TaxTMI 
TaxTMI 
2016 (12) TMI 432
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....ived any additional consideration than the consideration mentioned in the invoices for the invoice quantity of carbon black including slightly excess quantity (iii) If Tribunal finds that the appellants had not received any additional consideration for the slightly overfilled quantity of carbon black in the packing bags dispatched to buyers, then it shall examine whether Central Excise Duty can be demanded on such slightly excess/overfilled quantity of carbon black when the duty was payable on ad valorem basis". 2. That the brief facts are that the appellant are engaged in the manufacture of carbon black falling under heading 2803.00 of the schedule to the Central Excise Act, 1985 on which duty is payable on ad valorem basis. The nature of carbon black is such that it sticks to almost all surfaces with which it comes into contact. Specifically the carbon black sticks on to the metal surfaces of the silos as well as the packing material. Due to inherent nature of the carbon black as it sticks on to any surface on contact, the exact quantum of loose carbon black produced each day cannot be measured precisely. The appellant therefore, calculates the daily production of loose carbon ....
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....on black is highly priced at about Rs. 22,000/- to 28,000/- per kg. approx during the relevant period, the customer would not grudge if they receive a quantity slightly more than the quantity indicated in the invoice. On the other hand the customer will create a furore, if they receive a quantity lesser than the quantity indicated in the invoice. On receipt of a slightly lesser quantity than invoiced, the customer does not make payment for the shortage leading to disputes between the parties. Due to receipt of repeated complaints from the customers of shortage, the appellant invariably for the sake of goodwill overfill the bags marginally so that in no instance of weighment of the bags by the customers, the content is less than 25 kg. of carbon black. The extra quantity of carbon black that is added or packed is to the extent of 0.3 to 0.4% of the total weight. 5. There is one more reason why the appellants filled slightly excess quantity of carbon black. Being hygroscopic in nature it easily picks up or absorbs moisture if exposed to high relative humidity. While the normal result of an exposure to humidity is gain in weight, it may so happen that even after such a gain the overa....
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....m.t. would be Rs. 900. The actual quantity of carbon black received by the customer will be 9004 kg approximately, but the appellant would receive only Rs. 900. In other words, in real terms, the amount of 900 is the sale price not for 9000 kg but for 9004 kg. Since duty is payable on carbon black on ad valorem basis, the amount on which the appellants are liable to pay duty is Rs. 900 and the appellants have duly discharge the duty accordingly. 7. That the officers of Central Excise Department visited the factory of the appellant on 30 May, 1996 and scrutinized the documents as well as undertook stock verification of the quantities of finished products and raw materials. Pursuant thereto SCN dated 28 April, 1998 was issued alleging that appellant had clandestinely cleared excess quantity of carbon black without accounting for in their RG-I Register. The allegations in the SCN were made on the basis of private records maintained by the appellant. The fact being that although in the RG-I Register quantity per bag was shown as 25 KG but in the private record the quantity was slightly more indicated for the reasons as discussed hereinabove. 8. The SCN was adjudicated on contest and ....
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....py of such report. (ii) The High Court also noticed that the appellant have raised the issue that the duty on carbon black is on ad valorem basis. The department had conducted investigation with one of the purchaser namely Modi Tyres who had informed that no excess amount was paid for the excess quantity received. It is also not disputed by the Commissioner that the appellant have not received any excess amount for such excess quantity of carbon black packed. Reliance was placed on the rulings of this Tribunal in Rackitt & Colman of India Ltd. Vs. C.C.E., Calcutta 1993 (44) ECR 33 and Manisha Pharmo Plast Ltd. 1999 (108) E.L.T. 273, wherein it have been held that where the assessment is linked to value, the realisation of the price is the same even if the packed quantity is slightly more than the quantity projected, will not have any Revenue implication." 10. The Tribunal found force in the second contention of the appellant aforementioned and further the Tribunal had in its first order observed that the question whether overfilling was a trade practice needed to be examined in depth. In the final order passed in second round passed by this Tribunal on 19 October, 2004, the Hon'b....
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....r Section 4(1)(a) would have been discharged and the price would not be ignored and the transaction would fall under the protective umbrella contained in the Section itself." The Hon'ble High Court further observed that no evidence was brought on record by the Revenue before the adjudicating authority that the appellant had received any amount as additional consideration in respect of overfilling excess quantity of carbon black. It was also not the case of Revenue that the report of investigation conducted by them with one of the purchaser namely Modi Tyres, who confirmed that no excess amount was paid for the excess quantity was not on record. Further, there is no finding of the adjudicating authority that the appellants have received any excess amount for the excess quantity of carbon black so packed. Hon'ble High Court also observed that specific pleas raised by the appellant in this regard have not been considered by the learned Commissioner leading to miscarriage of justice. 11. Heard the learned counsel for the appellants Mr. A.R. Madhav Rao, Advocate assisted by Mr. Nishant Mishra and Mr. Rajat Mittal, Advocates. Also heard learned A.r. Shri D.S. Mann, Assistant Commissio....
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.... the appellant's counsel on Circular No.876/14/2008-CX dated 20/10/2008 regarding allowance of maximum permissible error on net quantity by weight declared in package of cement wherein the CBEC have explained that cement is required to be packed in bags containing 50 kg. Generally bagging in cement factories is done by automatic filling machines, adjusted to pack 50 kg in a bag. However, sometimes the actual quantity filled in a bag may be little more or less than 50 kg due to inherent nature of product and the quality of machines. Due to these reasons the standard of Weight and Measure (Packaged Commodities) Rules, 1977 provides for 1% of variation (excess or short) for cement bags of 50 kg. Therefore, it has been decided that same practice of variation 1% should be allowed for cement filled in bags for the purpose of levy of Central Excise duty. Pending disputes, if any, may also be decided accordingly. Learned A.R. contents that the circular is of the year 2008 and the period in dispute relates to 1993-94 to 1995-96 the same is not applicable. 15. Having considered the rival contentions, we find that under the facts and circumstances in view of the standard practice followe....