultant, appeared for the appellant. The respondents were represented by Smt. C.G. Lal, S.D.R.
11. Shri Rameshwar Singh, the learned Consultant, made the following submissions :-
(i) In their declaration they had given the entire money receipts, and all the amounts received. Later on, they were advised that they could claim deductions from such total money receipts. As per the declaration, they had exceeded the eligibility limit marginally.
(ii) Admissible deductions have been disallowed by the Additional Collector, Central Excise. Even trading activities have been taken as manufacturing activities.
(iii) Clearances under Item No. 45 and Item No. 68 of the Tariff could not have been clubbed together.
(iv) Exempted goods were also included in the aggregate value of clearances. The parts of weigh bridges were exempt but the same were also included for arriving at their duty liability.
(v) Seizure of goods was not warranted, in the circumstances of the case. Additional Collector has stated nothing in his Order about the seized goods.
(vi) They had no intention to evade payment of duty.
(vii) The case is very old and more than 10 years have passed from the date of issue of Show Cause Notice.
12. In support of the points made by him, he relied upon the following decisions :-
(1) 1989 (43) E.L.T. 195 (SC);
(2) 1993 (65) E.L.T. 121 (Tri.).
13. Smt. C.G. Lal, the learned SDR referred to the declaration filed by the appellants, and stated that the case is based on their own declaration, and the value of clearances as indicated by them have been accepted for calculating their duty liability. At the time when they filed the declaration no such deductions as claimed by them afterwards on "advice" were mentioned. The Additional Collector has analysed all the claims, and has come to a considered decision. He has already given relief in as far as repairing charges are concerned. For the reasons contained in the Order-in-Original passed by the Additional Collector, Central Excise, Meerut, no further deductions were permissible under law. She also submitted that excisable goods do not cease to be excisable goods after exemption. As the value of their clearances in the year 1980-81 exceeded Rs. 20 lakhs, they were not entitled for any small scale exemption in the year 1981-82. Further, as the value of their clearances of specified goods i.e. goods falling under Item No. 45 of the Tariff, exceeded Rs. 5 lakhs during the year 1980-81, they were not eligible for exemption in respect of the clearances in excess of Rs. 5 lakhs during the year 1980-81.
14. She also stated that the demand was within time, as it was only from the date of the declaration and filing of RT 12 returns that the limitation started in this case.
15. She also stated that the penalty of Rs. 10,000 was justified in the facts and circumstances of the case.
16. In support of the points made by her, she relied upon the following decisions :-
(1) 1987 (27) E.L.T. 677 (Tribunal);
(2) 1987 (32) E.L.T. 602 (Tribunal);
(3) 1988 (33) E.L.T. 787;
(4) 1988 (36) E.L.T. 151;
(5) 1988 (38) E.L.T 566 (S.C.);
(6) 1989 (40) E.L.T. 444 (Tribunal);
(7) 1989 (41) E.L.T. 610; and (8) 1990 (45) E.L.T. 450.
17. In reply, Shri Rameshwar Singh, the learned Consultant, referred to the explanation (V) in the notification, and stated that the exempted goods could not be taken into account and therefore, the parts of weigh bridges have to be excluded.
18. As regards the goods falling under Item No. 68, he stated that they were not specified goods. They were eligible for exemption under Item No. 68 as they had employed only 7 persons at that time in their factory.
19. We have carefully gone through the facts and circumstances of the case, and have considered the arguments advanced on both the sides.
20. Under letter dated 18-4-1981, M/s. Kapoor Engg. Works made a declaration under Notification No. 111/78-C.E., dated 9-5-1978, which was issued under Rule 174A of the Rules. It was provided under that Notification No. 111/78-C.E. that exemption from the operation of Rule 174 of the rules, was subject to the condition, among others, that the manufacturer makes a declaration and gives an undertaking as specified in the format annexed to that notification, while claiming exemption for the first time under that notification, and, thereafter before the 15th day of April of each financial year.
