SIDDHARTHA TUBES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this appeal filed by M/s Siddhartha Tubes Ltd., the matter relates to the valuation of the galvanised Mild Steel (MS) Pipes and Tubes fitted with sockets and rubber/plastic rings. The issue regarding inclusion of service charges paid to the Madhya Pradesh Laghu Udhyog Nigam Ltd. (LUNL) and the inspection charges, in the assessable value, is also for consideration. In the show cause notice dated 11 -11 -1994, central excise duty of Rs. 35,17,731/ - and Rs. 41,381/ - was demanded and penal provisions were invoked. The period involved in this show cause notice was from May 1994 to August 1994. Subsequently, seven show cause notices were also issued on different dates with the similar allegations for the period from 9.1994 to 7.1996 demanding duty of Rs. 53,82,119/ -. All of them were adjudicated by the Commissioner of Central Excise, Indore, who under his order -in -original dated 26 -3 -1997 confirmed the demand of Rs. 88,49,422/ - + Rs. 91,809/ - and imposed a penalty of Rs. 10,00,000/ - (rupees ten lakh). The benefit was, however, given with regard to the actual expenses subject to verification incurred towards unloading and stacking of the pipes and tubes at the customers site.

(2.) THE issue regarding inclusion of the cost incurred towards galvanisation of the M.S. Pipes and Tubes came up before the Tribunal in the appellants' own case in Siddhartha Tubes Ltd. v. CCE, Indore, 1996 (82) E.L.T. 399 (T), while disposing of the appellants' earlier appeal no. E/2441/94 -A. The Tribunal under order dated 4 -12 -1995 (while affirming that mere galvanisation did not amount to manufacture) held that even when galvanisation was done subsequent to paying duty on MS black pipes, the galvanisation charges were includible in the assessable value of the galvanised pipes. In the assenting decision, the Hon'ble President added, "the cost of galvanising or the enhanced price referrable to galvanisation is one of the components which is related to the value of the galvanised product and this has to be taken into account in its valuation for the purpose of excise duty." This Tribunal's decision has been confirmed by the Supreme Court vide order dated 3 -11 -1999. The Apex Court held "the mere fact that the process of galvanisation is carried on in another shed can make no difference. When the assessable value is to be calculated of the galvanised black pipe made by the appellants, the element of the cost of galvanisation must form a part thereof."

(3.) WHEN the matter was heard on 2 -2 -2000, Shri Gopal Prasad, advocate, appearing for the appellants, fairly agreed that in so far as the cost of galvanisation was concerned, the matter was already covered by the Tribunal's decision in the appellants' own case in Siddhartha Tubes Ltd. v. CCE, Indore, 1996 (82) E.L.T. 399 (Tribunal), which has been confirmed by the Supreme Court under order dated 3 -11 -1999 in Civil Appeal No. 7282 of 1996 [2000 (115) E.L.T. 32 (S.C.)]. This according to him, involved duty amount of Rs 39,17,192/ -. He, however, pleaded that the sockets, plastic rings and rubber rings were bought out items; all the pipes were not fitted with such sockets and rings and that their cost was not includible in the assessable value of the pipes. As these sockets and rings were in the nature of accessories, their cost was not includible in the value of the pipes. He referred to the Supreme Court decision in the case of Shriram Bearings Ltd. v. CCE, Patna, 1997 (91) E.L.T. 255 (S.C.). With regard to service charges, he relied upon the Tribunal's decision in the case of Electrical Products Corpn. v. CCE, 1989 (43) E.L.T. 70 (T). In so far as the inspection charges were concerned, it was pleaded that these charges were incurred on the request and on behalf of their customers. They were not includible in the assessable value. He referred to the Tribunal's decision in the case of Shree Pipes Ltd. v. CCE, 1992 (59) E.L.T. 462 (T), which has been confirmed by the Supreme Court as per Court Room Highlights appearing at page A -51 in 1992 (62) E.L.T. He further submitted that there was no case for imposition of penalty.