Custom, Excise & Service Tax Tribunal
M/S. Satyam Paper Products & Polymers ... vs Cce, Visakhapatnam on 13 May, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench DB Court I Appeal No.E/3255/2012 (Arising out of Order-in-original No.VIZ-CEX-001-COM-094-12 dt. 27/07/2012 passed by CCE&ST, Visakhapatnam) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Honble Shri Madhu Mohan Damodhar, Member(Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Satyam Paper Products & Polymers Pvt. Ltd. ..Appellant(s) Vs. CCE, Visakhapatnam ..Respondent(s)
Appearance Ms. A.S.K. Swetha, Advocate for the appellant.
Shri Arun Kumar, Deputy Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Honble Shri Madhu Mohan Damodhar, Member(Technical) Date of Hearing:13/05/2016 Date of decision:13/05/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The facts of the case are that the appellant are engaged in the manufacture of LLDPE bags, corrugated boxes and Duplex boxes. They cleared corrugated cartons and Duple boxes without payment of duty to various sea food exporting units, claiming benefit of Notification No.43/2001-CE(NT) dated 26.06.2001. Department took the view that Notifications No.24/2010-CE(NT) dated 26.05.2010 has amended Notification 42/2001-CE(NT) dated 26.06.2001 inserting a condition restricting the scope of earlier Notification and specifically excluding export of excisable goods which are chargeable to Nil rate of duty or wholly exempted from payment of duty under bond; that since frozen prawns/shrimps and other marine food are chargeable to Nil rate of duty, hence export of these goods are not done under bond; therefore procurement of packing material from the exporter without payment of duty vide Notification No.43/2001-CE (NT) dated 26.06.2001 is incorrect. Consequently show cause notice was issued to the appellant. On adjudication the lower authority confirmed demand of Rs.6,27,799/- and interest thereon and also imposed penalty. Hence this appeal.
2. The appellant represented by learned advocate Ms. A.S.K. Swetha who submitted that they had availed the exemption on the basis of Notification No.43/2001 on the strength of Annexure 1 of the notification. They contended that unless the Annexure 1 is set aside by following procedure laid down in Section 35E by competent authority, it is not permissible for the Department to raise demand; in support of this contention they placed reliance on various decisions of Tribunal and High Courts. It was also argued that demand of duty for contravention of Central Excise (Removal of Goods at Concessional rate of Duty for manufacture of Excisable Goods) Rules 2001 should not be on them but the exporter, who are the persons availing the benefit of exemptions under said notification.
3. On behalf of the department Ld. AR Sri. Arun Kumar reiterated the findings in the impugned order.
4. Heard both sides.
5. In the instant case, we find that the appellant had cleared the goods without payment of duty on the strength of Annexure 1 which is a requirement under Central Excise ( Removal of Goods at Concessional rate of Duty for manufacture of Excisable Goods) Rules 2001. Each such Annexure has been issued in favour of the appellant by the concerned exporter certifying Notification No.43/2001CE(NT) exemption to 5 PLY corrugated boxes/printed master cartons used for the specified purpose of usage in the processing / manufacture of frozen shrimp/prawn that are exported subsequently , attract the following excise duties, basic excise duty@ NIL and all other duties are NIL for the product
6. Each such Annexure 1 has been endorsed and counter signed by the jurisdictional Asst. Commissioner of such exporter with the following endorsement which reads as under:
It is hereby certified that M/s.ANANDA AQUA EXPORTS (P) LTD., RAMAYANPURAM, BHIMAVARAM MANDAL, WEST GODAVARI DISTRICT-534239 have executed the bond as required by said rules for Rs.35,00,000/- (Rupees Thirty Five Lakhs only), which has been accepted on behalf of the President India by the undersigned and entered at S.No.06 Dated 28/03/2011 of Bond Register, Page No.52.