21. The declaration for the year 1980-81 appears to have been filed on 19-6-1980, and for the year 1981-82, on 18-4-1981. Thus, it appears that the declarations were filed after the prescribed dates.
22. As per declaration for the year 1981-82, the aggregate value of their clearances of excisable goods, taken together, falling under Item No. 45 and Item No. 68, during the year 1980-81, had exceeded Rs. 20 lakhs. At the same time, clearances of the excisable goods under Item No. 45 alone during the year 1980-81, had exceeded the aggregate value of Rs. 5 lakhs. Thus, the party were not eligible for exemption from Central Excise duty under Notification No. 80/80-C.E., dated 19-6-1980, in respect of the goods falling under Item No. 45 cleared during the year 1980-81 in excess of Rs. 5 lakhs. In so far as the clearances of goods falling under Item No. 45 during the year 1981-82 were concerned, the appellants were not entitled for any exemption in view of Clause 2 of Notification No. 80/80-C.E., dated 19-6-1980.
23. Notification No. 80/80-C.E., dated 19-6-1980, subject to the conditions as provided under that notification, exempted the first clearances of the excisable goods of the description specified in the Table annexed to that notification, upto an aggregate value not exceeding Rs. 5 lakhs, from the whole of the duty of excise leviable thereon.
24. It was provided in Clause 2 of Notification No. 80/80-C.E. that the above exemption shall not apply to a manufacturer who manufacture excisable goods falling under more than one item number of the Tariff, and the aggregate value of clearances of all excisable goods by him or on his behalf for home consumption from one or more factories, during the preceding financial year, had exceeded Rs. 20 lakhs.
25. The value of clearances as declared by the appellants were net values and no deductions had been claimed from those declared net values. The figures of clearances arrived at after the detailed scrutiny of the records of the party were also net figures and there was nothing to show that any deductions were claimed or were permissible from such value of clearances.
26. In the case of Kerala Detergents and Chemicals Ltd. v. Collector, Central Excise, Cochin, 1987 (27) E.L.T. 323 (Tribunal), it has been observed that "It was for the appropriate officer to determine the assessable value excluding from it such elements of the price (at which goods are ordinarily sold) that cannot form part of the assessable value - not for the assessee himself to deduct whatever he fancies from the actual price and declare the resultant as the price at which the goods are ordinarily sold."
27. The appellants did not claim any deduction and did not obtain any approval for any deduction. In fact, they did not file declaration in time. They did not pay duty in respect of the goods falling under Item No. 45 cleared in excess of Rs. 5 lakhs during the year 1980-81. They also did not pay duty in respect of the goods falling under Item No. 45 cleared during the year 1981-82. They did not pay duty in respect of such clearances although they were not entitled for such exemption, and were obliged to apply for proper Central Excise licence and to pay appropriate duty, in terms of the very exemption from the licensing provision, they had claimed.
28. The declaration under Notification No. 111/78-C.E. related to the exemption from the operation of the licensing provisions under Rule 174 of the rules. In no way it provided exemption from payment of Central Excise duty. It was incumbent upon the manufacturer not only to obtain a proper licence as soon as they reached 80% of the exemption limit but also to observe all necessary formalities and to pay appropriate Central Excise duty once the exemption limit was crossed, in terms of the conditions as stipulated in that notification.
29. In their reply to the Show Cause Notice they claimed deductions from the aggregate value of clearances on account of packing and handling charges, supervision/erection charges, trading, exempted goods, bills cancelled and repairing charges. They further submitted that in the light of the judicial pronouncement of Calcutta High Court in the case of Bata Shoe Company v. Collector, Central Excise, Calcutta for arriving at the deemed value in terms of Section 4, the quantum of duty element has to be deducted from the normal price. They had not paid any Central Excise duty. In fact, they had not obtained even Central Excise licence. They had not specified any element for deduction before the clearances of the goods.
