EASTERN ELECTRO CHEMICAL Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) APPELLANT was engaged in the manufacture of calcium carbide. Because of the explosive nature of the substance, it was supplied in steel drums. While clearing the goods for payment of duty value of the steel drums namely the container was not included. This was on the ground that the steel drums are durable and returnable. Calcium carbide supplied persuant to 4 Purchase Orders dated 5 -6 -89, 8 -2 -90, 28 -1 -91 and 15 -10 -91 were valued by the manufacture for the purpose of payment of duty without adding the value of the container in which goods were packed. If the value of the drums were added to the value of the calcium carbide, during the financial year 1991 -92, the cost of the goods manufactured would exceed Rs. 2 Crores and appellant would not be entitled to the benefit of exemption Notification No. 175/86. For getting the benefit of that Notification the value of the goods manufactured were shown without value of the container.

(2.) SHOW cause notice dated 9 -7 -93 was issued to the appellant calling for their explanation for realising the differential duty of Rs. 10,70,841/ - short paid on account of wilful misdeclaration and suppression of material facts. In reply to the show cause notice, the manufacturer raised the contention that their existed arrangement for the return of durable and returnable packing, namely, the steel drums and so its value cannot be included in the assessable value of the goods manufactured as per the Provisions contained in Section 4(4)(d)(ii) of the Act. In support of this contention manufacturer produced copies of the invoices and other material evidence. Adjudicating authority rejected the contentions of the manufacturer by adjudication order dated 26 -3 -96. As per this order the amount of duty demanded in the show cause notice was confirmed and the manufacturer was directed to pay a penalty of Rs. 1 lakh under Rule 173Q of the Central Excise Rules. Aggrieved by this order manufacturer has come up in appeal.

(3.) THE main grounds urged by the ld. Counsel representing the appellant were that there existed an arrangement for the return of durable and returnable packing, namely, steel drums; that there was no suppression of any fact from the departmental authorities so as to sustain demand for an extended period and that there was no loss to the Revenue on account of the fact that had they paid duty on value of the container BHEL would have taken additional Modvat credit to that extent. We shall proceed to deal with these points herein below.