Custom, Excise & Service Tax Tribunal
Narasus Exports vs Commissioner Of Central Excise, Salem on 24 November, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal No.E/238/2009
[Arising out of Order-in-Original No.2/2009 dt. 30.1.2009 passed by the Commissioner of Customs & Central Excise, Salem]
Narasus Exports Appellant
Versus
Commissioner of Central Excise, Salem Respondent
Appearance:
Shri M.H. Patil, Advocate For the Appellant Ms. Indira Sisupal, AC (AR) For the Respondent CORAM : Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member Date of Hearing : 29.7.2015 Date of Pronouncement: 24.11.2015 FINAL ORDER No.41588/2015 Per P.K. Choudhary
The appeal is filed against the Order-in-Original dated 30.1.2009 passed by Commissioner of Central Excise, Salem.
2. The brief facts of the case are that appellant is a Export Oriented Unit set up for manufacture of Instant Coffee Powder. Show Cause Notice dt. 17.9.2008 was issued to the appellant demanding duty on "Instant Coffee Powder" cleared to DTA by wrongly availing the benefit of Notification No.43/2001-CE (NT) dt. 26.6.2001 wherein the appellant cleared "Instant Coffee" to M/s.Blend Pack, Bangalore under the above notification. The adjudicating authority in his order confirmed the demand of Rs.1,40,81,843/- on the clearances of Instant Coffee during the period 30.6.2007 to 16.5.2008 under Section 11A (2) along with interest and also imposed equivalent penalty under Rule 25 of Central Excise Rules,2002. Hence the present appeal.
3. Ld. Advocate appearing for the appellant submits that Notification No.43/2001-CE dt.26.6.2001 was issued under Rule 19 of Central Excise Rules As per clause (2) (ii) of the notification, exemption is allowed subject to fulfilment of condition that provisions of Central Excise (Removal of Goods at Concessional Rate of Duty For Manufacture of Excisable Goods) Rules, 2001 shall be followed, mutatis mutandis. He further submits that adjudicating authority has denied the benefit on the ground that Rule 2 of Rules, 2001 shall apply to a manufacturer who intends to avail of the benefit of a notification issued under sub-section (1) of Section 5A of Central Excise Act, 1944. He submits that the adjudicating authority denied the benefit saying that there is no notification issued under Section 5A for exempting the clearances of goods by EOU. He further submits that clause (2) of the notification clearly stipulates for following procedures of Central Excise Rules, 2001 mutatis mutandis. He drew our attention to Hon'ble Supreme Court's decision in the case of Paresh Chandra Chatterjee Vs State of Assam reported in (1962) 3 SCR 88 : AIR 1962 SC 167. (Ref. Page 24 of compilation of case law). He further submits that M/s.Blend Pack addressed a letter dt. 22.8.2007 to Asst. Commissioner of Central Excise, Bangalore III Division (Ref. Page 116 of Paper Book) seeking permission to procure the goods from the appellant by following Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods for Export) Rules, 2002 under Notification No.43/2001. He submitted that the goods were cleared under ARE-3 procedure to M/s.Blend Pack and receipt of the goods were accounted by Blend Pack and the intimation was sent to jurisdictional Commissioner of appellant's unit. (Ref. Page 124 of PB). He further submits that M/s.Blend Pack is a job worker of Hindustan Lever Ltd. who manufactured Instant Coffee for further repacking and the goods were ultimately exported by HLL which is not disputed by the adjudicating authority. He drew our attention to Rule 19 of Central Excise Rules as per Rule 19 (2) the goods can be removed without payment of duty from a factory of the producer or the manufacturer or from any other premises to for use in the processing of goods which are exported as maybe approved by Commissioner. He further submits that identical issue in denial of Notification No.47/94 wherein the Tribunal allowed the appeal and held that erstwhile Rule 13 is applicable to a 100% EOU. He relied the following citations :-
1) Kurt-O-John Shoe Components (I) Ltd. Vs CCE Noida 2003 (154) ELT 651 (Tri.-Del.)
2) Paras Fab International Vs CCE Jaipur 2003 (153) ELT 549 (Tri.-Del.)
3) Alsa Marine & Harvests Ltd. Vs CC Visakhapatnam 2003 (158) ELT 741 (Tri.-Bang.)
4) Kurt O'John Shoe Components (I) Pvt. Ltd. Vs CCE Noida 2003 (158) ELT 472 (Tri.-Del.)
5) Winsome Yarns Ltd. Vs CCE Chandigarh 2009 (243) ELT 639 (Tri.-Del.)
6) Subramaniyan & Co. Vs CCE 1992 (59) ELT 55 (Tribunal)
7) CCE Madras Vs Madras Radiators & Pressings Ltd.
1994 (69) ELT 409 (Tribunal)
4. Ld. advocate submits that in the aforecited Tribunal's decision in the case of Winsome Yarns Ltd. Vs CCE Chandigarh (supra) wherein similar benefit has been allowed under the existing Rule 19 wherein benefit of Notification No.43/2001-CE dt. 26.6.2001 has been extended.