30. Except repairing charges, no other deductions were found permissible by the Additional Collector, Central Excise, Meerut.
31. The appellants have pleaded for deduction of the value of clearances relating to parts of weighing machines in terms of Notification No. 310/77-C.E., dated 1-11-1977.
32. We find that in their declaration there is no mention of the parts of weighing machines. They were manufacturing weigh bridges and machines. In the details of their sales also weigh bridges and weighing machines are mentioned. In these documents, there does not appear to be any reference to parts of weighing machines.
33. At no stage, before this declaration was filed in terms of the licensing provisions they have declared that they were engaged in the clearance of parts of weighing machines; neither they have declared the clearances of such parts nor have they obtained any approval in respect of the removal of such parts.
34. Explanation V under Notification No. 80/80-C.E. provided that for the purposes of computing the aggregate value of clearances under that notification, the clearances of any specified goods, which were exempted from the whole of the duty of excise leviable thereon by any other notification issued under Sub-rule (1) of Rule 8 of the Rules, and for the time being in force, shall not be taken into account. Specified goods meant the excisable goods of the description specified in column (3) of the Table annexed to that Notification No. 80/80-C.E.
35. In the present case, goods falling under Item No. 45 - weigh bridge and parts thereof - were the specified goods.
36. Under Notification No. 310/77-C.E., dated 1-11-1977, parts of weigh bridges, if produced in the factory of production of weigh bridges or elsewhere, were exempted from the whole of the duty of excise leviable thereon. It was provided in that notification that where the parts of weigh bridges were produced elsewhere than in the factory of production of such weigh bridges, the procedure laid down in Rule 56A of the Central Excise Rules, 1944, were followed.
37. Although the notification is not happily worded, it is clear that parts of weigh bridges when sold as such were not entitled for exemption. It is clear from the proviso in the notification that when the parts of weigh bridges were not produced in the factory of production of weigh bridges then such parts will be received only on payment of duty. In the factory of production of weigh bridges the proforma credit will be allowed in respect of the duty paid on the parts of weigh bridge. Thus, there was no exemption to parts of weigh bridges if they were cleared as such; but only when they were used in the production of weigh bridges, in the factory of production, exemption was granted. If cleared as such proper duty was payable, and when used elsewhere in the production of weigh bridges, duty already paid on the part was eligible for proforma credit at the stage of the clearance of weigh bridges.
38. Any other interpretation to this notification will create anomalies inasmuch as if the interpretation put by the appellants for our consideration is accepted then if the parts of weigh bridges are received from outside they will be required to pay duty in the factory of the production of such parts. At the same time no duty could be charged on the parts of weigh-bridges, if in addition to the parts, the factory was producing weigh-bridges even if they were not utilising said parts in the production of weigh-bridges in their own factory.
39. Obviously, such an interpretation will be absurd and cannot be accepted.
40. In the case - Administrator, Municipal Corporation, Bilaspur v. Dattatraya Dahandar, 1992 AIR SCW 2081 the Honourable Supreme Court have observed that "the mechanical approach to construction is altogether out of step with the modern positive approach. The modern positive approach is to have a purposeful construction that is to effectuate the object and purpose of the Act."
41. In the case of Indian Administrative Service (SCS) Association, UP, and Ors. v. Union of India and Ors., 1993 AIR SC 1135 the Honourable Supreme Court have observed that if the language is found to be ambiguous or unintended then the court could "iron out the creases."
42. This is precisely what we have done with regard to Notification No. 310/77-C.E. 42A. In the case - Narne Tulaman Manufacturers Pvt. Ltd. v. Collector, Central Excise, 1988 (38) E.L.T. 566 (SC) the Honourable Supreme Court in para No. 3 have held that "when parts and the end-product are separately dutiable -both are taxable." They observed that a part may be goods as known in the excise laws and may be dutiable and further mat if the end product is a separate product which comes into being as a result of the endeavour and activity of the appellant then the appellant must be held to have manufactured the said item.
