ORDER
V.K. Agrawal, Member (T)
1. In these two appeals, filed by M/s. Chenab Textile Mills, the issue relates to the determination of the assessable value of the waste of man made fibre.
2.1. Shri J.P. Kaushik, learned Advocate, mentioned that the Appellants are not pressing the appeals in respect of inclusion of Dharmada and handling and forwarding charges in the assessable value of the waste; that they are only challenging the inclusion of packaging charges in the assessable value; that four show cause notices as under were issued to them for demanding duty:
SI.
No.
Appeal
No.
SCN
Date
Duty
Rs.
Period
involved
(i)
E/511/2001
1-6-1999
15908/-
Aug. 1998 to December 1998
(ii)
-do-
14-7-1999
8924/-
Jan.,
1999 to March 1999
Rs. 24832
Penalty
Rs. 25000/-
(iii)
E/512/200
08-12-1998
43687/-
October
1996 to Feb 98
(iv)
30-9-1998
15956/-
March,
98 to July 1998
Rs. 59642
Penalty
Rs. 60,000/-
2.2. The learned Advocate submitted that the Appellants charge bardana charges only from those buyers with whom they have the contract to charge bardana charges and in respect of others, the bardana was brought by the buyers; that bardana charges were collected by them only in cases when bardana was supplied by them; that it has been held by the Appellate Tribunal that where packing is optional, its cost is not to be included in the assessable value. He relied upon the following two cases:
(i) Dynamic Machines (P) Ltd. v. C.C.E., Aurangabad, 1999 (107) E.L.T. 682 (T) = 1998 (29) RLT 238 (CEGAT).
(ii) Hindustan National Glass & Industries Ltd. v. C.C.E. Calcutta II, 2000 (126) E.L.T. 827 (T) = 1999 (34) RLT 294 (CEGAT)
3. The learned Counsel, further, submitted that there has been no suppression or wilful mis-statement of facts by the Appellants with intent to evade payment of duty and accordingly extended period of limitation is not invokable; that the invoices issued under Rule 52A showed separately bar-dana charges and as such the fact that the said charge was not included in the assessable value was not suppressed by them; that further in show cause notice dated 1-6-1999, there was no mention of allegation of suppression at all and as such duty cannot be demanded for the extended period. Finally he submitted that penalty which is more than 100% has been imposed on the Appellant under Rule 173Q of the Central Excise Rules read with Section 11 AC of the Central Excise Act; that penalty under Section 11AC can be imposed only where the assessee had suppressed the facts which is absent in the present matters; that it has been held by the Tribunal in the following cases that in the case of consolidated penalty imposed, penalty can not be sustained as apportionment of penalty cannot be done in appeal:
(i) Monica Electronics Ltd. v. C.C.E., New Delhi, 2001 (134) E.L.T. 454 (T) = 2001 (46) RLT 866 (CEGAT).
(ii) Lauls Ltd. v. C.C.E, 1999 (33) RLT 523 (CEGAT)
4. Countering the arguments, Ms. Neeta Lai Butalia submitted that the waste material was removed by the Appellants only in the packing which was either supplied by them or brought by their buyers; that the Joint Commissioner, in the Adjudication Order has clearly given his findings that from the perusal of the contracts it is clear that the contracts stipulate that the goods is to be supplied in a packed condition; that accordingly in terms of Apex Court’s decision in MRF case, the packing charges are to be included in the assessable value of the waste of man made fibre. She finally submitted that larger period of limitation is invokable as the appellant did not include the packing charges in the assessable value and thus mis-declared the assessable value; that further they did not produce any evidence that the matter was in the knowledge of the Department; that penalty under Rule 173Q is in any case imposable on the appellants.
5. We have considered the submission of both the sides. As the learned Advocate has not pressed the demand of duty on account of Dharamada and handling & forwarding charges, the duty demanded on these two Courts is upheld. The law regarding inclusion of cost of packing has been finally settled by the Apex Court in the case of Government of India v. Madras Rubber Factory Ltd., 1995 (77) E.L.T. 433 (S.C.) by laying down the test for including the packing charges in the assessable value as under :
“The test is : whether packing, the cost whereof is sought to be included is the packing in which it is ordinarily sold in the course of a wholesale trade to the wholesale buyer. In other words, whether such packing is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate. If it is, then its cost is liable to be included in the value of the goods, and if it is not, the cost of such packing has to be excluded.”
6. It is not in dispute that the goods leave the factory in packed condition. The packaging is either provided by the Appellant or it is being brought by the buyers. On a query from the Bench, learned Advocate fairly mentioned that the waste of man made fibre cannot be removed without being packed. Thus following the test laid down by the Apex Court, we hold that the cost of packing charges (bardana) charged by the Appellants is in-cludible in the assessable value. However, we find substance in the submissions of the learned Advocate that the extended period of limitation as provided in Proviso to Section 11A(1) of the Central Excise Act is not invokable in the present matter. The learned Advocate has shown that Bardana charges were separately shown in the Invoice issued by them and as such the fact of non-including the same was not suppressed from the Department. Secondly as far as show cause notice dated 1-6-1999 is concerned, it does not contain any charge of suppression of facts, etc. which is a must for invoking the extended period of limitation for demanding duty. Accordingly penalty under Section 11AC of the Act is not imposable on the Appellant and interest under Section 11AB of the Act also cannot be charged from the Appellants. In the facts and circumstances of the case no penalty under Rule 173Q(1) of the Central Excise Rules is also imposable. We therefore, set aside the penalty imposed on the Appellants. The Adjudicating Authority will recompute the amount of duty payable by the Appellants in accordance with this order which will be payable by the Appellants.
Both the appeals are disposed of in these terms.