Customs, Excise and Gold Tribunal - Delhi
Procter And Gamble India Ltd. vs Commissioner Of Central Excise on 7 April, 1998
Equivalent citations: 1998(101)ELT305(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. The Stay Petition seeks waiver, for the purpose of hearing of the appeal filed by the petitioner/ appellant, pre-deposit of an amount of Rs. 1,10,40,613/- demanded as duty and amount of Rs. 10 lakhs imposed as penalty by the Commissioner of Central Excise, Indore vide his Order No. 10/Commr./CEX/Ind.-II/97, dated 10-12-1997.
2. Shri Arshad Hidayatullah, learned Senior Advocate assisted by Sar-vashri V.S. Nankani and P.K. Ram, learned Advocates appeared for the petitioner. He stated that appellant was clearing detergent powder in bulk packing on payment of duty from their factory in Mandideep in the jurisdiction of Indore Collectorate. Such duty paid detergent powder was being repacked by another manufacturer in the jurisdiction of Kanpur Collectorate in 20 gm and 30 gm sachets. Learned Counsel assailed the order as having been passed by the Commissioner without jurisdiction. He explained that the demand of duty has been raised by Commissioner of Indore in respect of such repacked Detergent powder. It was pointed out by the learned Senior Counsel mat the Commissioner, Kanpur had in fact, dropped the earlier proceedings initiated against the said Kanpur factory where such repacking of the detergent powder in 20 gm and 30 gm packing was being carried out on the ground that such repacking of detergent powder which was duty paid did not amount to manufacture. It was clarified that the relevant chapter viz. Chapter 34 of the Central Excise Tariff did not have, at the material time, any Chapter Note laying down that repacking of detergent powder from bulk packing into smaller packs constituted manufacture. Such a Note viz. Chapter Note 6 under Chapter 34 was introduced only subsequently. The Commissioner has tried to get over the objection of jurisdiction by stating that duty was not being demanded on repacking of detergent; duty was purportedly being demanded on the detergent powder cleared by the applicant from their Mandideep factory in bulk form by taking the values of the repacked product. Shri Hidayatullah pleaded for the grant of waiver of pre-deposit of the amounts in dispute on the ground that the applicant has a strong prima facie case.
3. Opposing the plea, Shri S. Srivastava, Departmental Representative stated that the repacking in the Kanpur factory was not by an independent manufacturer but by the applicants themselves, the job worker in Kanpur not being independent. The plant and equipment in the factory in Kanpur belonged to the applicant who was paying a fixed sum every month to the purported job worker, irrespective of whether the work of repacking was being done or not in a particular period or of the quantity repacked. Duty has been demanded treating the detergent powder packed in the 20 gm and 30 gm sachet as the excisable product. Such repacking was incidental to the completion of the manufactured product and duty was leviable at the repacked stage. In support of such a contention, the D.R. relied upon certain Tribunal decisions (i) Siddharth Tubes Ltd. v. C.C.E., Indore -1996 (82) E.L.T. 399, (ii) Kutty Flush Doors and Furniture Co. (P) Ltd. v. Commissioner of Central Excise, Madras -1997 (93) E.L.T. 766, and (iii) an unreported decision vide Final Order No. 1846/97-A, dated 3-10-1997 in Appeal E/4045/89 in the case of Impact Containers Ltd. He stated that in these cases the assessable values of the goods in question were held to be inclusive of the cost of certain additional processes carried out or certain fitments provided even after the products had been manufactured prior to such process or fitment. He opposed the plea for stay.
4. We have considered the submissions. The appellant had cleared detergent powder from their Mandideep factory on payment of duty and thereafter the work of repacking in sachets of 20 gms and 30 gms was carried out by the factory in Kanpur. It was indicated by the learned Counsel that proceedings were initiated earlier by the Commissioner, Kanpur for demand of duty from that factory but dropped as it was held that such repacking did not amount to manufacture at the material time. It was added that subsequent to the introduction of the new Chapter Note under Chapter 34 making such repacking of detergents a manufacturing activity, the Kanpur factory had complied with the excise requirements. The cases cited relate to situations where the excisable goods were subjected to certain processes or fitment of certain items which enhanced their value. In the first case certain quantity of the steel pipes and tubes manufactured by Siddharth Tubes was cleared on payment of duty to another portion of the factory where the tubes and pipes were galvanised. It was held that the cost of galvanisation had to be included in the assessable value of the goods. In the Kutty Flush Doors case it was observed that the price of the goods at the time of clearance from the factory is the prime consideration and the factors which have gone to enrich the value of the goods will have to be taken into reckoning notwithstanding the fact that some of these factors related to the post manufacturing operation and accordingly it was held that flush doors having lipping and key-hole will have to be assessed based on the price which they fetch at the time of clearance from the factory. In the last mentioned case, part of the goods were required to be subjected to a special process as required by the customer and it was held that the goods so subjected to the special process in question will be chargeable to duty with reference to their value after inclusion of the cost of the special process to which they have been subjected to. We are of the view that these decisions may not be relevant to the present case where the goods have been cleared on payment of duty from one factory and thereafter repacked in 20 gms and 30 gms Sachets in another factory which process, at the material time, did not amount to manufacture. In the circumstances, we hold that the applicant has made out a prima facie case for grant of waiver of pre-deposit of the amounts in dispute. We, accordingly, order waiver of pre-deposit of the disputed duty and penalty amounts for the hearing of the appeal and stay of recovery thereof till the disposal of the appeal.
The stay application is allowed.