43. In the case before us, parts of weigh-bridges although not specifically mentioned by the appellants in their declaration and no approval in respect of their classification or otherwise was obtained, were seaprate goods and were excisable and dutiable in their own right. The exemption was available to them only when they were used in the factory of production for the production of weigh-bridges. Weigh-bridges in their own right were also excisable and dutiable, and it was only to avoid double taxation that the exemption under Notification No. 310/77-C.E. was provided so that duty is not charged twice once on the parts of weigh-bridges and again on weigh-bridges in the production of which, such parts have been used for the same reason when parts of weigh-bridges are received from outside after discharging their duty liability the proforma credit procedure was applied so that duty credit in respect of the duty paid on the parts, was provided when weigh-bridges were cleared on payment of duty.
44. As regards the contention that the expression "all excisable goods" would not include the goods which were exempt from levy of excise duty by virtue of a notification, issued under Rule 8 of the Rules, and that the goods exempted under Item No. 45 or Item No. 68 from levy of duty of excise, were not excisable goods, reference may be made to the definition of "excisable goods" under Section 2(d) of the Act. 'Excisable goods' means the goods specified in the Central Excise Tariff as being subject to a duty of excise. Even after unconditional exemption they do not cease to be specified in the Tariff. They do not become unspecified goods. In the present case even the exemption notifications were not unconditional. They were subject to the conditions provided therein. Even when they were exempt they could not be considered as non excisable.
45. In the case of Priya Pharmaceutical Works v. Collector, Central Excise, Meerut, 1985 (19) E.L.T. 272 the Tribunal observed that even if the goods were exempted from duty, they continued to be excisable goods, and the character of products as excisable goods did not depend on the actual levy of duty, but on their description as excisable goods in the tariff Schedule.
46. After analysing a number of decisions on the subject, the Tribunal in the case of Coal Tar Chemical Mfg. Company v. Collector of Central Excise, Baroda, 1987 (32) E.L.T. 602, came to a decision that "the goods which appear in the first Schedule to the Central Excises and Salt Act, 1944, are excisable goods. In view of this, the goods falling under Item 68 of the Central Excise Tariff, though exempted for the time being by virtue of notification issued under Rule 8(1) of the Central Excise Rules, continued to be excisable goods, and as such the value of the same should be included in the value of the clearances of the excisable goods of previous year for availing of the benefit of Notification No. 71 /78-C.E. as amended by the Notification No. 141/79-C.E."
47. Similar observations were made by the Tribunal in the case of Knit Foulds Pvt. Ltd. v. Collector of Central Excise, 1989 (40) E.L.T. 444 (Tribunal).
48. In the case of Saurabh Construction Company v. Collector, Central Excise, Indore, 1987 (27) E.L.T. 677 (Tribunal), the Tribunal have interpreted the expression "the total value of all excisable goods cleared by him or on his behalf in the preceding financial year had exceeded Rs. 30 lakhs," under Notification No. 176/77-C.E., dated 18-6-1977, applicable to goods falling under Item No. 68. In that case before the Tribunal the value of goods falling under Item No. 23 of the Tariff had exceeded Rs. 45 lakhs during the preceding financial year. The appellants had contended that the value of clearances mentioned in the proviso as above should be reckoned with reference to the goods falling under item No. 68 manufactured and cleared during the relevant period and not with reference to other goods though excisable under other items of the Tariff. The Tribunal repelled this contention as being not tenable because the words used in the proviso were "total value of all excisable goods", and not the "total value of said goods", the said goods being the goods falling under Item No. 68 of the Tariff. The Tribunal held that the appellants in that case were not entitled to exemption under Notification No. 176/77-C.E.
