Custom, Excise & Service Tax Tribunal
M/S. Well Rope International Ltd vs Cce, Delhi-Iv on 1 August, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
SCO 147-148, SECTOR 17-C, CHANDIGARH-160017
DIVISION BENCH
Court-I
Appeal No.E/1795/2008
(Arising out of OIO No.38/KKJ/Adjn/2005 dt.28.2.2006 passed by the CCE, Delhi-IV)
Date of hearing/Decision: 01.08.2017
M/s. Well Rope International Ltd. Appellant
Vs.
CCE, Delhi-IV Respondent
Present for the Appellant: Shri J.M.Sharma, Advocate Present for the Respondent: Shri A.k.Saini, AR Coram: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr.Devender Singh, Member (Technical) FINAL ORDER NO. 61472/2017 PER: ASHOK JINDAL The appellant is in appeal against the impugned order wherein the demand has been confirmed against the appellant as per impugned order.
2. The brief facts of the case are that the appellant is engaged in manufacture of High Density Polyethylene/ Polypropylene monofilament yarn 60 deniers and above twisted rope of HDPE and Polypropylene Monofilament falling under sub heading 5404.10 and 5607.49 respectively of the Central Excise Tariff. The appellant did not get themselves registered with the Central Excise department for manufacture of the above said goods but were filing declaration regularly with the department under Rul 174 of the Central Excise Rules, 1944 read with Notification No.13/92 (NT) dated 14.5.1992 as amended, wherein the exemption has been claimed form payment of duty being SSI in respect of twisted ropes under Notification No.1/93-CE dated 28.2.1993 and for mono-filament yarn, they were claiming exemption under Notification No.8/96-CE dated 23.09.1996 as amended from time to time. As per notification No.8/96 ibid, mono-filament of High Density Polyethylene or Polypropylene attracts nil rate of duty if no credit under Rule 57A or 57Q of the Central Excise Rules, 1944 is availed. On 27.03.1998, a tempo was intercepted and on examination, it was found that it was containing twisted plastic ropes whereas cash memo No.394 dated 27.3.1998 showing the description of the goods as MF yarn. The goods were seized, on reasonable belief that the twisted plastic ropes were cleared under the guise of MF yarn for which a separate show cause notice had been issued on 25.9.1998. Further, investigation revealed that the appellant is manufacturing plastic rope. Various statements were recorded and the statement of the appellant and the samples were drawn and sent to the CRCL, New Delhi for testing and on the basis of report of the CRCL, the case was made out against the appellant that the mono-filament yarn shown to have manufactured and cleared is nothing but plastic rope and these ropes is made from LDPE in terms of the test report. On the basis of above allegation, the show cause notice issued to demand of duty on plastic ropes. The matter was adjudicated, the demand was confirmed along with interest and penalty was also imposed. The said order was challenged before the Tribunal and this Tribunal vide Order No.89/2005-B dated 24.1.2005 remanded the matter back to the adjudicating authority for fresh adjudication after giving the appellant an opportunity to cross examine the chemical examiner. In the remand proceedings, the cross examine of the chemical examiner was granted and fresh adjudication order was passed confirming the demand along with interest and imposing penalty terming the goods as plastic ropes. Aggrieved from the said order, the appellant is before us.
3. Ld. Consultant for the appellants submits that the report of the chemical examiner cannot be relied upon in the facts and circumstances of the case as initially the chemical examiner has given test report as:
The sample is a cut piece of green coloured 3 ply cord made of polyethylene plastic.
Note: It is not possible to determine the specific gravity of the polymer on additive free basis, sealed remnant returned. Later on a query was made by the Assistant Commissioner to advice the office to which are other approved laboratories where such testing could be done to find out gravity of polymer on a additive free basis. Instead of advising about approved laboratories, the chemical examiner gave his report that specific gravity of the sample has been found to be 0.917 which would indicate if to be low density polyethylene, the sample has been found to be of 339.5 decitex.
4. It is his submission that initially the chemical examiner was not able to test gravity of the polymer but later on, the chemical examiner on his own without asking the sample has given his finding which is contrary to the principle of natural justice. He further submits that on cross examination, he did not answer properly to the query raised to him. Further, he submits that on a specific query was made with regard to the re-examination of the sample without sample of the goods in question, he did not answer how re-examination was done but on query made by the adjudicating authority vide letter dated 10.11.2005, the Chief Examiner has given explanation that the samples retained in the laboratory at the time of testing being attached to the report. of office copy. It is his contention that the said report was given after conclusion of the hearing and cross examination of the chemical examiner, therefore, the said report cannot be the basis to determine quality of the goods. He further submits that the appellant never purchased LDPE and all the purchases shown that the goods are HDPE and PP. If the goods are found to be LDPE, then the Revenue has not investigated the matter from where the LDPE obtained by the appellant whereas the appellant has categorically stated that they have purchased/imported HDPE and PP. He further submits that the adjudicating authority without classifying the plastic ropes has demanded duty on plastic ropes. As the plastic rope is man-made fibres measuring more than 9000 deniers whereas the goods in question as per report having 339.5 decitex. It is his submission that 9000 deniers is equal to 10000 decitex as per HSN. He further submits that all the activities of the appellant were in the knowledge of the department at the time of issuance of initial show cause notice dated 25.9.1998. Therefore, in view of the decision of Honble Supreme Court in the case of Nizam Sugar Factory-2003 (155) ELT A-145 (SC), the show cause notice is not sustainable.
