Custom, Excise & Service Tax Tribunal
M/S Acme Industries vs Cce, Jaipur Ii on 25 February, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. COURT NO. I Excise Appeal No. 412 of 2005 [Arising out of the Order-in-Appeal No. 837-845 (RM) CE/JPR-II/ 2004 dated 20/12/2004 passed by The Commissioner (Appeals), Customs & Central Excise, Jaipur.] M/s Acme Industries Appellant Versus CCE, Jaipur II Respondent
Excise Appeal No. 1074 of 2005 [Arising out of the Order-in-Appeal No. 836/RM/CE/JPR-II/2004 dated 20/12/2004 passed by The Commissioner (Appeals), Customs & Central Excise, Jaipur.] M/s Balaji S.S. Sheets (P) Ltd. Appellant Versus CCE, Jaipur II Respondent Excise Appeal No. 527 of 2005 M/s Pratik Metals Pvt. Limited Appellant Versus CCE, Jaipur II Respondent Excise Appeal No. 528 of 2005 M/s Paradise Steel Pvt. Limited Appellant Versus CCE, Jaipur II Respondent Excise Appeal No. 529 of 2005 M/s Suraj Steel Industries Appellant Versus CCE, Jaipur II Respondent Excise Appeal No. 530 of 2005 M/s Bright Metals Appellant Versus CCE, Jaipur II Respondent Excise Appeal No. 531 of 2005 M/s Mayank Steel Industries Appellant Versus CCE, Jaipur II Respondent Excise Appeal No. 532 of 2005 M/s Surbhi Alloy Pvt. Limited Appellant Versus CCE, Jaipur II Respondent Excise Appeal No. 533 of 2005 M/s Veer Prabhu Steel Pvt. Limited Appellant Versus CCE, Jaipur II Respondent [Arising out of the Order-in-Appeal No. 837-845 (RM) CE/JPR-II/ 2004 dated 20/12/2004 passed by The Commissioner (Appeals), Customs & Central Excise, Jaipur.] For Approval and signature :
Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical)
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Appearance S/Shri K.K. Anand, Advocate (M/s Pratik Metals Pvt. Limited, Paradise Steel Pvt. Limited, M/s Suraj Steel Industries, M/s Bright Metals and M/s Mayank Steel Industries) and Shri O.P. Agrawal, C.A. (in Balaji S.S. Sheets (P) Ltd.) for the appellant.
Shri B.K. Singh, Authorized Representative (Jt. CDR) - for the Respondent.
CORAM : Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 18/01/2011.
DATE OF DECISION : 25/02/2011.
Final Order No. ________________ Dated : ___________ Per. Rakesh Kumar :-
The facts giving rise to these appeals are, in brief, as under.
1.1 The appellants are manufacturer of Stainless Steel Pattas and Pattis, chargeable to Central Excise Duty under Central Excise Tariff. The period of dispute in these appeals is from September 2001 to March 2002. During this period, the appellants were discharging duty liability on SS Pattas and Pattis under compounded levy scheme notified by Central Government vide Notification No. 34/2001-CE dated 28/06/2001. According to this scheme, the appellants were required to apply for permission for working under the said scheme and on being permitted, they were required to pay duty @ Rs. 15,000/- per month per Cold Rolling Machines installed in the factory, subject to condition that they would not take Cenvat credit of duty paid on any raw materials or capital goods under the provisions of Cenvat Credit Rules. As per para 3 of the Notification, a manufacturer whose application has been granted under para 2, shall pay a sum calculated at a rate specified in this Notification, subject to the conditions herein laid down and such payment shall be in full discharge of his duty liability on his production of Cold Re-rolled Stainless Steel Pattas/Pattis during the period, for which the said sum has been paid. In terms of para 3 (2), the sum payable under sub-para 3 (1) shall be calculated by application of the appropriate rate to the maximum number of Cold Rolling Machines installed by or on behalf of such manufacturer in one or more premises at any time during three calendar months immediately preceding the calendar month in which the application under para 2 has been made. In all these cases after obtaining the permission to work under this scheme, the appellants at one point or other dismantled one or more of the Cold Rolling Machines but continued to pay the duty in respect of the same. The dismantling of the Cold Rolling Machines had been done under intimation to the Jurisdictional Central Excise Officers. Subsequently, they claimed refund of the duty so paid on the dismantled machines on the ground that once the machine has been dismantled, there is no question of payment of duty, as there is no production from that machine. The refund claims were rejected by the original Adjudicating Authority on the ground that the appellants operating under the compounded levy scheme of Notification No. 34/2001-CE dated 28/6/2001 have to discharge duty liability in terms of the provisions of para 3 (1) of the Notification, according to which the duty liability to be discharged has to be calculated by applying the rate per machines specified in the Notification to the maximum number of machines installed by or on behalf of the appellant in one or more premises at any time during three calendar months immediately preceding the calendar month in which the application has been made and that the duty liability would not change if subsequently the machines are dismantled. The appeals filed by the appellants were dismissed by CCE (Appeals), Jaipur II vide order-in-appeal No. 837-845 (RM) CE/JPR-II/2004 dated 20th December 2004. Against this order of the Commissioner (Appeals), the present appeals have been filed.