49. In the case - Chemicals of India v. Collector, Central Excise, 1990 (45) E.L.T. 450 (Tribunal), the Tribunal had held that the excisable goods do not become non excisable even if fully exempted from duty under a notification. In that case the manufacturer manufactured excisable goods specified in the Notification No. 80/80-C.E., dated 19-6-1980. They also manufactured Thinner falling under Item No. 68 of the Tariff which were exempted from the whole of excise duty, under Notification No. 179/77-C.E. The Tribunal held that the value of Thinner was correctly included in the computation of total value of clearances of all excisable goods during the previous financial year, and as the total value of clearances of all excisable goods including value of Thinner exceeded Rs. 20 lakhs in the previous financial year the benefit of exemption under Notification No. 80/80-C.E. was not available to the appellants.
50. As regards the various deductions which the party had claimed after filing of their own declaration, it may be mentioned that no such deduction was claimed when they filed their declaration. The goods had already been removed without any knowledge and approval of the Central Excise officers.
51. In the case - Collector, Central Excise, Bangalore v. Sunray Computers Pvt. Ltd., 1988 (33) E.L.T. 787 (Tribunal), the Tribunal had observed that all costs incurred for manufacturing and marketing of the goods upto the stage of delivery at the factory gate are includible, while expenses incurred after removal of the goods from the factory gate are not includible in the assessable value. They added that it is not possible to say that each and every service activity has no nexus with the manufacture of the goods, their marketability and their delivery at the factory gate. The Tribunal cautioned that "if there is a single contract for supply of the goods as well as services, care may have to be taken to see that there is no attempt at diverting a. part of the true price of the goods to service charges."
52. The party has claimed deduction from their aggregate value of clearances, packing and handling expenses.
53. The packing has not been supplied by the buyer to the assessee. The packing cost has been incurred by the assessee. The packing is neither durable nor returnable. There is no ground that the packing was required for transportation of goods only or for "avoiding damage or injury during transit" or "for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade" [Refer Hon'ble Supreme Court's decision in the case Hindustan Polymers v. Collector, Central Excise, 1989 (43) E.L.T. 165 (S.C.)].
54. As per Hon'ble Supreme Court's decision in the case - Hindustan Polymers (supra), under the scheme of Clause (d) of Section 4(4) of the Act, the cost of packing incurred by the assessee is includible in the value of excisable goods. They observed that "If in order to be able to put it on the market certain amount of packing or user of containers or wrappers or putting them either in drums or containers are required then the value or the cost of such wrapper or container or drum must be included in the assessable value and if the price at which the goods are sold does not include the value then it must be so included by the very force of the terms of the Section."
55. The Tribunal in the case - AIMS Oxygen Pvt. Ltd., v. Collector, Central Excise, 1988 (36) E.L.T. 151 (Tribunal), had observed that the handling charges incurred upto the factory gate stage would be includible in the assessable value.
56. They also added that the loading charges incurred in the factory before the clearance of the goods are to be included in the assessable value in the light of the Hon'ble Supreme Court judgment in the case - Union of India v. Bombay Tyre International Ltd., reported in 1983 (14) E.L.T. 1986, and Assistant Collector, Central Excise v. MRF Ltd., reported in 1987 (27) E.L.T. 553 (SC).
57. Similar observations were made by the Tribunal in the case of Collector, Central Excise v. Indian Oxygen Ltd., 1989 (41) E.L.T. 610 (Tribunal). It was observed that "in so far as delivery and handling charges ex-factory are concerned, these must constitute a part of the assessable value itself as they make up the price of the goods, ex-factory. Such charges, therefore, will have to be added to the price declared by the manufacturer."
58. In the case of Gabriel India Ltd. v. Union of India, 1992 (62) E.L.T. 696 (Bom.), the Bombay High Court has observed in para No. 7 of their decision as under :-
"The contention cannot succeed in the light of the factual position. If the customers demanded packing the shock absorbers not merely in plastic covers or corrugated cartons, but also an insulation in wooden crates, there would certainly be the evidentiary correspondence. The necessary correspondence in that case could easily be traced. It is unlikely that a demand of nature would be orally made. Businessmen could not, certainly, be expected to be vague in relation to the specification of their requirements and the stipulation regarding the cost and other essential terms. They are conspicuous in their absence in the present case."
