The changing stand of the appellant in relation to the charges and the specific terms of remand influenced the court's decision in reducing the penalty.

JUDGMENT

Dr. ARIJIT PASAYAT, J.

1.Challenge in these appeals is to the orders passed by the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai (in short the CEGAT) and Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (in short the CESTAT).

2.As common points are involved, they are taken up together for disposal.

3.So far as Appeal Nos.5317-5318/2002 are concerned they relate to order passed by CEGAT in Appeal No.E/566/02-Bom. Appeal No.5318 of 2002 relates to rejection of the application for rectification filed. Appeal No.7098 of 2005relates to Appeal No.E/3617/04-MUM. For convenience the factual position in Civil Appeal Nos.5317-18 is noted:

4.Paper Products Ltd. the appellant was engaged in the manufacture of printed flexible packaging laminates and pouches. The printing of these goods is done by means of printing cylinders. These cylinders were being manufactured by Helio Gravure, Thane, a division of Paper Products Ltd. The Department investigation led it to believe that the charges for making printing cylinders were recovered by the appellant separately from the buyers of that product and did not include these charges in the assessable value of the laminates pouches etc. Notice dated 1.2.1994 was issued demanding duty of Rs.43.59 lakhs which was alleged to have been short levied. The Collector passed orders in December 1994confirming the demand and imposed penalty. The assessee challenged the order to the Tribunal. The Tribunal in its order reported in Paper Products Ltd. v. Collector of Central Excise, Bombay (1999 (110) ELT 671) held that the charges that were paid for printing cylinders were includible in the value of the pouches and other such goods. It also held with regard to the service charges that the appellant recovered from its buyers "the activity for which the charges recovered must be regarded as an activity essential to enable the appellant to print the laminated cartons which are the appellants final products and in this view also, the charges collected would be part of the assessable value." The Tribunal also noted that the appellant before it "had no case before the Adjudicating Authority that the cost of cylinders had been amortized to any extent" by the appellant. A further contention was raised before the Tribunal that duty chargeable on the finished product during a substantial part of the disputed period was nil either on account of the order of the Board dated 5.5.1999 or exemption notification 49/87 dated 1.3.1987. The Tribunal noted that those contentions had not been raised before the adjudicating authority observed that these stands would require factual investigation and felt that the controversy should be decided by the adjudicating authority and, therefore, remanded the case to the adjudicating authority for deciding on the two issues what is the correct rate of duty chargeable and correct amount of differential duty payable and the correct amount of penalty imposable. The Commissioner passed orders with regard to the remand proceedings by order dated 31.10.2001.The said order was challenged before CEGAT.

5.In his order, the Commissioner took the stand that the order of the Tribunal, and the order passed by the bench on a subsequent application for rectification of mistake in that order, made it clear that the question of amortization was not to be considered by him in the remand proceedings. He examined the applicability of notification 49/87 and the order of the Board dated 5.5.1989 and found that neither of them would apply. The assessee had not been shown fulfillment of the condition subject to which the exemption of notification49/87 was available and the circular of the Board did not relate to the disputed period.

6.The contention of the counsel for the appellant before CEGAT was that the Commissioner should have taken into account the plea that the casting had been amortized. He relied upon the decision of the Tribunal in Flex