TaxTMI 
TaxTMI 
TaxTMI 
2005 (11) TMI 73
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....5 (for short "the 1985 Act") at their factory at Mandideep, Bhopal within the jurisdiction of the Commissioner of Central Excise, Indore. On 8/10-6-1994, a show cause notice was issued by the Collector in which it was alleged that during the period December, 1992 to December, 1993, the appellants had removed AMS in bulk packs of 25 kgs. for further repacking in 20 gms. and 30 gms. sachets by M/s. Industrial Enterprises (Detergent), Kanpur ("IED" for short); that, the said IED was an extended arm of appellants; that, the appellants had cleared 25 kgs. bulk packs of AMS on pricing, based on the cost method, and thereby did not pay the appropriate amount of duty on AMS in the condition in which it emerged after repacking by IED, Kanpur; that, the appellants did not pay duty on the prices of the sachets; that, the appellants had failed to disclose to the department the particulars of the agreement with IED for the repacking of the detergent powder (AMS); that, the appellants had removed the AMS in 25 kgs. packs with the sole intention of getting it packed in 20 gms. and 30 gms. sachets by IED, Kanpur; that, the entire modus operandi on the part of the appellants was to deliberately dec....
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....D had informed the department that it had stopped carrying out manufacturing operations and that it had surrendered L-4 licence. Further, vide letter dated 11-11-1991, addressed by the Assistant Collector, Kanpur, clarification was given that "repacking" of the detergent powder did not amount to "manufacture". The appellants relied upon the aforestated circumstances in support of their contention that there was no wilful suppression on their part and, therefore, the department was not entitled to invoke the extended period of limitation, as was sought to be done vide the above show cause notice. In reply to the show cause notice, the appellants further submitted that the demand for differential duty was proposed by the department on the ground that the duty was payable on the price of the sachets, which were sold. In reply, the appellants contended that 25 kgs. bulk packs were cleared at their factory's gate at Mandideep, Bhopal; that, they were not sold; that, 25 kgs. bulk packs were sent by the appellants to IED for repacking in sachets and since such repacking did not constitute "manufacture", the department was not entitled to levy differential duty on the price of the sachets.....
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....rm of the appellants; that, under the contract between the appellants and the IED, activity of IED was not disclosed by the appellants; that, the appellants had removed the AMS in 25 kgs. packs with the sole intention of getting it packed in 20 gms. and 30 gms. sachets by IED, Kanpur; that, the appellants had deliberately declared only the cost of 25 kgs. bulk packs for payment of excise duty; and, that, the appellants had suppressed the true price of AMS in the condition in which the said AMS was removed after repacking in 20 gms. and 30 gms. sachets on which the appellants failed to pay duty and, consequently, the demand raised by the department was legal and justifiable. Consequently, the Commissioner confirmed the show cause notice. 6.Being aggrieved by the order of the Commissioner dated 10-12-1997, the assessees carried the matter in appeal to the Tribunal. By the impugned judgment, the Tribunal came to the conclusion that the IED was an extended arm of the appellants; that, the entire dispute was about under-valuation of the 25 kgs. bulk packs cleared from Mandideep and, therefore, the Commissioner of Central Excise at Indore had jurisdiction to decide the issue of valuatio....
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....of Section 4(4)(d)(i) of the said Act. Learned Counsel also submitted that if repacking activity did not amount to "manufacture" at the relevant time then the cost of repacking cannot be included in the assessable value. Lastly, it was urged that repacking amounted to "manufacture" only after the Finance Act No. 2 of 1994; that, after the said 1994 Act, IED had obtained the requisite registration, and that IED has since been paying excise duty on the manufacture of retail packs. Consequently, it was urged that there was no suppression on the part of the appellants. Learned Counsel submitted that none of these facts have been considered by the Tribunal. 8.Shri Mohan Parasaran, learned Additional Solicitor General submitted on behalf of the appellants that during the relevant period, AMS was manufactured by the appellants and not by the IED and, therefore, the department was right in demanding the differential duty on the price of the sachets. He submitted that the appellants removed the detergent powder in 25 kgs. bulk packs from the factory gate at Mandideep, Bhopal with the sole intention of getting it packed into sachets of the aforestated dimensions by IED, Kanpur. He contended....
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....e levy. It was held that the fundamental criterion for computing the value of an excisable article was the price at which the excisable article was sold or was capable of being sold by the manufacturer. It was further held that the price of an article was related to its value and in that value, we have several components, including those components which enhance the commercial value of the article and which give to the article its marketability in the trade. Therefore, the expenses incurred on such factors inter alia have to be included in the assessable value of the article up to the date of the sale, which was the date of delivery. 10.In the case of Sidhartha Tubes Ltd. v. Collector of Central Excise reported in 2000 (115) E.L.T. 32, this Court held that the process of galvanization, though did not amount to "manufacture", resulted in value addition and, therefore, the galvanization charges were includible in the assessable value of the M.S. black pipe. 11.The concepts of "manufacture" and "valuation" are two different and distinct concepts. In the present case, we are concerned with valuation. Value is the function of price under Section 4(1)(a) of the said Act. In the presen....