Kalapi Printing Press vs Commissioner Of Central Excise, Thane ...

(Arising out Order-in-Appeal No. BR/27 to 28/M-IV/2005 dated 28.02.2005 passed by the Commissioner of Central Excise (Appeals), Mumbai I)

For approval and signature: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. 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

Kalapi Printing Press Appellant Nazim S. Nanjee Vs.

Commissioner of Central Excise, Thane II Respondent

Appearance:

Shri Vinay Sejpal, Advocate with Shri Sunil Agnihotri, Advocate for the appellant Shri N.N. Prabhudesai, Supdt. (AR) for the respondent

CORAM:

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

Date of hearing : 03.09.2015 Date of decision : 03.09.2015

O R D E R No:..

Per: P.K. Jain:

The brief facts of the case are that the appellant is engaged in the manufacture of printed cartons, catch covers and labels. In connection with printing of such goods, they are getting certain art work done and get plates made. They are incurring expenditure in developing the art work and plate making charges. Normally, such charges are not being recovered by the appellant from its customers directly but these are indirectly recovered by including in the cost of printed cartons, catch covers labels or in the printing charges. However, in certain cases appellants customer placed certain orders and in connection with such orders, they got certain art work and plate making done but for various reasons the same are not used in the manufacturing of goods as their customers may not approved the same or cancelled the order etc. In such cases appellant had raised debit notes for the said expenditure/amount. Revenue has issued demand notices on the ground that expenditure incurred/debit notes raised in such cases would form part of the assessable value.

2. Ld. counsel for the appellant submits that a perusal of the Order-in-Original in the finding portion would indicate that the issue involved in the demand is on the amounts raised by different debit note to the various customers for the positives which are either rejected for specific reasons or not used in the manufacture of excisable goods namely cartons and labels. Ld. counsel for the appellant also submitted that in most of the cases in reality amount corresponding to such debit notes have not been recovered by the appellant and debit notes are raised as a pressure tactics on the customer by them. Ld. counsel also submitted that in any case such art work and plate making is not done by them but some other person. As far as they are concerned, such art work or plate have not been used by them, thus if at all duty is to be charged, the same should be charged from the person who has done the art work or made the plate. Ld. counsel also submitted that demand has been issued invoking the extended period of limitation and ingredients of proviso are absent in this case. Ld. counsel submitted following case laws:-

* Essel Propack Ltd. vs. CCE  Appeal no. E/2482/05  Final Order no. A/2814/15/EB dated 31.08.2015 * Ashok Iron Works Ltd. vs. CCE 2004 (168) ELT 198 (Tri-Bang) * Excel Glasses Ltd. vs. CCE 2000 (123) ELT 772 (T) * Creative Dyeing & Printing Mills 2004 (164) ELT 41

3. Ld. AR on the other hand, took us through the impugned order as also the Order-in-Original and submitted that development of art work and preparation of plates is a continuous work and any expenditure incurred on the same and recovered from the buyer will form part of the assessable value. Ld. AR also submitted that these crucial facts were suppressed from the department and not indicated in the price declaration. It is only during investigation that these facts have come to the notice and in view of the said position extended period of limitation is correctly invoked.

4. We have considered the submissions of both sides. As explained by the ld. counsel for the appellant that normally they are not charging their customers separately for the art work and development of plates, as these are essential part of printing process and the expenditure done on the items gets included in the charges they collect from their customer for printing or for manufacture of final products. We also note that the art work and development of plate is not being done by themselves but by some other person. If such plates or art work is not being used then we do not find any reason to include the expenditure so made in the assessable value. In fact we observe that almost similar issue has come up before this Tribunal in the case of Essel Propack Ltd. vs. CCE  Appeal no. E/2482/05  Final Order no. A/2814/15/EB dated 31.08.2015 and this Tribunal has observed as under:-

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.

5. In view of the above position, we do not find any case of revenue on merits, and accordingly, appeals are allowed. Since we are allowing the appeal on merits itself, we do not consider it necessary to go to the aspect of extended period of limitation, penalty etc.

6. Appeals are allowed.

(Operative part pronounced in Court)

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

//SR

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E/1828 & 1829/05