59. We do not find any evidence on record on which any reasonable presumption and the evaluation of the petitioner's plea could be made to exclude packing and handling charges from the aggregate value of the clearances.
60. Next, we may take up the question of supervision/erection charges.
61. No separate claim was made for deductions towards such charges before the clearances of the goods. There are no copies of the agreements. The Additional Collector had come to a finding that they formed a part of the price structure and they could not be de-linked from the goods supplied, and constituted the part of the assessable value.
62. In the case - Auto Control (Pvt.) Ltd. v. Collector, Central Excise, 1993 (63) E.L.T. 15 (Tribunal), the appellants had claimed certain deductions in the price lists. They had claimed deductions towards installation charges. The Tribunal held that the deduction of installation charges was subject to production of evidence of the actual expenses incurred by the appellant on its staff employed towards the installation.
63. In the case before us, there is no evidence of the actual expenses incurred on the staff employed for this purpose, if any.
64. The party had claimed exemption under Item No. 68 on the ground that the number of workers in their factory were only 7. In the light of this declaration, it is doubtful whether the appellant had employed any staff for the purpose in respect of which they have claimed deduction.
65. We may repeat that in the case - Collector, Central Excise, Bangalore v. Sunray Computers Pvt. Ltd., 1988 (33) E.L.T. 787 (Tribunal), the Tribunal had observed that "if there is a single contract for supply of the goods as well as services, care may have to be taken to see that there is no attempt at diverting a part of the true price of the goods to service charges."
66. In the case before us, no copy of any contract has been filed.
67. As regards the cancelled bills, the demands were raised on the basis of party's declaration. The figures of manufacture /sale given by the party were adopted for the purpose of raising demands. There was no mention of any cancelled bills thereon. The Additional Collector, Central Excise, Meerut had come to a finding that in any case, the bills were not cancelled during the year 1980-81, and if any bills were cancelled during 1981-82 their effect will have only on the subsequent years 1982-83 onwards which period is not before us for our consideration.
68. Further, no evidence has been produced that the goods covered by the bills as originally issued were not removed from the factory. The party had failed to fulfil their obligations with regard to maintenance of accounts, licensing and payment of excise duty. In the circumstances, we do not find any merit in the plea advanced on this score.
69. A point has also been raised by the party that they had purchased certain duty paid components and the value in respect of such duty paid components should be excluded from the value of their aggregate clearances.
70. In the case - Koron Business Systems Ltd. v. Union of India reported in 1992 (58) E.L.T. 48 (Bom.), the Bombay High Court had observed that the assessable value of finished goods is to include the value of duty paid components purchased from the market. They observed in that case that "while determining the assessable value of the copier machine the value of the timer and the lens even if the petitioner purchased the same in the market, is required to be included. The items though purchased in the market are assembled while manufacturing the copier machine and, therefore, the process of assembling amounts to manufacture."
71. In the case - Shalimar Wires and Industries Ltd. v. Union of India reported in 1992 (58) E.L.T. 44 (Bom.), the Bombay High Court in a case where the scrap material had been supplied by the customers, and the petitioners brought into existence raw material by melting the said scrap, and, thereafter, manufactured specific alloys required for the purpose of manufacture of wires, had held that the value of raw materials was includible when process undertaken was more than mere job work.
72. In the case - Gwalior Rayon Silk Manufacturing (Weaving) Company v. Collector, Central Excise, Indore reported in 1993 (65) E.L.T. 121 (Tri.), the Evaporator J. plant was built on cement concrete foundation and permanently laid and embedded in the ground. It was considered by the Tribunal as immovable property as it was attached to the ground. In that case the Tribunal held that the assembly/erection and commissioning of the Evaporator J. plant did not amount to manufacture of excisable goods, under the Central Excise Tariff.