2. Heard both the sides.
2.1 Shri K.K. Anand, Advocate, the learned Counsel appearing for M/s Pratik Metals Pvt. Limited; Paradise Steel Pvt. Limited; M/s Suraj Steel Industries; M/s Bright Metals and M/s Mayank Steel Industries and Shri O.P. Agrawal, C.A., learned Counsel appearing for M/s Balaji S.S. Sheets (P) Ltd. pleaded that prior to the scheme of compounded levy for manufacturers of Stainless Steel Pattas/Pattis under Notification No. 34/2001-CE (NT) dated 28/06/2001, there were Rule 96 ZA to 96 ZGG of Central Excise Rules, 1944, which prescribed an identical compounding procedure for discharging duty liability in respect of Stainless Steel Pattas/Pattis and Aluminium Circles, that provisions of Rule 96 ZA to 96 ZGG are identical to the provisions of compounded levy scheme notified under Notification No. 34/2001-CE (NT), that in respect of the compounded levy scheme under Rule 96 ZA to 96 ZGG, Honble Rajasthan High Court in the case of CCE, Jaipur II vs. Jupiter Industries reported in 2006 (206) E.L.T. 1195 (Raj.) has held that no duty is leviable for the period when a machine has not been operated or has been dismantled, as when there is no production in respect of a machine, which is not in existence, there is no question of charging any Central Excise Duty in respect of that machine, that in this case Honble Rajasthan High Court also held that the principle of unjust enrichment has no applicability to the refund of the duty paid in respect of the machine which had been dismantled, that the ratio of judgment of Honble Rajasthan High Court is squarely applicable to the facts of the case, that as per para 4 of the Notification, every manufacturer who has been granted permission under para 2 of this Notification to operate under this special procedure, is required to make an application in a prescribed format specified in Appendix II, to the Jurisdictional Superintendent for permission to remove the SS Pattas/Pattis during the ensuing month declaring the number of Cold Rolling Machines installed and employed, the rate of duty per month per machine prescribed by the Government, and the total sum payable and prior to filing of the application, the amount of duty is required to be paid, that from this, it is clear that if in any particular month, some machines have been dismantled, no duty would be required to be paid in respect of those machines in the next month and that in any case, in view of judgment of Honble Rajasthan High Court in the case of CCE, Jaipur II vs. Jupiter Industries (supra) no duty can be charged in respect of the machines which have been dismantled.
2.2 Shri B.K. Singh, the learned Jt. CDR, defended the impugned order by reiterating the Commissioner (Appeals)s findings and further pleaded that the judgment of Honble Rajasthan High Court in the case of CCE, Jaipur II vs. Jupiter Industries (supra) is with regard to the special procedure for Stainless Steel Pattas/Pattis and Aluminium Circles prescribed in Rule 96 ZA to 96 ZGG of the Central Excise Rules, 1944, while the appellants were operating under the compounded scheme prescribed under Notification No. 34/2001-CE (NT) dated 28/6/2001, and as such the judgment of Honble Rajasthan High Court is not applicable to this case, that when in terms of para 3 (2) of the Notification No. 34/2001-CE (NT), the appellants were liable to discharge duty liability by paying a sum determined by applying the rate of duty per machine per month prescribed in the Notification, to the maximum number of Cold Rolling Machines installed by or on behalf of the appellants in one or more premises at any time during three calendars months immediately preceding the calendar month in which the application had been made for operating under this procedure, the dismantling of the machine after starting the operations under this procedure is not material and that the duty liability has to be discharged on the basis of maximum number of machines during preceding three months, as declared at the time of applying for permission to operate under this procedure and in the application for removal being made to the Superintendent every month and that in view of this, there is no infirmity in the impugned order.