5. On the other hand, learned AR reiterated the findings of the adjudicating authority and submits that as per the report of the Chemical Examiner the goods are found low density. Therefore the appellant is not entitled for exemption under Notification No.8/96-Central Excise Therefore, the impugned order is to be upheld.
6. Heard both sides and considered the submissions of both sides.
7. On careful consideration of the submissions made by both sides, we find that three issues have emerged:
(a) Whether the report of the chemical examiner is admissible or not if the same is admissible whether the goods are correctly classifiable as plastic ropes to demand duty or not?
(b) Whether any evidence has brought on record by the Revenue to allege that the goods in question are manufactured from LDPE or not? and
(c) Whether the show cause notice is sustainable in the light of the decision of Honble Supreme Court in the case of Nizam Sugar Factory or not?
Issue No.1
8. Ld. Consultant has disputed the test report and the chemical examiner was called for cross examination. First of all, the chemical examiner has not given any proper reply to the question put to him to prove his truthfulness of the report/statement during the course of cross examination. Therefore, as stated in the reply to the questions that the information will be available in the analytical book of the chemist is not convincing. Moreover, in the second test report dated 14.3.2000 was never asked from the chemical examiner but it was sought advice to tell the name of laboratory where test can be conducted. Instead of providing such details, the chemical examiner has given his finding which initially denied. Therefore, it creates doubt on the veracity of the 2nd report given by the chemical examiner which is deemed to be influenced report. Moreover, during the course of cross examination, the chemical examiner never stated that they keep the sample in their records and on the basis of those samples, the 2nd report was submitted but in cross examination when specific query was made to him, the chemical examiner did not given any explanation but the adjudicating authority sought explanation for the same, it was answered as under:
Please refer to your office letter C.No.V(56)15/20-CE/2000 dt.10.11.05 on the subject cited above.
In this connection, the clarification reply has been received from Shri A.H.M. Shand, the then Chemical Examiner vide his letter dated 18.11.2005, the relevant portion is being cited above:-
In this connection, I am to state that report on the sample in dispute was issued on 03.11.1999 and subsequently on the request to the Chief Chemist vide office letter C.No.V(56)/5/Seiz/D-I/Prev/4/98/766 dated 09.03.2000 from Assistant Commissioner, Central Excise Div.-I, Faridabad, the matter was re-examined and the amended report issued on 11.03.2000.
It is normal practice in the testing procedure to always keep a portion the original sample for the visual examination and approval and for any further reference before sending back the remnant of the sample. It was this portion of the sample retained in the laboratory, being attached to the report office copy which was used for re-examination an issuing the amended report. Hope that above clarification of the Chemical Examiner will solve your purpose.
From the above it is clear that the report of the chemical examiner is doubtful. Accordingly, the same cannot be the basis to determine the quality/classification of the goods in question manufactured form LDPE.
Issue No.2
9. During the investigation, there was statement of the appellant that they never purchased LDPE and purchased HDPE and PP and no evidence has been brought on record by the Revenue that the appellant has purchased LDPE. In the absence of evidence on record without bringing on record how the goods manufactured from LDPE, the demands are not sustainable.
Issue No.3
10. It is seen that as per test report, deniers of the goods in question is 305.55 which is equal to 339.5 decitex. As per Section XI of Textile and Textile Articles, clause 12 (A) (b) states that man-made fibres (including yarn of two or more mono-filaments of Chapter 54), measuring more than 9000 deniers which is equal to 10000 decitex as per HSN. The adjudicating authority without any reasoning classified the goods in question, one plastic ropes which less than 10000 deniers to demand duty. Therefore, without classifying the impugned goods, the adjudicating authority cannot demand duty from the appellant. On this account also, the demand is set aside.
11. We find that in the adjudication order, the adjudicating authority, has relied upon on the decision of Larger Bench in the case of Nizam Sugar Factory to say that the show cause notice is sustainable, the decision of the Larger Bench has been set aside by the Apex Court. In that circumstance, also the show cause notice is barred by limitation.
12. In view of the above analysis, we do not find any merit in the impugned order, the same is set aside and the appeal is allowed with consequential relief.
(Dictated and pronounced in the court)
(DEVENDER SINGH) (ASHOK JINDAL)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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