ORDER
V.K. Agrawal, Member (T)
1. These are 3 appeals – 2 filed by M/s. Vasundhara Containers & pipe Ltd., and its Director Shri Penal Shah, and one filed by the Revenue – against Order-in-Appeal Nos. 672-674/2002, dated 29-11-2002.
2. Shri Kamaljit Singh, learned Advocate, submitted on behalf of M/s. Vasundhara Containers & Pipes Ltd., that the assessees are engaged in the manufacture of plastic water storage tank of different capacity and section hose pipes; that on their visit of the factory on 11-7-1998 the Central Excise Officers found that the actual capacity of roof tank which were declared to be 300 litres was more than 310 litres; that the Officers also found a test report stating that the net capacity of these tanks was 300 litres and the gross capacity was 353 litres making them ineligible for the benefit of Notification No. 4/97-C.E., dated 1-3-97; that the Jt. Commissioner under Order-in-Original No. 17/2001, dated 28-2-2001, confirmed the demand of duty against M/s. Vasundhara Containers & Pipes Ltd. besides imposing a penalty Of equal amount on them under Rule 173Q of the Central Excise Rules; 1944, read with Section 11AC of Central Excise Act; that the Jt. Commissioner also imposed a penalty of Rs. 3 lakhs each on two directors, namely, Shri Penal Shah and Shri Pragnesh Shah. On appeal the Commissioner (Appeals), wider the impugned Order, has held that tanks marked with 300 litres capacity and sold at prices up to Rs. 2.85 per litre capacity would be construed of capacity up to 300 litres While the Other tanks charged to prices in excess shall be construed to be of a capacity of more than 300 litres; that the Commissioner (Appeals) has also held that the assessee shall be given adjustment towards Modvat credit on the input materials subject to submissions of evidence of payment of duty; that the Commissioner (Appeals) reduced the penalty to Rs. 1 lakh in respect of assessee-firm and set aside the penalty imposed on Shri Pragnesh Shah while confirming the penalty imposed On Shri Penal Shah.
3. The learned Advocate, further, submitted that the assessees are manufacturing tank as per ISI Specification; that the gross capacity of the tank is more than 300 litres on account of technical reasons like inlet and outlet and on account of necessity to provide space for filling and draining; that the net capacity of tank is 300 litres only; that ISI specification No. 1271 provides that the gross capacity of the storage tank should be minimum 5% more than the net capacity; that the learned Commissioner has erroneously held that the tanks of prices ranging from 3.25 to 3.24 per litre capacity are different from tank of prices ranging from 2.65 to 2.85 per litres; that the difference in price is not on account of capacity of tank as has been assumed by the Commissioner (Appeals) but on account of the quality of the tank. He also mentioned that these tanks are bought and sold in the market as tanks of 300 litres capacity only. In fact the words “300 litres” are printed on the tanks; that the storage tanks are bought and sold in the market in standard sizes of 100 litres, 200 litres, 500 litres, 1000 litres and are not bought and sold in odd sizes like 310 litres; that therefore, the Appellants are rightly declaring tanks of 300 litres capacity; that neighter larger period of limitation is invocable nor penalty is imposable in the facts and circumstances of the present matter.
4. On the other hand Shri Vikas Kumar, learned SDR, submitted that the actual capacity when measured in the presence of the Director of the assessee company was found to be exceeding 300 litres and this fact has been confirmed by the quality testing data sheets of the assessee as per IS 12701/96 wherein the net capacity has been indicated as 300 litres and gross capacity as 355 litres which has been shown as capacity in remarks column; that the actual capacity was also measured by actual filling of water into storage tanks; that the actual physical capacity filled in tank was 350 litres; that thus the Department has proved that the capacity of the tank in question exceeded 300 litres, and therefore, these tanks are classifiable under Sub-heading 3925.10 of the Schedule to the Central Excise Tariff Act and the benefit of Exemption under Notification No. 4/97 Srl. No. 57 will not be available to such tanks; that the findings of the Commissioner that the tank of sale price of more than Rs. 2.85 per litre should be construed as tank of capacity of more than 300 litres is without any legal support; that therefore, the entire goods in question are of capacity more than 300 litres; that in their reply dated 27-12-99 to the show cause notice the assessee had not challenged the allegation that the tanks were not more than 300 litre capacity. He also submitted that as both Shri Penal Shah and Shri Pragnesh Shah were directing the overall activities and have suppressed the facts and misdeclared the capacity of the tank penalties are liable to be imposed on both of them in reply the learned Advocate submitted that in view of the decision of the Larger Bench of the Tribunal in the case of Srichakra Tyres v. CCE, 1999 (108) E.L.T. (T) = 1999 (32) RLT 1 (CEGAT-LB) the price should be treated as cum-duty from which the value should be re-determined.
5. We have considered the submissions of both the sides. Tanks of capacity exceeding 300 litres are classifiable under sub-heading 3925.10 of the Central Excise Tariff attracting Central Excise duty. It is the case of the Revenue that the Appellants were declaring their tanks as of 300 litres capacity which on physical verification in the presence of the Assesses’ Director were found to be of more than 300 litres capacity. Moreover the quality testing data sheet of the assessee company itself indicated the net capacity of the tank to be 310 litres and gross capacity 355 litres. The Director of the company has also admitted these facts in his statement on 11-7-93 and nothing has been brought on record to show that the said statement was retracted. We find substantial force in the submissions of the learned SDR that categorization of the tank of 300 litres or more than 300 litres capacity cannot be done on the basis of price per litre charged by the assessee. In fact even M/s. Vasundhara Containers & Pipes Ltd. in their memorandum of appeal has mentioned (Ground of Appeal No. 5) that the learned Commissioner (Appeals) has erroneously held that the tanks of price ranging from 3.25 to 3.24 per litre capacity were different from tanks of prices ranging from Rs. 2.65 to Rs. 2.85. The difference in price is not on account of capacity of tanks as has been assumed in the impugned Order, but on account of the quality of the tank.” In view of this we hold that the assessees have not succeeded in controverting the Revenue’s claim that the tanks manufactured by them were of less than 300 litres capacity. Accordingly they are liable to discharge duty liability. However, we agree that the price of the tank has to be treated as cum-duty price and the assessable value has to be re-determined after allowing the statutory deduction in terms of the decision of the Larger Bench in the case of Sri Chakra Tyres. The extended period of limitation is invocable for demanding the duty as the Assessees have knowingly misdeclared the capacity of the tanks. The penalty is also imposable on both the Vasundhara Containers and Pipes (P) Ltd. and its Director Shri Penal Shah. The Commissioner (Appeals) has given his specific finding about the involvement of Shri Penal Shah, Director which has not been rebutted by him successfully. It has been held by the Commissioner (Appeals) that Shri Penal Shah had accepted the fact and admitted to misdeclaring the capacity to claim the benefit of exemption. We, therefore, uphold the penalty imposed on M/s, Vasundhara Containers & Pipes (P) Ltd. as the penalty of Rs. 1 lakh imposed on them is not on the higher side, and is reasonable. However, we agree with the learned Advocate that the penalty imposed on Shri Penal Shah is on the higher side which we reduce to Rs. 20,000/-. The Revenue has not made a case of imposition of penalty on Shri Pragnesh Shah.
All the 3 appeals are disposed of in the above terms.