3. We have carefully considered the submissions from both the sides and perused the records. Under Rule 15 (1) of the Central Excise Rules, 2001, the Central Government may, by Notification, specify the goods, in respect of which an assessee shall have option to pay the Excise Duty on the basis of such factors as may be relevant to production of such goods and as such rate as may be prescribed in the such Notification, subject to such limitations and conditions including, those relating to interest or penalty, as may be specified in such Notification. Under Rule 15 (1) of the Central Excise Rules, 2001, the Central Government has issued Notification No. 34/2001-CE dated 28/6/2001 by which the compounding scheme for payment of duty on Stainless Steel Pattas/Pattis and Aluminium Circles has been prescribed. The first para of the Notification is as under :-
In exercise of the powers conferred by Rule 15 of the Central Excise (No. 2) Rules, 2001, the Central Government hereby specifies the excisable goods viz. Stainless Steel Pattas/Pattis , falling under Chapter 72, or aluminium circles falling under Chapter 76 of the First Schedule to the Central Excise Tariff Act, 1985, subjected to the process of cold rolling with the aid of cold rolling Machines in respect of which an assessee shall have an option to pay the duty of excise on the basis of cold rolling Machines installed for cold rolling of these goods and fixes the following rate of duty per cold rolling Machines, per month :-
(i) Stainless Steel Pattas/Pattis fifteen thousand rupees xxxxxxxxxxxxxxxxx Provided that no Cenvat credit duty paid on any raw materials, component part or machinery or finished products used for cold rolling of Stainless Steel Pattas/Pattis, or aluminium circles under CENVAT Credit Rules, 2001 shall be taken. These compounded rates are applicable subject to following the procedure prescribed under para 1 to 10 of this Notification. Para 2 provides for an application being made in a prescribed format to the Jurisdictional Superintendent and also that the application shall be made so as to cover 12 consequentive calendar months, but the permission may be given for shorter period for the reasons to be recorded by the Assistant Commissioner/Deputy Commissioner. Under para 3 (1), a manufacturer, who has been allowed to operate by availing of this compounding scheme, is required to pay a sum calculated at the rate specified of this Notification which shall be in full discharge of his duty liability on his entire production of Cold Rolled Stainless Steel Pattas/Pattis during the month, and as per para 3 (2), the sum payable in para 3 (1) shall be calculated by application of the specified rate to the maximum number of cold rolling Machines installed by or on behalf of such manufacturer in one or more premises at any time during three calendar months immediately preceding the calendar month in which the application under para 2 has been made and the sum shall be tendered by the manufacturer alongwith the application. In terms of para 4 (1) of the Notification, the manufacturer who has been granted permission under para 2 of the Notification, shall make an application in a prescribed form (Appendix II) to the Notification, to the Superintendent incharge of the factory for permission to remove Stainless Steel Pattas/Pattis from his premises during the ensuing month, declaring the maximum number of cold rolling machines installed by him on his behalf in one or more premises at any time during three calendar month immediately preceding the calendar month in which such application has been made. As per para 4 (3), the manufacturer shall also intimate the Superintendent in writing for any proposed change in the number of cold rolling Machines installed by him or in his behalf and obtain written approval of such officer before making any such change. On the basis of para 3 and 4 of the Notification, the Departments contention is that if after obtaining the permission to operate under the compounded levy scheme and starting the operation under this scheme on the basis of maximum number of machines declared, the manufacturer dismantles some machines in a particular month, for three months following the month in which the machines had been dismantled, he will have to pay duty on the basis of the maximum number of machines declared earlier. The appellant plead that the provisions of Notification No. 34/2001-CE (NT) dated 28/6/01 are identical to the special procedure prescribed under Rule 96 ZA to 96 ZGG and, therefore, the ratio of Honble Rajasthan High Court judgment in the case of CCE, Jaipur II vs. Jupiter Industries (supra) which is with regard to Rule 96 ZA to 96 ZC is applicable to these cases also.
