NATIONAL METAL WORKS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) There is a duty demand of over Rs. 20 lakhs, and equal amount of penalty imposed on the appellant. This is on a finding that the appellant was manufacturing aluminium from assorted aluminium waste and scrap and clearing it without discharging Central Excise duty.

(2.) The very first contention of the learned Advocate for the appellant during the hearing is that there was no manufacturing involved at all so as to attract imposition of Central Excise duty. This submission is being made on the contention that the appellant was procuring assorted scrap from the market and converting it into scrap. Thus, there was no manufacture of a new product. It is also being contended that two types of processes were being carried out. The first process is that scrap in the form of tubes of paste etc., which contains other materials like paper as impurities, is burnt and the impurities removed and such scrap is sold. The second process is that the assorted scrap after clearing by removing impurities is melted into slabs. The learned Counsel has relied on the classification of scrap in the Customs and Central Excise Tariff to show that in both the above processes the resultant product is only scrap. The contention is that when the original material procured from the market and the material being sold after processes are scrap, there could be no finding that there was a process of manufacturing of new goods with separate identity, use etc. Another contention is that, in any event, the scrap resulting from the first process of removal of impurities like paper cannot be treated as manufactured goods at all inasmuch as the procedure carried out involved only removal of other items from the scrap. The learned Counsel also pointed out that in the seized account books themselves the appellant described the material manufactured by two categories as 'W and 'Y'. It is his contention that 'W stood for White and 'Y' stood for Yellow scrap which has been converted into slabs. He also submitted that the appellant's workers had also submitted affidavit to this effect. The learned Advocate also submitted that, if it is held that only the scrap made in the form of slabs were subject to duty, the duty involved would be only Rs. 2,43,000/ -.

(3.) The learned Advocate also made a submission that the valuation of the goods has been done incorrectly. It is being pointed out that as against the value of Rs. 70/ - per Kg. fixed at the time of preparation of Panchanama, ultimately in the impugned order, goods have been valued at Rs. 75/ - per kg. The learned Advocate also submitted that for each year, valuation should be fixed taking into account the evidence on record. It is also further pointed out that duty has been imposed treating the value of Rs. 75/ - per kg. as assessable value, instead of treating it as cum -duty price. It is the submission of the learned Counsel that it is settled that sale prices cannot be treated as assessable value. Instead, it is to be treated as cum -duty price and assessable value has to be arrived at from the same.