1990 (10) TMI 173 - AT - Central Excise

Appeal dismissed, cost of bottle decoration included in assessable value, show cause notice valid.

The Tribunal dismissed the appeal, ruling that the cost of printing and decorating plain glass bottles is includible in the assessable value as it ... Redetermination of value when might result in short levy Issues Involved:1. Inclusion of the cost of ceramic printing in the assessable value of glass bottles.2. Validity of the show cause notice.3. Competence of the Superintendent to approve the ground plan.4. Whether the ACL Unit qualifies as a factory under Section 2(e) of the Act.5. Whether printing and decorating glass bottles constitute manufacture under Section 2(f) of the Act.Issue-wise Detailed Analysis:1. Inclusion of the cost of ceramic printing in the assessable value of glass bottles:The primary issue in this appeal is whether the cost of ceramic printing on plain glass bottles, after their removal on payment of duty, is includible in the assessable value of the glass bottles. The appellants contended that the process of printing in the segregated premises does not amount to manufacture under Section 2(f) of the Act, and thus, the cost of printing should not be included in the assessable value. However, the Tribunal held that printed bottles are commercially distinct from plain bottles, having a specific use and character. The transformation of plain bottles into printed bottles constitutes manufacture, making the cost of printing includible in the assessable value.2. Validity of the show cause notice:The appellants argued that the show cause notice was unauthorized as the price list was already approved, and Section 11A was not applicable since no amount was specified. The Tribunal rejected this contention, stating that the purpose of the show cause notice was to re-determine the assessable value, potentially resulting in short levy or non-levy. Therefore, the provisions of Section 11A were applicable, and the failure to mention Section 11A did not invalidate the show cause notice, making it valid in the eyes of the law.3. Competence of the Superintendent to approve the ground plan:The appellants argued that the approval of the ground plan by the Superintendent was valid and should be considered. However, the Tribunal found no material on record establishing that the Superintendent was the licensing authority. The Notification relied upon by the appellants authorized the Superintendent for approval of authorized persons/agents, but not for specifying places where excisable goods are produced. Therefore, the Tribunal concluded that the Superintendent was not competent to approve the ground plan.4. Whether the ACL Unit qualifies as a factory under Section 2(e) of the Act:The Tribunal examined whether the ACL Unit, where the printing was carried out, qualifies as a factory under Section 2(e) of the Act. The definition of a factory includes any premises where excisable goods are manufactured or any process incidental to their production is carried on. The ACL Unit, being an enclosed space adjunct to the main factory, was considered part of the factory. The Tribunal held that the removal from the precincts of the factory is relevant for determining the assessable value, and thus, the ACL Unit is a factory within the meaning of Section 2(e).5. Whether printing and decorating glass bottles constitute manufacture under Section 2(f) of the Act:The Tribunal analyzed whether the process of printing and decorating glass bottles amounts to manufacture. Referring to various judgments, including the Supreme Court's decision in Empire Industries Ltd. v. UOI, the Tribunal concluded that transformation of plain bottles into printed bottles, which are commercially distinct and have a specific use, constitutes manufacture. The degree of transformation is irrelevant as long as the commodity is commercially known as a separate and distinct commodity. Therefore, the process of printing and decorating glass bottles is considered manufacture under Section 2(f) of the Act.Conclusion:The Tribunal dismissed the appeal, holding that the cost of printing and decorating plain glass bottles is includible in the assessable value as the process constitutes manufacture. The show cause notice was deemed valid, and the ACL Unit was considered a factory within the meaning of the Act. The approval of the ground plan by the Superintendent was found to be unauthorized.