4. During the period prior to 28/6/01 Rule 96 ZA to 96 ZGG prescribed a special procedure (compounding scheme) for discharge of duty liability by the manufacturers of Stainless Steel Pattas/Pattis and aluminium circles. On going through the compounding scheme prescribed under Rule 96 ZA to 96 ZGG of the Central Excise Rules, 1944, as it existed during the period prior to 28/6/01 and the compounding scheme prescribed under Notification No. 34/01-CE (NT) dated 28/6/01, we find that -
(a) Rule 96 ZA of Central Excise Rules, 1944 is identical to para 2 of the Notification No. 34/01-CE (NT) dated 28/6/01 ;
(b) Rule 96 ZB is identical to para 3 of the Notification No. 34/01-CE (NT) ;
(c) Rule 96 ZC is identical to para 4 of the Notification No. 34/01-CE (NT) ;
(d) Rule 96 ZD is identical to para 5 of the Notification No. 34/01-CE (NT) ;
(e) Rule 96 ZF is identical to para 6 of the Notification No. 34/01-CE (NT) ;
(f) Rule 96 ZG is identical to para 7 of the Notification No. 34/01-CE (NT) and
(g) Rule 96 ZGG is identical to para 8 of the Notification No. 34/01-CE (NT) Thus, the provisions of Rule 96 ZA to 96 ZGG of Central Excise Rules, 1944 as the same existed during the period prior to 28/6/01 are in pari materia with the provisions of Notification No. 34/01-CE (NT) dated 28/6/01.Notification No. 34/2001-CE (NT) dated 28/6/01 as well as Rule 96 ZA to Rule ZGG of the Central Excise Rules, 1944, as the same existed during the period prior to 28/6/01, prescribed that at the time of applying for permission for operating under this special procedure and also for applying to the Jurisdictional Central Excise Superintendent in the beginning of every month, the assessee is required to declare the maximum number of cold rolling Machines installed by or on behalf of the manufacturer in one or more premises at any time during three calendar months immediately preceding the calendar month in which the application has been made and that the sum payable is to be calculated by application of the specified rate to the maximum number of cold rolling Machines installed by or on behalf of such manufacturer in one or more premises at any time during three calendar months immediately preceding the calendar month in which the application has been made. The implication of these provisions is that if a manufacturer operating under this special procedure dismantles some machines in a particular month, as a result of which the number of machines decreases, even then, up to three months he will be required to pay duty even on the dismantled machines, as the amount payable is linked with the maximum number of machines installed during the preceding three months. However, while interpreting these provisions of Rule 96 ZA to 96 ZGG of the Central Excise Rules, 1944, Honble Rajasthan High Court in the case of CCE, Jaipur II vs. Jupiter Industries (supra) held that no duty would be payable in respect of the dismantled machines. In this regard para 23, 24 and 25 of the judgment are reproduced below :-
23.?It goes without saying that, if in any particular month, no machine is operated and no production had taken place, there cannot be any levy of excise Duty. The manufacture of goods is condition precedent for charging of excise duty without which no levy can be made. Therefore, the rule cannot be made to go beyond the scope of charging provision, on the undisputed premises that no production had taken place from the cold rolling machine which has been removed on 29th May, 1998. In other words, no production has been taken place in respect of cold rolling machine which ceased to operate before the first July, 1996, no review could have been allowed in respect of estimated production in that machine. This is the simple logic which prevailed within the Tribunal and in our opinion rightly. No contrary view can be taken from the reading of the Rules also. We are, therefore, of the opinion that the conclusion reached by the Tribunal was valid.
24.? Moreover, when there is no production of any articles in relation to the machine which was not in existence, the question of passing on duty to consumers of existing goods can arise so as to require the invocation of principle of unjust enrichment to deny refund. Therefore, there is no justification for taking the view that since the tax has been paid under the special provision it is not subject to refund. Refund is a consequence of recovery of duty which is not leviable under the provisions of taxing statute or of excess payment of Duty. In given circumstances, such excess collection of Duty may be refused to be refunded, if it results in unjust enrichment because passing of duty to buyers of goods. It depends on furnishing satisfactory proof by the manufacturer that such duty has been passed on to buyers. However, in case like the present where goods have not at all been manufactured and yet on estimated basis of imaginary production Duty has been demanded, the question of passing of such duty collected from the assessee to buyers of the non-existence production cannot arise.
25.? We are therefore, also of the opinion that the direction of the Tribunal to refund excess amount received in respect of machine which had ceased to function during the month of July to August also does not call for any interference. Consequently, the question referred to us is answered affirmative that is to say in favour of the assessee and against the revenue There shall be no orders as to costs.
5. Since as discussed above, the provisions of Rule 96 ZA to 96 ZGG of the Central Excise Rules, 1944, as the same existed during the period prior to 28/6/01 are in pari materia with the provisions of Notification No. 34/01-CE (NT) dated 28/6/01 the judgment of Honble Rajasthan High Court in the case of CCE, Jaipur II vs. Jupiter Industries (supra) would be applicable to the case in hand. No contrary judgment of any High Court or Honble Supreme Court has been produced.
6. Moreover we also find that para 1 of the Notification No. 34/01-CE (NT) talks of the assessee having an option to pay the duty in respect of cold rolled Stainless Steel Pattas/Pattis on the basis of cold rolling machines installed for cold rolling of these goods thereafter para fixes the rate per machine per month. When the first para of the Notification talks of payment of duty on the basis of cold rolling machines installed and not on the basis of the maximum number of cold rolling machines installed during the preceding three months, notwithstanding the provisions of para 3 (1) and 4 (1) of the Notification No. 38/2001-CE (NT) dated 28/6/2001, the duty can be charged only on the basis of actual number of cold rolling machines installed and, therefore, if in a particular month, some cold rolling machines have been dismantled, in subsequent month duty in respect of the same cannot be charged. In view of the above discussion, we hold that the impugned order is not sustainable. The same is set aside. The appeals are allowed. (Pronounced in open court on 25/02/2011.) (Justice R.M.S. Khandeparkar) President (Rakesh Kumar) Member (Technical) PK ??
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