Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Indcon Structurals (P) Ltd. And Malt And ... on 23 April, 2002
Equivalent citations: 2002(83)ECC782
ORDER S.L. Peeran, Member (J)
1. All these revenue appeals arise a common question of law and fact and hence they are taken up together for disposal as per law.
2. The assessees are manufacturers of pre-polished cement concrete tiles falling under CSH 6807 of Central Excise Tariff Act, 1985. Both the assessee claim the benefit of Notification No. 8/96 dated 23.7.96 in respect of the said product. The SI. No. 68.4 of the notification read as follows.
Goods, in which more than 25% by weight of one or more of the following materials have been used
(i) red mud
(ii) press mud
(iii) blast furnace slag
3. The assessees were issued with show cause notice by the Department alleging that the benefit cannot be extended to them as the total quantum of blast furnace slag used directly is 20 to 22% and not 25% in terms of notification in question and hence they were directed to pay duty for the clearance made during the period indicated in the show cause notice. The matter was adjudicated by the Assistant Commissioner, Chennai IV Division by Order-in-Original No. 59/97 dated 26.9.97 by which he has arrived at his own calculation to hold that the quantum of blast furnace slag used by them was 22.5% as against their contention that the percentage of blast furnace slag was 26.21%. The Assistant Commissioner relied on the Deputy Chief Chemist report wherein it stated that portland slag cement samples on test indicated that the blast furnace slag used in the manufacture of portland slag cement had already undergone changes and it is no more present in its independent form in which it was added for the manufacture of cement. Therefore the Assistant Commissioner excluded the item portland slag cement while arriving at the percentage of the said item and to hold that the item used for manufacturing is only 20 to 22% as against minimum required percentage of 25%. The said order was challenged before Commissioner (Appeals) and the Commissioner (Appeals) by Order-in-Appeal No. 17 & 18/98 (M-ll) dated 17.2.98 took into consideration the affidavit filed by the assessee to show that the total quantum of blast furnace slag is more than 25% by weight of the final product and hence granted benefit of the notification. The revenue has challenged this order in E/1235 & 1236/98.
4. While in terms of the said Order-in-Appeal No. 17 & 18/98 dated 17.2.98 the assessee filed applications for grant of refund on the duty paid by them under protest. The said claim was rejected in Order-in-Originals and the said Order-in-Originals was contested before the Commissioner (Appeals) and the Commissioner (Appeals) in his Order-in-Appeal No. 164 & 166/2001 held that the refund was not hit by unjust enrichment and that they had paid differential duty without passing on the same to the consumer. The Revenue has also filed appeal against this order and the ground taken is that the main issue regarding the grant of exemption by Commissioner (Appeals) in his Order-in-Appeal No. 17 & 18/98 dated 17.2.98 is not challenged before the Tribunal. However, in the grounds of appeal there are grounds pertaining to grant of refund. The revenue has not made out any ground with regard to the finding recorded by Commissioner (Appeals) that the refund is not hit by unjust enrichment.
5. The issue before is whether the assessee is entitled to the benefit of the Notification No. 8/96 dated 23.7.96.
6. We have heard Ld. SDR G. Sree Kumar Menon and Shri P.C. Anand, CA.
7. Ld. SDR pointed out that the Commissioner (Appeals) ought to have remanded the matter to the Assistant Commissioner for verification of quantum of blast furnace slag instead of accepting the affidavit. There is doubt with regard to the percentage and unless this is established the benefit of notification cannot be extended.
