Customs, Excise and Gold Tribunal - Mumbai
Flex-O-Packaging Babloo S. Khanna vs Commissioner Of Central Excise ... on 8 May, 2001
ORDER
Gowri Shankar, Member (Technical)
1. Applications are for waiver of deposit of duty of Rs.3,67,042/- demanded from Flex-O-Packaging and penalties of Rs.50,000/- upon it and Rs.5000/- on Babloo Khanna, its partner.
2. The applicant inter alia, is a dealer of aluminium foil. It is also engaged in the printing of such foil. It received aluminium foil from its manufacturer and it is stated to have sold the foil to various persons, without however physically delivering them. These persons thereupon placed orders on it for printing of the aluminium foil, claiming the benefit of notification 214/86. The applicant thereafter supplied the printed foil without payment of duty. In the order impugned in the appeal, the Commissioner has demanded duty on the ground that in computing for the purposes of notification 1/93, the value of clearances of the applicant, the quantity for which the benefit of notification 214/86 was availed of is not to be excluded.
3. The contentions of the representative of the applicants are these. There has been a sale by it of the unprinted foil notwithstanding an absence of physical delivery. Therefore, when the buyers of the foils placed orders for printing of it by the applicant they must be considered to have supplied foil. The benefit of notification 214/86 hence cannot be denied. The decision of the larger bench of the Tribunal in Maruti Udyog Ltd. vs. CCE 2000 (118) ELT 43 supports this view. The Commissioner's order purports to demand duty on the basis of notification 1/93, but actually does so by denying notification 214/86.
4. His last submission straightaway deserves to be rejected. The show cause notice and the Commissioner's order both proposes to recover duty by recalculating the value of clearance not includible in notification 1/93. The duty demanded is specifically described in annexure A-IV to the Commissioner's order as "duty in terms of notification 1/93". As to the other point, we note the contention of the departmental representative that applicant was earlier a licensed manufacturer who close to describe itself after issue of notification 2114/86 as a job worker. When we asked the representative of the applicant for evidence in support of the contention that there was sale of goods, he says that the first applicant issued dealer's invoices, but has no other evidence. Whether this is really a case of supply of foils after they were printed by the applicant, or is a case where the benefit of notification 214/86 was genuinely availed of is debatable. We also note that notification referred to "supplier" of the material. Going by the ordinary meaning of the term, it is debatable whether, in a situation where there has been a sale (assuming it to be so) of goods of the first applicant to another without physical transfer of the property, the buyer could be said to have "supplied" the goods within the meaning of the notification.
5. The decision of the larger bench did not go into these aspects and was not concerned with a situation where the so-called supplier of the raw material did not physically supply the goods. It only found that there was no loss of revenue if any duty was payable by the job worker not availing the notification that duty would be available as credit taken by the supplier of the raw material. We have to note that the duty demanded is not specifically on the goods specified in the notification 214/86. The duty is demanded by denying the benefit of notification 1/93, arriving at clearances calculated by denying the benefit of notification 214/86. In that situation that so called "revenue neutrality" which representative of the applicant emphasises would prima facie not be available as defence.
6. We are also not able to find prima facie that the applicant has a case on limitation the extended period being involved in this case. The contention that earlier the Superintendent issued subsidiary gate passes for sale of the unprinted foils does not in our view establish any case on limitation. The essential question to be determined is whether the department was aware that unprinted foil was never physically removed from the applicant's possession. The representative of the applicant admits that this information was never furnished to the department.
7. In these circumstances, we consider it appropriate to ask the applicant to deposit Rs.1.50 lakhs towards the duty either by payment in cash or by debit in the personal ledger account within two months from today. On such deposit being made, we waive deposit of the remaining duty and penalty on the applicant and penalty on Babloo Khanna and stay their recovery.
8. Compliance on 23.7.2001.