Lajja Ram, Member (T)

1. M/s. Kapoor Engg. Works, Railway Road, Saharanpur (hereinafter referred to as the 'party'), were engaged in the manufacture of excisable goods - weigh bridges, weighing machines, sugar centrifugal machines, crystallizers, sulphur furnace, coal mixers, briquette presses etc., falling under Item No. 45 and Item No. 68 of the erstwhile Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Tariff').

2. It was observed as per notice to show cause No. V-45(15)75/81, dated 5-10-1981, issued by the Assistant Collector Central Excise, Saharanpur, that the Central Excise officers had visited the factory premises of the party, on 5-5-1981. It was found that since as per their declaration filed under Notification No. 111/78-C.E., dated 9-5-1978, the total value of all the excisable goods cleared by them in the financial year 1980-81 were Rs. 2009379, and thus had exceeded Rs. 20 lakhs they were not entitled, during the year 1981-82, for any exemption as per para 2(i) of the Notification No. 80/80-C.E., dated 19-6-1980 (as amended).

3. Accordingly, it was alleged that the party had removed without payment of Central Excise duty, excisable as under :-

(1) The value of the goods falling under Item No. 45 of the Tariff and exceeded the exemption limit of Rs. 5 lakhs during the year 1980-81, and the party was liable to pay excise duty on the goods valued at Rs. 101150, cleared by them during that year 1980-81, after crossing the exemption limit of Rs. 5 lakhs.

(2) During the year 1981-82 they were liable to pay excise duty on the goods falling under Item No. 45 of the Tariff, valued at Rs. 64300/-, as they were not entitled for any exemption in terms of para 2(i) of the Notification No. 80/80-C.E., dated 19-6-1980 (as amended).

4. The case was adjudicated by the Additional Collector, Central Excise, Meerut, vide Order-in-Original No. 18- Additional/Collector/82 from file No. V(15)(45)Off/Adj./116/81, dated 2-7-1983.

5. After detailing the submissions made by the party, the Additional Collector, Central Excise, Meerut rejected the claim of the party in respect of the goods falling under Item No. 45 and Item No. 68, for deductions, pleaded by them on account of packing and handling charges, supervision and erection charges, parts of weighing machines and bills cancelled.

6. As regards the goods falling under Item No. 68, he decided that the charges in respect of the parts received from outside, and added to those goods which were fabricated by the party, were to be taken into account for computing their total clearances.

7. He, however, accepted the contention of the party with regard to 'repairing charges'.

8. He confirmed the duty demanded in the show cause notice, and imposed a penalty of Rs. 10,000/- on the party.

9. In appeal, the party has pleaded that :-

(i) Packing and handling expenses incurred by them on customer's account, on their specific request, should be deducted from the aggregate value of their clearances during the year 1980-81;

(ii) The charges towards supervision/erection of machinery at site on specific request of the customer should be deducted;

(iii) The value of clearances relating to parts of weighing machines which were exempt under Notification No. 310/77-C.E., dated 1-11-1977, should have been deducted;

(iv) The amounts covered by 'bills cancelled' should have been deducted from the value of clearances. The value of the articles purchased by them should not have been added in the value of finished goods;

(v) The exempted goods could not be considered as 'excisable goods';

(vi) There is no mention of the seized goods in the adjudication order;

(vii) The penalty has been imposed under Rule 173Q of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules'), while there is no reference to Rule 173Q of the Rules in the Show Cause Notice.

10. The case was heard on 3-3-1993 when Shri Rameshwar Singh, Consultant, appeared for the appellant. The respondents were represente