5. Ld. A.R for the Revenue reiterated the findings of OIO. She submits that appellant being a 100% EOU whereas the goods were cleared to DTA without payment of duty. The goods were cleared to "DTA sale" without payment of duty and the appellants have either exported or cleared to DTA on payment of duty whereas in this case the adjudicating authority rightly demanded duty by denying notification No.43/2001 and submits that there was no exemption or clearance of goods from EOU without payment of duty other than export. They are borne by notification No.53/2003. She further submits that the goods were not exported by M/s. Blend Pack and the goods were cleared again by HLL. She submits that the clearance of goods to M/s. Blend Pack is nothing but sale and Notification No.43/2001 is not applicable. She referred to page 144 of the paper book wherein Form A.R.E.2 is filed to submit that M/s. Hindustan Lever Ltd. has exported the goods under DEPB. Clearances of goods by HLL cannot be considered to have been made by 100% EOU. She relied on the following citations :-
(1) Leather Crafts (India) Pvt. Ltd.
2011 (274) ELT 379 (2) Amod Stampings Pvt. Ltd. Vs CC Kandla 2015 (318) ELT 468 (Tri.-Ahmd.)
6. We have carefully considered the submissions from both sides. In the present case, the appellant have chosen to supply to special category of buyers covered under Rule 19 (2) of the Central Excise Rules. Duty shall be payable only if the clearances are made to general category of buyers. We agree with the submission of the learned Advocate that Rule 19 does not exclude the clearances from 100% EOU from its purview. We find that Notification No. 43/2001-CE dated 26.06.2001 was issued under Rule 19 of Central Excise Rules. As per clause 2(ii) of the notification, exemption is allowed subject to fulfilment of the condition that provisions of the Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001, shall be followed mutatis mutandis. We also find that the goods were cleared under ARE-3 procedure to M/s. Blend Pack and receipt of the goods were accounted for by M/s. Blend Pack and intimation was sent to jurisdictional Commissioner of appellants unit. Blend Pack is a job worker of Hindustan Level Ltd., (HLL) for further repacking and the goods were ultimately exported by HLL, which is not in dispute. The decision of Winsome yarns Ltd. (supra) support the contention of the learned Advocate. The relevant paragraphs of the Tribunals order are reproduced below:-
3.?The appellant is a 100% E.O.U. and manufacture yarn and clear them mainly for export and the quantity permitted by the Development Commissioner into DTA. In respect of permitted quantity, it is claimed that the appellant supplied the same as inputs to manufacturer of excisable goods who ultimately exported the said product. For this purpose, it is claimed that they produced CT-2 certificate issued in favour of the recipient unit by the officer of the in-charge of the recipient unit. On the basis of the said certificate it was claimed that they have effected the clearances duty free in terms of Rule 19(2) of the Central Excise Rules, 2002 read with the Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001. The original authority held that as a 100% E.O.U. they are governed by special provisions and, therefore, they cannot avail the benefit under Rule 19(2) of the Central Excise Rules and the said order has been upheld by the Commissioner (Appeals).
4.?Learned Advocate submits that as a 100% E.O.U., clearances effected by them to DTA were within the permissible limit as per EXIM Policy. Rule 19 does not exclude 100% E.O.U. from its purview. He also relies on the decisions of the Tribunal in the case of Kurt-O-John Shoe Components (I) Ltd. v. Commissioner of C.Ex & Cus., Noida, reported in 2003 (154) E.L.T. 651 (Tri.-Del.) and in the case of Paras Fab International v. CCE, Jaipur, reported in 2003 (153) E.L.T. 549 (Tri.-Del.) which held that Rule 13 of Central Excise Rules, 1944 was applicable in respect of clearances made from 100% E.O.U. He also relies on the decision of the Tribunal in the case of CCE, Madurai v. Renuga Soft-X Towels, reported in 2007 (217) E.L.T. 589 (Tri.-Chennai) wherein it has been held that Rule 19 of Central Excise Rules, 2002 and the Notification No. 43/2001-C.E. (N.T.) are pari materia to Rule 13 of erstwhile Rules, 1944 and Notification No. 47/2001-C.E. (N.T.) issued under Rule 13.
6.?We have carefully considered the submissions from both sides. There is no dispute before us that the clearances made by the appellants is beyond the limit prescribed by the Development Commissioner. In respect of such clearances duty shall be payable, if they are made to general category of buyers. In the present case, the appellant have chosen to supply to special category of buyers covered under Rule 19(2) of the Central Excise Rules, 2002. We agree with the submission of the learned Advocate that Rule 19 does not exclude the clearances from 100% E.O.U. from its purview. The decisions of the Tribunal in the case of Kurt-O-John Shoe Components (I) Ltd. and Paras Fab International (supra) support the contention of the learned Advocate. The Tribunals above decision squarely applies to the present case.
7. By following the Tribunals decision, we hold that the appellant EOU cleared the goods under Notification No. 43/2001 which was issued under Rule 19 of the Central Excise Rules and the goods were ultimately exported by HLL. Therefore, the question of demanding duty on the instant coffee powder ultimately exported does not arise and the demand is liable to be set aside. Consequently, no penalty is imposable. In the light of the above, we set aside the impugned order and allow the appeal.
(Pronounced in open court on 24-11-2015) (P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER gs 1