TIMEX WATCHES LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this appeal which has been filed by the appellants against the impugned order -in -appeal, the controversy centres round the question as to whether the appellants are entitled to take abatement of 35% from MRP, while arriving at the price of the goods excluding sales tax and other taxes for payment of 8% of the amount under Rules 57CC and 57 -AD(2) of the Central Excise Rules, 1944, or not. The lower authorities have disallowed this abatement and confirmed the differential demand of Rs. 16,30,197/ - with penalty of Rs. 1 lakh against the appellants.

(2.) THE facts are not much in dispute. The appellants are engaged in the manufacture of Wrist watches. They availed the Modvat credit on the inputs used in the manufacture of those watches, the retail price of which was Rs. 500/ -per piece during the period March, 2000 to February, 2001 and cleared those watches without payment of duty by availing exemption under Notification No. 6/2000 -C.E. dated 1 -3 -2000. For having not maintained the separate record in terms of Rules 57CC and 57AD(2) of the Rules in respect of the inputs utilised by them in the manufacture of the exempted wrist watches, as they were also during that time, manufacturing the wrist watches having sale price of more than Rs. 500/ - per piece and on which there was no exemption from payment of duty, they were required to pay 8% of the total price of the exempted wrist watches cleared by them and which was to be calculated after excluding the sales tax and other taxes. But they calculated the price after availing abatement of 35% on account of the taxes as has been notified under Section 4A of the Central Excise Act. We have heard both the sides.

(3.) FROM the record, we find that since the appellants were engaged in the manufacture of exempted as well as dutiable goods, they were required to maintain a separate record in respect of the inputs utilised by them in the manufacture of the exempted goods as no credit on those inputs could be legally availed by them and if availed, were required to reverse the same before clearing the exempted goods. But admittedly, this procedure was not followed by the appellants as required under the above said Rules. It has also not been disputed before us that the appellants, during the relevant period, were required to pay 8% of the total price excluding sales tax and other taxes, if any paid, at the time of clearance of the exempted goods in terms of Rules 57CC and 57AD(2) of the Rules. The contention of the Counsel that while calculating the total price of the exempted goods, the appellants are entitled to take abatement of 35% of MRP is wholly misconceived and cannot be accepted. The wording of Rule 57CC is quite clear and unambiguous and it mandates, that an assessee shall pay 8% of the total price excluding sales tax and other taxes, if any paid, of the exempted cleared goods. The exclusion provided under this Rule is of sales tax and other taxes, if any, paid while computing the total price of the exempted cleared goods. This rule does not speak of availability of any abatement of 35% of the MRP, to an assessee, while calculating the total price of such goods, for the purpose of payment of 8% thereon. The appellants, therefore, cannot legally claim this abatement while calculating the 8% of the total price of the exempted goods cleared by them during the period in dispute. This abatement has been rightly disallowed to them by the lower authorities. The demand of the amount in question detailed above, has been correctly raised through show cause notice and confirmed on appellants by the lower authorities.