ORDER
T. Anjaneyulu, Member (J)
1. This appeal is preferred by the assessee against Order-in-Original dated 30.11.1999 passed by the Commissioner, Central Excise, Mumbai, wherein he confirmed the duty demand of Rs. 2,28,221.63 against the assessee under Section 11A(2) of the Central Excise Act, 1944 and imposed penalty of Rs. 2,50,000/- under Rule 173Q of the Central Excise Rules, 1946.
2. M/s. Needle Roller Bearing Co. Ltd., Thane, (hereinafter referred to as the assessee) holding Central Excise Licence for manufacture of goods falling under T.I.49 of the first schedule of the Central Excise and Salt Act, 1944, inter alia, manufactured and cleared the needle roller and bushes as shown in their gate passes issued by them to the various customers during the period from July 1978 to 15.8.84 on the basis of the prices of the said goods declared in the price list part 1 of the Proforma.
3. Assessee charged to the customers some extra value on account of carriage outwards and wooden cases packing materials, which was in the nature of secondary packing in which the said goods were supplied as could be observed from their invoices of the said period available on their records and the so called extra value charged to the customers had neither been declared by them in their normal price lists submitted to the Department for approval from time to time, nor had they paid the appropriate duty of excise on the said value, in spite of informing therein their liability under the laws. In Col. 5 & 6 of the price list, it had been mentioned that the packing was of carton and its value had been added in the assessable value of goods. However, in addition to this packing, they had used the wooden case packing for supply of the goods for which no value had been taken into account in such price lists submitted from time to time. As such assessee suppressed the real value of their goods under. Section 4 of the Central Excise & Salt Act, 1944.
4. According to the provisions of Section 4 of the Central Excise & Salt Act, 1944, the value of the carriage outwards and the wooden case packing forms the part of assessable value of the goods cleared from the factory in respect of which such value have been charged to the customers. Therefore, it appeared that the assessee did not determine the correct value and did not pay the correct duty in respect of the goods falling under T.I.49 manufactured and cleared during the period from July 1978 to 15.8.84 and thereby contravened the provisions of Rule 9, 173F read with Rule 173G and Rule 173C of the Central Excise Rules, 1944. Therefore, a SCN was issued for period from April 78 to August 84 amounting to Rs. 9,42,441.18 on the extra amount charged on account of “carriage outward and secondary packing” by the Supdt. C. Ex., Range IX, Division Thane-II. It was further alleged that these charges had been recovered under invoices during the period from July 1978 to 15.8.84 over and above the prices declared in their price lists in part I and thereby the assessee had suppressed the value of the goods viz. Needle Rollers and Bushes falling under erstwhile T.I.49 under Section 4 of the CESA, 1944. The differential duty was sought to be recovered under Section 11A(1) of the CESA, 1944 and a penalty was to be imposed under Rule 173Q of the C.Ex Rules, 1944 for contravention of the provisions of Rule 9, Rule 173F read with Rule 173G and Rule 173C of the Central Excise Rules, 1944.
5. The assessee replied to the notice vide their letter dated 30.3.857 wherein they stated that their normal practice was to dispatch the bearing to upcountry places in wooden cases to ensure their safety during transit. They claimed that packing in wooden cases was a special secondary packing whose value could be deducted from the assessable value in view of the Supreme Court decision in the case of U.O.I v. Bombay Tyre International. According to them, the demand was also time barred as it was issued after a period of 6 months.
6. In the case of Collector of Hindustan Polymers v. Collector of Central Excise reported in 1989 (43) ELT 165 (SC), it is held that “Cost of packing not includible if goods are marketable without being packed, or contained in drums or containers when packing not necessary for completion of manufacture of excisable goods – No cost incurred for packing by manufacture – Goods in packed condition at the time of removal – Cost of packing still not includible”.
7. In the instant case, the Show Cause Notice and the Order-in-Original admits the fact that the goods are sold at the factory gate, as such the above decision is squarely applicable to the case. Therefore, the impugned order is not tenable and accordingly the same is set aside. In the result, the appeal is allowed.
(Pronounced in Court on 22.12.2004)