8. On the other hand Ld. Chartered Accountant contended that in that first place the finding recorded by the Assistant Commissioner on the basis of the Deputy Chief Chemist's report that the portland slag cement cannot be taken into consideration is not correct. It is his contention that the SI. No. 68.4 of the said notification lays down the condition that goods which are more than 25% by weight in any or more of the material like red mud, press mud, blast furnace slag have its use in manufacture of pre-polished cement concrete tiles then they are entitled for the benefit. The goods referred to here refers to the intermediate goods which are used as inputs. Therefore, the intermediate goods has been manufactured by furnace slag and the total quantum in the entire manufacture of pre-polished cement concrete tiles consisted of 25% by weight of any of the materials shown in the notification then the benefit is required to be extended. He points out that the finding given by the Deputy Chief Chemist that the blast furnace slag has undergone changes and it is no more present in its independent form in which it was added for the manufacture of cement is not material for the purpose of interpreting the notification. The notification merely states that the goods in which more than 25% by weight of blast furnace slag is used in manufacture of the final product then the benefit should be given. It does not state that the goods should continue to retain in its item shown in the notification in independent form. He submits that once the materials are used for the manufacture of goods then there is bound to be a change and lose its independent form. He submits that the notification has to be strictly considered and the manner in which the Assistant Commissioner has arrived at percentage is not in terms of the notification. He submits that Assistant Commissioner did not give a copy of the Deputy Chief Chemist's report. He submits that the assessee had produced enormous evidence to show that the total percentage in the final product and blast furnace slag is more than 25% by weight. Therefore, the Commissioner (Appeals) has rightly accepted their affidavit after due examination of the evidence. He seeks for dismissal of the appeal.
9. On a careful consideration of the submission we notice that the Commissioner (Appeals) has accepted the affidavit and the ISI Foreward with reference to portland slag cement (IS:455:1999) to hold that the percentage of blast furnace slag by weight is more than 25% in the final product. The assessee had produced the evidence of the manufacturers of the portland slag cement to show that the percentage is more than 25% in the portland stag cement. The percentage of the blast furnace slag is 45%. We are of the considered opinion that instead of arriving at the figures by the concerned authority on their own, they ought to have got it verified and put the assessee's contention to proper test. We agree with Ld. CA that the materials do not retain their independent form once the materials used in manufacture of the goods which are in turn used for manufacture of the final product that is pre-polished cement concrete tiles. It is a matter of common sense that once the materials are used for manufacture of goods that is intermediate inputs then there will be a change and the original ingredients cannot retain its independent composition. What is required for consideration is that the goods which are used in the manufacture of pre-polished cement concrete tiles should contain by weight 25% of one or more of the following materials that is red mud, press mud, blast furnace slag. The assessee's contentions is that portland slag cement has been manufactured with blast furnace slag and its content in portland slag cement is 45%. On the whole, if all the ingredients are taken into consideration as shown in the table annexed and which are extracted in Order-in-Original, the percentage of blast furnace slag is more than 25% satisfying the terms of the notification. We are of the considered opinion that the matter has to go back to the original authority for verification of this submission. The original authority has to take into consideration the weight of blast furnace slag in the port-land slag cement used for manufacture of the final product. The original authority cannot exclude the percentage of blast furnace slag used in the manufacture of port-land slag cement which in turn being used in the manufacture of final product. We are of the considered opinion that in the manufacture of the final product that is pre-polished cement concrete tiles, the total percentage of any of the item shown in SI. No. 68.4 should by weight be more than 25%. If the percentage is established with regard to one the material shown in the SI. No. 68.4 to be more than 25% by weight then the benefit of exemption has to be extended to them. Insofar as the other order of the Commissioner granting refund is concerned, the revenue has not contested the findings of the Commissioner (Appeal). The assessee's plea that it is not hit by unjust enrichment and that the element of duty has not been passed on to the consumer. In that view of the matter we set aside the impugned order and remand the cases to the original authority for the purpose of verifying the total percentage by weight with regard to all the materials used in the goods which are in turn used in the manufacture of pre-polished cement concrete tiles. All the ingredients which have gone into the manufacture of cement has to be taken while arriving at the percentage and to this extent the contention of the Chartered Accountant is accepted. The matter is remanded for the purpose for ascertaining the percentage and if the percentage is more than 25% by weight of any of the material used in the manufacture of final product then the benefit has to be extended. The assessee is entitled to produce evidence, which has been produced before Commissioner (Appeals) in support of their contention. They shall be given full opportunity in terms of principles of natural justice. Thus all the appeals are remanded for de novo consideration to the original authority.