UNIQUE PHOTO OFFSET SERVICES Vs. CCE

JUDGEMENT

(1.) THIS appeal arises from order -in -original dt. 27.9.1990 passed by Collector of Central Excise, Bombay, confirming a duty demand of Rs. 9,53,662.86 under Rule 9(2) of CE Rules, read with Section 11A of CE Act. He has imposed a penalty of Rs. 10,000/ - under Rule 173Q of CE Rules. The facts of the case are that during the course of preventive checks on 8.10.1984, the officers of Division G -I, Bombay -I noticed the appellants engaged since 1979 -80 in developing negative and positive films printing where different colour, character sets of negative and positive are produced by the exposure of colour artwork, colour design and colour transparency on photographic material with the help of a computerised camera. A film is developed in a developing machine. The image on such negative and positive is transferred on zinc offset plate. The zinc offset plate is coated with required light sensitive chemical and the negative/positive are placed in contact. A strong light exposure is given which transfers the image on the zinc plate. The department took a view that as the said negative/positive films and zinc offset plates were classifiable under TI 68 of CET and since the party was clearing the same without obtaining Central Excise licence, without payment of duty leviable thereon, therefore, records were seized under a panchnama. On scrutiny it was found that the value of capital investment on plant and machinery was less than Rs. ten lacs and the details of the clearances for the year 1979 -80 and for subsequent years upto 1983 -84 was shown in the show cause notice.

(2.) IT is stated by the department that the party was eligible for exemption under Notification No. 89/79 dt. 1.3.1979 and Notification No. 105/80 dt. 19.6.1980 during the period from 1979 -80 to 1981 -82. It is stated that they were required to clear the products in excess of Rs. 30 lakhs on payment of duty in terms of Notification No. 105/80 dt. 19.6.1980 and Notification No. 77/83 dt. 1.3.1983 during the year 1982 -83 and that they were not eligible for exemption subsequent to the said period.

(3.) IT was the contention of the party that they had not contravened any of the provisions of the CE Act or Rules. That they had right from 1975 onwards when TI 68 was introduced and particularly when Notification No. 264/76 was issued on 29.10.1976, processing of duty paid photographic films was held to be non -dutiable. It was further contended that they had filed a declaration on 3.10.1983 as required under the Notification No. 111/78 dt. 9.5.1978 as amended etc. and that the department did not object to their plea that processing of duty paid film was not an activity liable to excise duty. It was their further contention that their professional activities are like 'developing and printing' of photos and are like 'enlargement of photo prints from and are like preparation of colour sides'. The activities mentioned in the explanation to Notification No. 264/76 would not strictly restrict the activities mentioned therein but would also include similar activities on account of use of the word 'like' in the explanation to the said Notification. It was also contended that making of photographic negatives and positives is the fundamental activity in every professional photographic establishment. There is nothing in the said Notification which would exclude the product of such activity if in their production any equipment e.g. chronographic or computerised camera is used from the benefit of the exemption Notification. It was contented that they do not have computerised camera known as chromograph in their premises. The cameras they have, are having electronic timings and exposure unit and are not computer based. These cameras do not have random excess memory like in a chromograph computerised camera. They relied on their declaration filed on 3.10.1983 much prior to the issue of Tariff Advice No. 31/84 dt. 5.7.1984 by which it was considered that the negative and positive films prints as well as zinc offset plates manufactured with the help of chromograph for use in the offset printing are not eligible for exemption under Notification No. 264/76 dt. 29.10.1976. Therefore, they contend that the charge of suppression of facts for using computerised camera and not disclosing the same in the declaration dt. 3.10.1983 is absolutely baseless. It was also contended that the demand was based on the total value of invoices without excluding the charges for printing and proofing which are fully exempted, such charges worked out to Rs. 1,80,214.28 during 1982 -83 and Rs. 3,37,761.57 during the year 1983 -84.