RUNGTA IRRIGATION LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) APPELLANT manufactures rigid HDPE and PVC pipes and their fittings. They were classifying the produce under Central Excise Tariff sub -heading 3917. Duty was being paid accordingly. Show cause notice dated 27 -5 -1998 was issued calling upon them to show cause why Central Excise duty amounting to Rs. 64,85,956.00 should not be recovered under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944, why interest at 20% on the duty so claimed should not be recovered under Section 11AB of the Act and why penal action should not be taken against them for violation of the provisions contained in Rule 173Q of the Rules. The appellant disputed the claim made in the show cause notice. After considering the contentions, Commissioner by order in -original No. 22/CE/99, dated 31 -3 -1999 confirmed the demand made in the notice, directed payment of interest as claimed in the notice and also imposed penalty of a like sum under Section 11AC of the Act read with Rule 173Q of the Rules. This order of the adjudicating authority is under challenge.

(2.) LEARNED counsel representing the appellant raised three points for our consideration. The first one was that the Commissioner was not justified in denying the benefit of the decision of the Tribunal in Dai Ichi Karkaria Ltd. v. Collector of Central Excise reported in 1996 (81) E.L.T. 676 to the appellant. The second argument was that the goods manufactured by the appellant should have been classified under Chapter 84 of the Central Excise Tariff Act and not under Chapter 39 as has been done. The third contention was that the cost of the production of the HDPE and PVC pipes was not properly assessed by the Commissioner while confirming the demand of duty made in the show cause notice. We shall proceed to deal with these arguments hereunder.

(3.) IT is settled position of law that assessable value of the goods manufactured should be calculated under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975. In arriving at the assessable value as per that, the duty paid on the inputs should not have been taken into account. That was the decision rendered by this Tribunal in Dai Ichi Karkaria Ltd. v. Collector of Central Excise, 1996 (81) E.L.T. 676. The Commissioner while passing the impugned order did not apply that principle to the facts before him on the ground that that decision of the Tribunal was taken in appeal before the Supreme Court. In the appeal filed before the Supreme Court, their Lordships did not grant any stay of operation of the order passed by this Tribunal. Since there was no order of stay, the Commissioner was bound to follow the law laid down by this Tribunal. As an authority subordinate to this Tribunal, the Commissioner was clearly in error in denying the benefit of that decision to the manufacturer in this case. Now the Supreme Court has dismissed the appeal of the Revenue reported in 1999 (112) E.L.T. 353 and this Tribunal's order stands confirmed, we direct the Commissioner to requantify the tax liability of the appellant. This order will deal with the first point raised by the learned counsel representing the appellant in his favour.