73. The matter before the Tribunal in that case had no relevancy to the facts before us. There is no dispute before us about the process of manufacture. The Order appealed against relates to the value of goods for purposes of assessment.
74. Accordingly, we do not consider that the Tribunal's decision in that case has any relevancy to the facts before us.
75. In the case - Priya Pharmaceutical Works v. Collector, Central Excise, Meerut, 1985 (19) E.L.T. 272 (Tribunal), the Tribunal had noted about limitation that "to have all details of clearances, production etc. etc., is not the same thing as having a sheet or a statement or a declaration for a particular purpose designed to meet that one purpose."
76. In the case before us the declaration was filed by the appellant on 18-4-1981, and the Show Cause Notice was issued on 5-10-1981. We consider that it was issued within time.
77. It has been laid down in N.S. Metal Industries v. Union of India [77 TLR (NOC) 31] that when no licence is obtained for the manufacture of excisable goods and removal is effected without payment of duty, Rule 9(2) is attracted.
78. The Bombay High Court in the case of Devi Dayal Rolling and Refineries Pvt. Ltd. v. Superintendent, Central Excise and Ors., 1983 (12) E.L.T. 338 (Bom.) had also held that if there was no assessment, Rule 9(2) will apply.
79. In the case - Collector, Central Excise, Hyderabad v. Chemphar Drugs and Liniments, Hyderabad, 1989 (2) SCC 127, the Honourable Supreme Court had observed that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability beyond the period of 6 months had to be established. Whether in a particular set of facts and circumstances, there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact, depending upon the facts and circumstances of a particular case.
80. In the case - Padmini Products v. Collector, Central Excise, Bangalore, 1989 (43) E.L.T. 195 (SC) also the Hon'ble Supreme Court observed that "mere failure or negligence on the part of the producer or manufacturer either not to take out a licence in case where there was scope for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable or not would not attract Section 11A of the Act."
81. In the present case the duty has been demanded under Rule 9(1) of the Rules and the notice was issued within a period of 6 months from the date of the declaration filed by the appellant. They had not paid excise duty when they should have paid and have availed of exemption when they were not authorised to avail of such exemption.
82. In the circumstances, the date of limitation has to be calculated from the date the declaration was filed by them, and the Show Cause Notice was issued within time.
83. In the notice to show cause, the Central Excise duty was demanded under Rule 9 of the Rules on the goods which the party had removed without payment of Central Excise duty and on the goods seized on 5-5-1981. In the adjudication order, the demand of duty was confirmed under Rule 9(2) on the clearances effected by the party without payment of duty as set out in the Show Cause Notice.
84. As the goods seized could not be equated with the goods cleared, in the demand of duty confirmed vide adjudication order, the duty element in respect of the seized goods has not been included. Accordingly, seized goods automatically stand released in terms of this order. If in the duty demanded under Rule 9(2) in respect of the clearances effected by the party without payment of duty, the duty in respect of the goods seized is also included, then the duty liability shall stand reduced to the extent of the duty liability taken in respect of the seized goods and in respect of which there is no mention about confiscation or redemption fine in the Order-in-Original.
85. As regards penalty, the Additional Collector, Central Excise, Meerut had imposed personal penalty of Rs. 10,000/- on the appellants under Rule 173Q of the Rules. Under Show Cause Notice, the party was required to show cause as to why the penalty should not be imposed on them under Rules 174, 210 and 226 of the Rules. There was no reference to Rule 173Q. Although there is no irregularity in imposing penalty under Rule 173Q as the Additional Collector was fully competent to do so [refer Honourable Supreme Court's judgment in Roche Products Ltd. v. Collector, Customs, 1990 (25) ECC 171 (S.C.)], however, in the interest of justice, we reduce the amount of penalty from Rs. 10,000/- to Rs. 2,000/-.
86. Subject to above, the appeal is otherwise rejected, and the Order-in-Original of the Additional Collector, Central Excise, Meerut is confirmed.