TaxTMI 
TaxTMI 
2000 (2) TMI 243
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....ain records and recorded the statement of Dr. S.N. Chadha, Prop. of M/s. KWC who stated inter alia that all the four units were engaged in the manufacture of common products in the same plot and that records of all the four units were maintained in the same plot; that Proprietors of all the four firms were, himself (Dr. Chadha), his wife Amita Chadha and his two sons Shri Ajay Chadha and Shri Sanjay Chadha); that the word 'Kingwin' is used to identify the company's product; that there was only one power connection in the name of M/s. KWC which was utilised by all units; that factory premises belongs to M/s. KWC and rent is being charged from other units etc. 2. Statement of Shri Sanjay Chadha was recorded on 26-10-1993 on which date, the statement of Mrs. Susheela S. Kutty, Accountant of M/s. KWI, was also recorded. A further statement of Dr. Chadha was recorded on 26-10-1993 and on 1-2-1994, investigation revealed that all the raw materials for all four units were purchased by Dr. Chadha; raw material was jointly stored without any unit-wise maintenance of raw material stock accounts and that inter-unit transfer of raw materials was carried out without making any chemical ....
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....sed a penalty of amount equal to duty under Section 11AC and Rule 173Q and also imposed a penalty of Rs. 11,50,000/- on Dr. Chadha. He also ordered recovery of interest under Section 11AB of the Central Excise Act. The Commissioner held that clearance of all the units of Kingwin are liable to be clubbed for denying exemption under SSI notification; that forwarding charges, insurance charges and consultancy charges are to be included in the assessable value of the goods cleared by the units; that w.e.f. 8-6-1996, the prices at which KWHCL has sold the goods to customers should be taken as the normal price for determining the assessable value of goods sold by KWI and other 3 units in the beginning to M/s. KWHCL and that the process of dilution with water/or addition of soda as filler to herbicides/fungicides, castor oil, and organic or inorganic chemicals amounts to manufacture and that the products are classifiable under Chapter 38. Hence these appeals. 5. We have considered the rival submissions and perused the records. Let us first take up the issue as to whether dilution of herbicides/fungicides, sulphonated castor oil and inorganic and organic chemicals amounts to manufa....
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....phonated castor oil (SH 3402.10) have been marketed under different brand names like Coolwin, Corowin, Softwin. Sodawin as corrosion inhibitor. Scale softener for boilers etc. which the concentrated sulphonated castor oil certainly is not. Thus starting from a chemical a new product for altogether different uses and applications has emerged which definitely is covered within the meaning of manufacture under the Central Excise law. Thus the products even if obtained by dilution, are fit for some specific end purpose for which sulphonated castor oil itself cannot be put. Since new products with distinct names and uses have emerged, the activities conducted by the noticees definitely tantamount to manufacture in terms of Section 2(f). Thus the products based on sulphonated castor oil are classifiable under Heading 38.23. Similarly, the activity of producing formulations even by dilution of inorganic/organic chemicals which are sold under different names and for specific end uses amount to manufacture in terms of Section 2(f) and such products are correctly classifiable under CH 38.23. Dr. Chadha in his statement dated 13-2-1996 has admitted that the products declared by them ....
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....l decision. The appeals of the Revenue in both the cases were dismissed by the Hon'ble Supreme Court [vide order dated 7-5-1991 in Civil Appeal No. 1847/91 [1991 (54) E.L.T. A25] and C.A No. 2610/91, dated 15-7-1991 respectively]. 9. In the case of C.C.E. v. Markfed Agro Chemicals reported in [1993 (68) E.L.T. 848], the Tribunal held that preparation of malathion 50%, DDT 25%, Aldrin 30% and Sohnagar 30% E.C. mainly dilution of basic pesticide chemicals in highly concentrated form by addition of inert carriers/solvents and dispensing and stability agents to make them suitable for either direct use or use after addition of water, does not amount to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 since no new product having distinct name, character and use appeared as a result of such processing. 10. In the case of Jyoti Laboratories v. C.C.E. - 1994 (72) E.L.T. 669 (T) = 1994 (50) ECR 36 it was held that mixing and dissolving in hot water of acid dye Ranipal and Ultra Marine Blue being a physical change is not manufacture under Section 2(f) of the Central Excise Act, 1944. 11. In the case of Commissioner of Central Excise v. Den....
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....f goods falling under Heading 38.08. However, the appellants have submitted that no clearance of diluted herbicides/fungicides took place subsequent to this date. This is a factual matter which will be required to be verified by the jurisdictional authorities to whom this aspect is remanded. If investigation reveals that the appellants cleared diluted fungicides/herbicides after 23-7-1996, duty will be payable on such clearances. We also observe that Chapter notes have been added on 1-3-1997 to Chapters 28, 29, 34 and 38 by which the process of packing have been deemed to amount to manufacture; however, the period in these cases is upto 31-1-1997 and therefore, the Chapter notes are not applicable herein. 17. The next issue to be considered is regarding the includibility of insurance charges, forwarding charges and consultancy charges in the assessable value of the goods cleared by the appellants. The Adjudicating authority has held that these charges are liable to be included in the assessable value. The appellants submit that in addition to sales at the factory gate where insurance charges are not collected, there are instances where delivery is given at the customers pre....
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....e notice was already available in October, 1993 itself so as to claim that the demand for the period subsequent to 27-10-1993 is barred by limitation, particularly when the charge of suppression prices is not contested by the appellants. We therefore, hold that no part of the demand is barred by limitation. 19. The contention of the appellants is that, if the argument that dilution with water/soda ash and packing and selling is not manufacture and consultancy charges for sale of formula alone cannot be included in the assessable value of their product is accepted, then the value of clearances by the assessees will remain within the exemption limit prescribed for each of the units in each of the financial years in question, even if the clearances of all the units are clubbed. They submit that this will be brought out from the charts produced by the Adjudicating authority for each of the unit for each financial year. In view of our finding in the previous paragraph of this order that dilution with water/soda ash does not amount to manufacture and that insurance and forwarding charges cannot be included in the assessable value of the final products if it is found on verificati....