C.No.V/5/06/2011-Bonds B.RAMESH Date: 28/03/2011 (sign. of the Asst. Commissioner)
7. We also find that it is not the case that any of these Annexure 1 certificate has been cancelled by the Central Excise authorities. Viewed in this context we are of the opinion that when such Annexure 1 certificate continued to be live and are not cancelled or declared void by department after following due procedure. The clearances effected on the strength of such annexure by the appellant cannot be denied the benefit of exemption provided by notification 43/2001 CE (NT) dated 26.06.2001. We find that this view finds sustenance in a number of decisions as discussed under:
a. In the case of Teknik Plant & Machinery Vs CCE, Pune I [2014 (309) ELT 573 (Tri-Mum)], the Tribunal has held that the issue of Show cause notice demanding duty without first cancelling annexure 1 is not legal . The relevant portion is reproduced as below:
8.?Coming to the next issue (ii) regarding Annexure I. It is seen that the Annexure has been signed by the appellant and then issued by the jurisdictional Central Excise authority at the end of M/s. BCML to the Assistant Commissioner of Central Excise-V, Akurdi, Pune, who has jurisdiction over the appellants. The Annexure clearly grants exemption to fuel and ash handling system used for the specified purpose of Non-Conventional renewable source Bagasse/Biomass based Cogeneration Plant. In the Annexure the appellant undertakes to follow the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. The jurisdictional Central Excise Officer has certified that the appellants have executed bond for Rs. 45,00,000/- (Rupees forty-five lakhs only). The appellants have dispatched their goods namely fuel and ash handling system under a series of invoices over a period of time and have stated that the A.R. 3A documents supporting the invoices were received back duly acknowledged and with duly completed re-warehousing certificates countersigned by the Central Excise authorities at the end of M/s. BCML. Such copies of A.R. 3As duly certified after re-warehousing were continuously submitted to their Superintendent of Range-V, Pune. It is to be noted that these facts are not disputed by Revenue. It is also stated by the ld. Consultant that Annexure-I is still live and has not been cancelled by the Central Excise authorities. The Commissioner (Appeals) in her order acknowledges that the Annexure has been signed by the AC/DC Central Excise but has not raised the question of cancellation of Annexure I. In fact the Commissioner (Appeals) states that Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 procedure is not applicable but at the same time does not go into the question of validity of Annexure-I or the cancellation of Annexure-I.
9.?As mentioned above, Annexure-I is stated to be live. Revenue does not controvert this fact. It is, therefore not understood how the show cause notice could be issued demanding duty without proposing to cancel the Annexure-I. At no stage of the proceedings from the time of issue of show cause notice to adjudication to the Commissioner (Appeals) order, the Annexure-I is proposed to be cancelled. This Annexure-I allowed the party to clear the goods without payment of duty. The ld. Consultant have relied on the judgment of Honble High Court of Madras in the case of Madurai Power Corpn. (P) Ltd. v. Deputy Commr. of C. Ex. Madurai-I [2008 (229) 521 (Mad.)]. The judgment dealt with a case where show cause notices were issued without challenging the validity of Annexure or without cancellation of the Annexure. It was held by the Honble High Court of Madras :
In our opinion, there is no nexus between Section 11A and Section 35E. Section 11A does not indicate that the Legislature intended to override Section 35E. Both sections have to be read harmoniously. In the present case, Annexure-I certificate has been issued in favour of the petitioners from time to time on executing B-8 security bond and on furnishing a bank guarantee. The department has to follow the procedure under Section 35E for setting aside the Annexure-I certificate. Unless, the Annexure-I certificate is cancelled or rejected by the competent authority, by following the procedure under Section 35E, it is not permissible for the respondents to invoke Section 11A of the Act. Therefore, we are of the considered opinion that the issuance of show cause notices are without jurisdiction and liable to be struck down. In the case of the appellants also we find that Annexure-I which clearly granted exemption to the appellants has not been cancelled. Therefore, the demand of duty against the appellants and imposition of penalty is not legal.
b. In the case of Madurai Power Corporation Vs Dy CCE , Madurai I [2008 (229) ELT 521 (Mad)], the Honble High Court held that unless annexure 1 certificate is cancelled or rejected by competing authority by following procedure under Section 35 E , department cannot invoke Section 11 A. The relevant portion of the judgment is reproduced below.
23.?In our opinion, there is no nexus between Section 11A and Section 35E. Section 11A does not indicate that the legislature intended to override Section 35E. Both sections have to be read harmoniously. In the present case, Annexure-I certificate has been issued in favour of the petitioners from time to time on executing B-8 security bond and on furnishing a bank guarantee. The department has to follow the procedure under Section 35E for setting aside the Annexure-I certificate. Unless, the Annexure-I certificate is cancelled or rejected by the competent authority, by following the procedure under Section 35E, it is not permissible for the respondents to invoke Section 11A of the Act. Therefore, we are of the considered opinion that the issuance of show cause notices are without jurisdiction and is liable to be struck down.
8. In the light of the discussions made above and also applying the above decisions to the facts of the case in hand we are of the considered opinion that the impugned order is unsustainable and requires to be set aside, which we hereby do.
9. In the result, the appeal is allowed with consequential reliefs, if any.
(Operative part of this order was pronounced in court on conclusion of the hearing) MADHU MOHAN DAMODHAR MEMBER(TECHNICAL) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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