P.C. Jain, Member (T)

1. Since the common issues are involved in both the appeals - one filed by the assessee and the other by the Collector - a common order is being passed.

2. Brief facts of the case are as follows :-

2.1 JMC Industries (hereinafter referred to as the assessee) are engaged in the manufacture of various types of motor vehicle parts falling under Tariff Item 68 CET. Besides manufacturing the above goods, the assessee is also importing forged crankshaft. The said crankshafts are thereafter sent by them outside their factory for machining, grinding etc. on job work basis. After the receipt of the crankshaft thus processed/manufactured by outside units the assessee undertakes the shallock process i.e. applying oil etc. to save the crankshaft from rusting. Thereafter they pack it before despatching to their customers.

2.1A. Before 15-1-1983 the assessee had included the value of the crankshafts manufactured on their behalf by the outside manufacturers and they were paying duty and the value of the crankshafts was also taken into account while computing the exemption limit of Rs. 30 lakhs in terms of Notification 105/80 dated 19-6-1980. Prior to 15-1-1983 the assessee were in fact availing the facility of procedure under Rule 56B for which they requested vide their letter dated 24th December, 1981 addressed to the Asstt. Collector of Central Excise, Rajouri Garden, New Delhi. The said Asstt. Collector vide his letter dated 13-1-1982 permitted the assessee to effect the clearance of semi-finished crankshaft for further processing to the premises of Sahyadri Automotive Product Pvt. Ltd., Industrial Area, Pune under their usual gate passes and challans and to bring the finished goods back to their factory for further clearance thereof till they cross the clearance of Rs. 30 lakhs, whereafter the permission was granted subject to the observance of the procedure contained in the provisions of Rule 56B ibid read with the trade notices.

2.2 Thereafter the assessee had a doubt regarding payment of duty on crankshafts so got manufactured by them from outside. Accordingly, they wrote a letter dated 10th November, 1982 to the said Asstt. Collector stating that the crankshaft was not being manufactured in their factory; the entire manufacturing process i.e. grinding, machining and hardening etc. were being done by there companies in different parts of the country and that they were merely repacking the finished crankshaft at their factory premises and trading the same in the market. Accordingly, they urged that they were not liable to pay any duty on the crankshafts so cleared by them after getting it manufactured from others. A further clarification was, therefore, sought by the department vide its letter dated 22-1-1982 by the concerned Range Supdt. of Central Excise. After receipt of the clarification from the assessee vide his letter dated 15-1-1983 the Supdt. advised the assessee to file a revised classification list and also to intimate the department regarding withdrawal of facility under Rule 56B in respect of crankshafts. Hence the assessee stopped paying duty on crankshaft thus got manufactured by the assessee on job work basis from outside w.e.f. 15-1-1983.

23 They also stopped paying duty after 15-1-1983 on the plea that they had not cleared the goods worth more than Rs. 30 lakhs in the year 1982-83 after excluding the value of crankshaft as it was not manufactured by them. They had also filed a refund claim consequently for the past period. While this claim was under scrutiny, a doubt was felt whether the value of the crankshaft was to be included in the value for the purpose of Notification 105/80 dated 19-6-1980 and as superseded by Notification 77/83 dated 1-3-1983. Accordingly, the manufacturing unit was visited on 6-9-1983 and 7-9-1983 for making enquiries in this regard.

2.4 As a result of those enquiries and investigation it was observed by the Central Excise department that during the period 1982-83 the asse