ORDER
S.L. Peeran, Member (J)
1. In all these four appeals, common question of law and facts are involved and hence they are taken up together for disposal as per law. As the Orders are common, we take up all the four appeals for passing a common order. In respect of E/241/01 the findings given by the Commissioner is extracted herein below:-
“I have carefully gone through the submissions made by the appellants in their grounds of appeal as well as at the time of personal hearing held on 19.01.2001. The lower adjudicating authority in his impugned order has held that the appellants have removed the goods to their jobworker for Ion and Gold plating without following the procedure under Rule 57F(3) and that the value of such Ion and gold plating were not included in the assessable value of the watch cases cleared by them, and therefore the price are not the normal price under section 4(i)(b) of the Central Excise Act, read with Central excise Valuation Rules, 1975. Whereas on the other hand the appellants have contended that they were under the bonafide belief that the were not required to include the gold plating/ ion plating charges in the assessable value of the watch cases despatched by them to their clients, i.e, M/s Timex Watches, since there was a clear indication in the purchase order placed on them to the effect that gold plating/Ion plating charges were being paid by the clients themselves and the price for supply of watch cases manufactured by them were fixed. That their belief was also strengthened by the fact that although they had manufactured the watch cases they had not incurred any expenses towards plating of such cases and therefore such plating charges were out side their cost of manufacture of goods and consequently they were not required to pay duty on such charges, since the cost of watch cases was also fixed by M/s Timex. They further submitted that they have absolutely no intention to evade payment of any duty as leviable, in as much as such act will not bring them any extra profit or benefit. They have relied on the Tribunal decision in the case of M/s Engineers Combine Vs. CCE, 1999 (113) ELT 440 Tribunal, besides came other, wherein it is held that there can be no intention to evade payment of duty, where duty paid by the assessee is available as modvat credit to the customer, and contended that the allegation of intention to evade payment of duty invoked against them does not survive.
Further they have relied on the decision of CCE, Coimbatore Original No. 120/96 dated 29.07.96, which has been accepted by the Department, where it is held that the process of gold/Ion plating is not a process amounting to manufacture and therefore it does not attract payment of excise duty, consequently following of any Central Excise procedure. In the present case also the appellants have sent the watch cases after manufacture to another job worker for Ion and Gold plating for which the job charges was paid by M/s Timex Watches Ltd, Noida directly to the job worker and after the Ion/ Gold plating the said cases were brought back by the appellant and cleared to their clients i.e, M/s Timex watches, on payment of duty on the value agreed up in the purchase order placed on them. Furthermore, it is well settled that penalty can be levied only where there is a contumacious conduct on the part of the manufacturer or there is willful negligence or conscious disregard of the statutory provisions with intention to evade duty. As discussed above the appellants have followed the procedure to clear the watch cases on payment of central excise duty as per the value fixed in the purchase order placed by their client, who have supplied the raw material on jobwork and the appellant did not have any liberty or choice other than to follow the said procedure. As such the lower authority’s contention that the appellants have not included the value of gold plating with an intention to evade payment of duty does not hold any water.
Further the Hon’ble supreme Court in the case of UOI Vs. J.G. Glass Industries Ltd [1998 (97) ELT 5 (SC)] had held that printing/ decoration carried out thereon does not amount to manufacture-No Duty/ differential duty payable against if printing / decoration done in separate premises-But duty payable on value of printed bottles (i.e, including printing charges) if manufacture of bottles and printing thereon carried out within the same factory, which squarely covers the appellants case. In the present case also the appellants have manufactured the watch case, which is excisable and them sent for Ion/Gold plating to another jobworker as per the direction of M/s Timex Watches, (primary manufacturer) and since this process of gold plating does not amount to manufacture as per the decision of Commissioner of Central Excise, Coimbatore cited supra and since the appellants have not received any charges for such gold / Ion plating done at the job worker end, no cost of such process is includible in the assessable value of the watch cases, which view is further fortified by the decision of Supreme Court in the case of J.G. glass Industries.
