2005 (12) TMI 135 - AT - Central Excise

Tribunal Confirms Manufacture of Glow Signs, Upholds Valuation, Modifies Penalty to Rs. 50,000 for Non-Disclosure.

The Tribunal upheld the Commissioner's decision that the appellant's activities constituted the manufacture of glow signs under Chapter Heading 94.05, ... Manufacture and classification as excisable goods (glow signs under Chapter Heading 94.05) - assembled/installed at site constituting manufacture (ratio applied from Narne Tuleman and Sirpur Paper Mills) - valuation of excisable goods after departmental re-scrutiny - invocation of extended period of limitation for concealed manufacture - penalty under fiscal provisions relating to concealment and suppression (proviso to Section 11A and Section 11AC)Manufacture and classification as excisable goods (glow signs under Chapter Heading 94.05) - assembled/installed at site constituting manufacture (ratio applied from Narne Tuleman and Sirpur Paper Mills) - Whether the appellant manufactured glow signs classifiable under Chapter Heading 94.05. - HELD THAT: - The tribunal accepted the factual findings that the appellants received orders for glow signs, supplied printed sheets and procured/assembled metal boxes with permanent light fittings (sometimes supplying dismantled units and sometimes installing them at site), and billed and were paid as suppliers of glow signs. Applying the principle in Narne Tuleman and Sirpur Paper Mills, where assembly or erection at site of bought-out components amounted to manufacture, the tribunal held that the appellant's activity amounted to manufacture of excisable glow signs. The fact that some components (the tin/aluminium boxes) were manufactured by a third party did not preclude a finding of manufacture by the appellant when they fitted/assembled parts and supplied the finished signs or dismantled but complete units for installation. [Paras 3, 5]Activity constituted manufacture of glow signs classifiable under Chapter Heading 94.05; demand for duty confirmed.Valuation of excisable goods after departmental re-scrutiny - Whether the revised valuation adopted by the Commissioner was invalid for having been determined behind the appellants' back. - HELD THAT: - The tribunal found that the Commissioner had afforded opportunity to the appellants to raise disputes on valuation during proceedings and had directed investigating officers to re-scrutinize the figures in the annexures. The revised quantification of duty liability followed that re-scrutiny. The appellants' contention that the valuation was fixed without their knowledge was rejected and fresh valuation arguments not previously urged were not permitted. [Paras 6]Commissioner's valuation after re-scrutiny upheld; appellants' fresh valuation contentions rejected.Invocation of extended period of limitation for concealed manufacture - Whether the extended period of limitation could be invoked for the demand of duty. - HELD THAT: - The tribunal observed that the appellants received and supplied glow signs but did not disclose these activities to the Department, including instances of installation or supply of fully manufactured signs. Concealment of material facts supported invocation of the extended period. The appellants' plea of bona fide belief that they were only manufacturers of printed sheets was rejected as insufficient to negate concealment. [Paras 7]Extended period of limitation held invocable.Penalty under fiscal provisions relating to concealment and suppression (proviso to Section 11A and Section 11AC) - Whether the penalty imposed should be sustained in full or mitigated. - HELD THAT: - Although the demand and penalty arising from the concealment were sustained, the tribunal exercised its discretion to moderate the punitive consequence. While upholding the liability and the invocation of extended limitation, the tribunal found it appropriate to reduce the penalty quantum imposed by the Commissioner. [Paras 8]Penalty reduced to a moderated amount; otherwise Commissioner's order upheld.Final Conclusion: Demand for duty for the tax periods 1997-98 and 1998-99 confirmed on the finding that the appellant manufactured excisable glow signs; departmental valuation after re-scrutiny sustained; extended period of limitation invocable; penalty moderated and reduced while the remainder of the Commissioner's order is upheld; appeal partly allowed on these terms. Issues involved:Manufacture of glow signs under Chapter Heading 94.05, valuation of glow signs, extended period of limitation, imposition of penalty under Section 11A.Manufacture of glow signs under Chapter Heading 94.05:The case involved the accusation against the appellant of manufacturing glow signs falling under Chapter Heading 94.05 and clearing them without payment of duty. The Commissioner concluded that the appellant manufactured glow signs based on statements from customers and the assembly of various parts to create the finished product. The Commissioner relied on precedents where assembly of items at the site amounted to manufacturing, rejecting the appellant's argument that they did not manufacture the Tin/Aluminium box. The Tribunal upheld the Commissioner's decision, stating that the appellant's activity constituted the manufacture of glow signs under Chapter Heading 94.05.Valuation of glow signs:The appellant disputed the valuation arrived at by the Commissioner, claiming a lower payable amount. The Commissioner quantified the demand after re-scrutinizing figures mentioned in the show cause notice annexures. The Tribunal rejected the appellant's argument that the Commissioner acted behind their back and raised fresh issues on valuation, upholding the Commissioner's valuation determination.Extended period of limitation:The appellant argued that the extended period of limitation was not applicable as they acted with a bona fide belief and did not disclose certain facts to the Department. The Tribunal disagreed, stating that the appellant's failure to disclose the manufacturing and supply of glow signs warranted the invocability of the extended period of limitation, emphasizing that a blind belief does not constitute a bona fide belief.Imposition of penalty under Section 11A:The Commissioner imposed an equal amount of penalty under Section 11A, which the appellant argued against, stating it was not a case for a maximum penalty. The Tribunal agreed and reduced the penalty amount to Rs. 50,000, upholding the Commissioner's decision with this modification. The appeal was partly allowed on these terms.