Essel Propack Ltd vs Commissioner Of Central Excise, Thane I

(Arising out Order-in-Appeal No. BR/116/TH-I/2005 dated 31.05.2005 passed by the Commissioner of Central Excise (Appeals), Mumbai IV)

For approval and signature: Honble Shri P.K. Jain, Member (Technical) Honble Shri S.S.Garg, Member (Judicial)

1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? : No 2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? : Yes 3. Whether Their Lordships wish to see the fair copy of the Order? : Seen 4. Whether Order is to be circulated to the Departmental authorities? : Yes

Essel Propack Ltd. Appellant

Vs.

Commissioner of Central Excise, Thane I Respondent

Appearance:

Mr. Prasad Paranjape, Advocate for the appellant Shri V.K. Shastri, AC (AR) for the respondent

CORAM:

Honble Shri P.K. Jain, Member (Technical) Honble Shri S. S. Garg, Member (Judicial)

Date of hearing : 19.08.2015 Date of decision : 31.08.2015

O R D E R No:..

Per: P.K. Jain:

The brief facts of the case are that the appellant is engaged in manufacture of laminated tube for various consumable products such as toothpaste etc. In connection with printing of such tube, they are getting certain art work done on behalf of the customer and incurring expenditure in developing the art work and plate making charges. During audit it was found that appellant has raised debit notes to the customer but the said amount is not included for the purpose of assessable value and accordingly, the demands were issued.

2. The ld. counsel for the appellants main contention is that wherever they have used art work and plate for manufacture of laminated tubes, they have included the value of the same as the assessable value of laminated tubes. However, there are many instances wherein they have gone ahead with the art work/plate making in anticipation of order and for some reason as cancellation of order etc. the same was not used for manufacture of laminated tubes. In such a situation, they have recovered the amount of cost of developing the art work and plate making charges from their customer by way of debit note. Since these items have not been used for the manufacture of any excisable goods, the question of paying duty on such value does not arise. It was further submitted that since they have not used the said art work, it is not possible for them to produce evidence that they have not used the same in the manufacturing process. He further submitted that this is the stand of the appellant right from the stage of audit, reply to the show-cause notice etc. He submitted that no evidence can be produced if the item is not used in the manufacturing process. It was also submitted that the demand is negligible compared to the yearly duty paid by them and there is no reason for them to evade such a negligible amount. It was also submitted that the show-cause notice has been issued invoking the extended period and the ingredients of invoking the extended period are not present, and therefore, the demand is not sustainable.

3. Ld. AR, on the other hand, submitted that appellants have failed to produce any evidence in support of their contention that such an art work was not used by them in the manufacturing process. He took us through the impugned order and Order-in-Original in support of his submission.

4. We have considered the submission made by both sides.

5. The main contention of the appellant is that the art work and plate making charges wherever they have raised in the form of debit note are pertaining to the cases wherein no manufacturing has taken place and it is for this reason that they have raised the debit note on the customer to recover the expenses incurred by them. We find force in the contention of the appellant inasmuch as the appellant is taking this stand from the time of audit. We also note that revenue has not investigated the explanation of the appellant by contacting the customers or at least ask the appellant to get the explanation from the customer. The art work and plate making as such are not excisable activities and these will form part of the assessable value only if the same are used in the manufacture of laminated tubes. Keeping in view the overall factual matrix, we are of the view that no case is made to indicate that such art work/plates were used in the manufacture of laminated tubes and value of such artwork/plates was not included in the value of laminated tubes.

6. Accordingly, we set aside the said order and allow the appeal of the appellant.

(Pronounced in Court on .)

(S. S. Garg) (P.K. Jain) Member (Judicial) Member (Technical)

//SR

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