Further more as contended by the appellants in their grounds of appeal, M/s Timex Watches Ltd (the primary manufacturer) have also furnished certificate to the effect that while arriving at the assessable value of the watches cleared by them all inputs cost, including gold plating charges have been taken into consideration. In view of my discussions in the aforesaid para, I am of the considered opinion that the Ion/ Gold Plating undertaken in the jobworker premises does not amount to manufacture and accordingly not includible in the value of the watch cases manufactured by them since the watch cases could serve a purpose even without Ion/Gold plating and there is no change in the commercial product after the plating is carried out. Besides the primary manufacture i.e., Timex Watches Ltd have produced the certificate to the effect that while arriving at the assessable value of the watches cleared by them, they have taken into consideration all input costs including Gold/ Plating charges. Thereby, there has been no loss of revenue to the Government caused. Therefore, I set aside the order of the lower authority in full including the imposition of penalty as I do not find any merit and allow the appeal filed by the appellant accordingly.”
It is the contention of the appellants that the job worker who is carrying on the process of Ion and Gold plating was doing so on behalf of the main supplier of the material namely Timex Watches Ltd who had included the cost of job work done by the job worker in the assessable value of the watches, therefore, they were not required to add the same in their cost while clearing the goods. They had produced a certificate issued by Timex who certified that although the assessees had not included the job work charges of gold plating in their assessable value, they had paid duty on the same. The Ld. Commissioner as seen from the extracted order noted that the process of Ion and Gold plating is a process of manufacture and therefore, following the ratio of the Supreme court rendered in the case of UOI Vs. J.G. Glass Industries Ltd [1998 (97) ELT (SC)] held that the differential duty was not liable to be added since the watch cases serve a purpose even without Ion/gold plating and there was no charge in the commercial product after the plating is carried out. He also looked into the certificate produced and noted that the primary manufacturer while arriving at the assessable value cleared by them had taken into consideration all input costs including gold plating charges and there was no revenue loss.
2. Ld. DR pointed out that the appellants had cleared the goods to the job worker for Ion/gold plating without following the procedure of Rule 57F(4) while arriving at the assessable value. The contention that ultimately the Timex Watches were adding the assessable value to their assessable value will not make any consequence. He submitted that the process of gold plating is also a process of manufacture and hence its value is required to be added. The Counsel also relied on the Circular No.139/08/2000-CX.4, issued by the Board wherein they have referred to the Apex Court judgment rendered in the case of Siddhartha Tubes Ltd Vs. CCE [2000(115) ELT 32(SC)] and J.G. Glass [1998 (97) ELT (SC)] and held that when goods are cleared for certain processes outside the factory then they are not required to be added and the said processes does not amount to manufacture and he argued that the judgment given by the lower authorities is correct and proper. They also relied on the judgment rendered in the case of Andhra Pradesh Paper Mills ltd Vs. CCE [2002 (149) ELT 1000] on the same point.
3. On a careful consideration of the submission we notice that the Commissioner has given a categorical finding that the process of Ion/gold plating is not a process of manufacture as the watch cases can be marketed even without this plating. The Commissioner has also noted that the primary manufacturer i.e, Timex Watches has produced a certificate to the effect that while arriving at the assessable value of the watches cleared by them, they have taken into consideration all input costs including gold plating charges. Therefore, he has noted that there has been no revenue loss to the Company. We are of the considered opinion that the this finding is legal and proper in the light of the Apex Court judgment in the case of J.G. Glass & Sidhartha Tubes Ltd (supra). This Bench also has held in the case of Andhra Pradesh Paper Mills Ltd (supra) that cost of slitting of paper reels into reams incurred by person other than assessee, would not be includible in assessable value of reams, even if such cost is incurred in their depot. In view of these citations, we do not find any merit in the appeals. Accordingly, appeals are rejected.