CCE MUMBAI-I Vs. PURAN ENTERPRISES & OTHERS

JUDGEMENT

(1.) Both these appeals relate to differential duty demands on Audio Cassettes. The appellants were job workers who carried out recording of music on cassettes against job contract. They paid duty at the time of the clearances of the tapes on assessable value comprising of price of audio tape and the recording charge received by them. The subsequent duty demands involved in these appeals have been made invoking the extended period as provided in priviso to Section 11A(1) of the Central Excise Act holding that the assessable value should have also included a component towards cost of master cassettes and inlay. Demand has been raised beyond the normal period of six months allowed under Section 11A(1) on the basis that short levy is the result of suppression of facts with intent to evade payment of duty.

(2.) Arguing the appeal of M/s Swar Cassettes, the learned Consultant has stressed that the appellant had included in the assessable value are the elements of cost known to them, i.e. cost of tape and recording charge. He submitted that the recording charge levied by them included all costs associated with recording, like the cost of machinery, the rental of premises, electricity and other costs and the profit earned by them in the recording work. He submitted that no elements of cost which they were aware have been excluded. He also submitted that part of the recording by them was in the nature of religious songs which were distributed as religious and philanthropic activites. No royalty is involved in respect of such songs. He also submitted that the revenue has not established that in each of the contracts, there was actually the element of royalty and other costs and the basis on which they have determined the cost of the master cassettes, demanded duty. He submitted that the demand of duty is based entirely on an ad -hoc addition of Rs. 2/ to the value of each cassette without any evidence to show that royalty and other elements were involved in each case and that Rs. 2/ - per cassettes would be the cost of master cassettes and inlay. The learned Consultant submitted that from these it was clear that there was no wilful suppression of facts with intent to evade payment of duty by the recorders. He, therefore, urged that the appeal should be allowed on the ground of time bar alone. 2. The impugned order shows that the appellant started paying duty on an additional value of Rs.2/ - from 20.1.98, the date on which they started charging Rs. 2/ - per cassette towards the cost in dispute.

(3.) A perusal of the records show that no specific evidence has been adduced by the revenue about the existance of roylty and other charge in each of the cases. There is considerable force in the submission of the appellant that no royalty is involved in relation to devotional songs. The assessee also started paying duty on the higher value from the day they started charging Rs. 2/ - per cassette as additional charge towards cost of master cassette. In these circumstances, the allegation of wilful suppression of facts with intent to evade duty cannot be sustained against M/s Swar Sudha Cassette. In the case of M/s Puran Enterprises and Other, duty demand was held to be not sustainable by the Commissioner on the ground of time bar also. The Revenue's appeal does not challenge this finding of the commissioner. Therefore, in that case it has to be held that there is no error in regard to the finding on time bar.