Jubilee Leather Works Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. duty of rs. 1.43 lacs (approximately) and penalty of rs. 1.50 lacs imposed on the concern and rs. 50,000/- imposed on its proprietor are required to be deposited. there is also a redemption fine for plant and machinery ordered to be confiscated of rs. 1.00 lac.2. duty has been demanded on the ground that the applicant did not include in its assessable value of their clearances in the value to the extent of rs. 8.98 lacs (approximately).3. advocate for the applicant says that these were on three counts. the first was with regard to furniture supplied to andheri recreation club.quotation for supply of furniture of value of rs. 9.35 lacs was given by the applicant to the club. after negotiation, the applicant agreed to provide services to the club in return of payment of rs. 1.72 lacs.these services consisted of inspection of raw material to be purchased by the club, provision of design, hiring of labour on behalf of club and occasional supervision of manufacture. he contends that the applicant therefore did not manufacture these goods and this amount has been wrongly included in the assessable value.4. the second count was that the commissioner found that furniture of value of rs. 7.40 lacs which was sold by it had not been included.advocate for the applicant contends that this furniture were purchased by it from another trader. he says that at the time of visit by the officers on 5-2-1993, when its accounts were seized, the bill for the goods had not been received, and the goods having been supplied only in january. subsequently, in july 1993 the applicant gave to the commissioner the bills and its explanation. he contends that this delay alone is not sufficient to hold that the applicant had manufactured the goods. the third count is that the department included furniture of the value of rs. 1.10 lacs in the showroom in the applicant's factory in its clearances. it is contended that the goods did not leave the applicant's factory and therefore they had not been cleared for home consumption. it is also contended that separate penalties on the concern and its proprietor are not justifiable.5. the departmental representative contends that there is evidence in the form of delivery challans and statement of the club officials to show that the goods had actually been manufactured at the applicant's factory and were transported from that to the club. he says that when the account books were seized on 5-2-1992 no delivery challans for the supply of furniture stated to have been received from another manufacturer was found and there is no plausible explanation for the delay in submitting the bill for the same. he says that the factory premises is located in galas 101-104, whereas the furniture was seized from gala no. 5 of the new india industrial estate. therefore, gala no.5 was clearly outside the factory premises.6. issues are arguable. the presence of the delivery challans showing movement of the goods from the applicant's factory to the club and the fact of supervision of workmanship and other services rendered to by the applicant to the andheri recreation club do not impel us to believe that is has a prima facie case in this regard. the absence of delivery challans at the time of seizure of records and the delay in furnishing the explanation of purchase from outside also prima facie go against the applicant. the question as to whether the goods found in gala no. 5 were or not in the applicant's factory also requires detailed examination. in these circumstances, we direct the applicant to deposit rs. 1.00 lac towards the sum demanded within two months from today. on such deposit being made, there shall be waiver of balance amount of duty and penalty and its recovery stayed. the department shall not dispose of the applicant's machinery or otherwise deal with it. the applicant also shall not dispose or of alienate any such machinery.

Judgment:
1. Duty of Rs. 1.43 lacs (approximately) and penalty of Rs. 1.50 lacs imposed on the concern and Rs. 50,000/- imposed on its proprietor are required to be deposited. There is also a redemption fine for plant and machinery ordered to be confiscated of Rs. 1.00 lac.

2. Duty has been demanded on the ground that the applicant did not include in its assessable value of their clearances in the value to the extent of Rs. 8.98 lacs (approximately).

3. Advocate for the applicant says that these were on three counts. The first was with regard to furniture supplied to Andheri Recreation Club.

Quotation for supply of furniture of value of Rs. 9.35 lacs was given by the applicant to the club. After negotiation, the applicant agreed to provide services to the club in return of payment of Rs. 1.72 lacs.

These services consisted of inspection of raw material to be purchased by the club, provision of design, hiring of labour on behalf of club and occasional supervision of manufacture. He contends that the applicant therefore did not manufacture these goods and this amount has been wrongly included in the assessable value.

4. The second count was that the Commissioner found that furniture of value of Rs. 7.40 lacs which was sold by it had not been included.

Advocate for the applicant contends that this furniture were purchased by it from another trader. He says that at the time of visit by the officers on 5-2-1993, when its accounts were seized, the bill for the goods had not been received, and the goods having been supplied only in January. Subsequently, in July 1993 the applicant gave to the Commissioner the bills and its explanation. He contends that this delay alone is not sufficient to hold that the applicant had manufactured the goods. The third count is that the department included furniture of the value of Rs. 1.10 lacs in the showroom in the applicant's factory in its clearances. It is contended that the goods did not leave the applicant's factory and therefore they had not been cleared for home consumption. It is also contended that separate penalties on the concern and its proprietor are not justifiable.

5. The Departmental Representative contends that there is evidence in the form of delivery challans and statement of the Club officials to show that the goods had actually been manufactured at the applicant's factory and were transported from that to the Club. He says that when the account books were seized on 5-2-1992 no delivery challans for the supply of furniture stated to have been received from another manufacturer was found and there is no plausible explanation for the delay in submitting the bill for the same. He says that the factory premises is located in Galas 101-104, whereas the furniture was seized from Gala No. 5 of the New India Industrial Estate. Therefore, Gala No.5 was clearly outside the factory premises.

6. Issues are arguable. The presence of the delivery challans showing movement of the goods from the applicant's factory to the Club and the fact of supervision of workmanship and other services rendered to by the applicant to the Andheri Recreation Club do not impel us to believe that is has a prima facie case in this regard. The absence of delivery challans at the time of seizure of records and the delay in furnishing the explanation of purchase from outside also prima facie go against the applicant. The question as to whether the goods found in Gala No. 5 were or not in the applicant's factory also requires detailed examination. In these circumstances, we direct the applicant to deposit Rs. 1.00 lac towards the sum demanded within two months from today. On such deposit being made, there shall be waiver of balance amount of duty and penalty and its recovery stayed. The department shall not dispose of the applicant's machinery or otherwise deal with it. The applicant also shall not dispose or of alienate any such machinery.