Custom, Excise & Service Tax Tribunal
Bhubaneshwar-I vs Cargil India Ltd on 4 September, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.2
Excise Appeal No. 76270 of 2016
(Arising out of Order-in-Original No. CCE/BBSR-I/03/2016 dated 18.03.2016 passed
by Commissioner of CGST & Central Excise, Bhubaneshwar-I.)
M/s Cargill India Pvt. Ltd.,
(Oil Terminal Road, Attharabanki, Paradeep,
Dist.-Jagatsinghput, Odisha-754142.)
...Appellant
VERSUS
Commissioner of CGST & Central Excise, Bhubaneshwar-I,
(C. R. Building, Rajaswa Vihar, Bhubaneshwar-751007.)
.. ...Respondent
APPERANCE :
Shri Deepro se & Ms. Payal Bharwani, both Advocates for the Appellant Shri P. K. Ghosh, Authorized Representative for the Respondent With Excise Appeal No. 76334 of 2016 (Arising out of Order-in-Original No. CCE/BBSR-I/03/2016 dated 18.03.2016 passed by Commissioner of CGST & Central Excise, Bhubaneshwar-I.) Commissioner of CGST & Central Excise, Bhubaneshwar-I, (C. R. Building, Rajaswa Vihar, Bhubaneshwar-751007.) ...Appellant VERSUS M/s Cargill India Pvt. Ltd., (Oil Terminal Road, Attharabanki, Paradeep, Dist.-Jagatsinghput, Odisha-754142.) .. ...Respondent APPERANCE :
Shri P. K. Ghosh, Authorized Representative for the Appellant Shri Deepro Sen & Ms. Payal Bharwani, both Advocates for the Respondent CORAM:
HON'BLE MR. R. MURALIDHAR, MEMBER (JUDICIAL) HON'BLE MR. RAJEEV TANDON, MEMBER (TECHNICAL) Final Order No...77629-77630/2024 DATE OF HEARING : 04.09.2024 DATE OF DECISION : 04.09.2024 2 Excise Appeal Nos. 76270,76334 of 2016 Per R. Muralidhar :
The appellants, Cargill India Pvt. Ltd. is engaged in manufacturing of Palm Stearin including Refined Bleached Deodorized ('RBD') Palm Stearing from palm oil at their unit located at Paradeep, operating under Central Excise Registration AAACC3269JXM001. For the purpose of manufacturing the goods, crude palm oil is refined, bleached and deodorized and then refined palm oil is put through the process fractionation which yields two fractions of palm oil viz. Palmolein and Palm Stearin. Palm Stearin is a fraction of palm oil received after fractionation process. Palm oil viz fractionation does not undergo any chemical change or modification and contains 99.9% triglycerides and 0.1% fatty acids ('FFA'). Palm Stearin is also known as RBD Palm Stearin. During the period from December 2009 to 25.03.2011 the Company was classifying the product under tariff item 15119090. The same were being cleared without payment of excise duty by availing the benefit of Notification No. 3/2006-CE dated 01.03.2006.
2. The issue of classification of non-edible Industrial Grade Crude Palm Stearin as to whether it would fall under tariff item 38231112 or under tariff item 15119090 was before the Hon'ble Supreme Court during that period. The Hon'ble Supreme Court in the matter of CCE, Vishakhapatnam v. JOCIL Ltd., 2011 (263) E.L.T. 9 (SC), held that the product would be classifiable under CET 382321112. Subsequent to this decision, the apellant started classifying the products under CTH 3823 w.e.f. 26.03.2011. After this Apex Court's judgement, the CBEC 3 Excise Appeal Nos. 76270,76334 of 2016 withdrew Circular No. 81/2002-Customs dated 03.12.2002 vide Circular No. 31/2011-Customs dated 26.07.2011.
3. The DGCEI initiated investigation against the Company, by issuing letter dated 16.01.2013. On the basis of such investigation, the Department issued the SCN on proposing to demand excise duty of Rs. 1,65,80,014 along with interest and penalty, by invoking the extended period provisions. After due process, the Adjudicating authority confirmed the demand, interest and penalty. Being aggrieved the appellant is before the Tribunal.
4. The Ld Counsel representing the appellant, fairly submits that the issue of classification in respect of the impugned product is now stands settled against the appellant, since the Apex Court in the case of Jocil Ltd., has held that it would fall under CET 38231112.
5. Therefore, now the only defence of the appellant before the Tribunal is on account of limitation alone. The Ld Advocate makes the following submissions :
(1) Subsequent to this judgement, the appellant has started clearing their goods under CET 381112. The dispute is only towards the clearances carried out by them during the period December 2009 to 25.03.2011, wherein their adoption of CET 15119090 was based on the Board Circular No. 81/2002-Customs dated 03.12.2002 and the decision of the Tribunal in the case Jocil Ltd.
vs. CCE, Vishakapatnam 2009 (244) ELT 69 (Tri), wherein it 4 Excise Appeal Nos. 76270,76334 of 2016 was held that the correct classification of Crude Palm Stearin falls under Tariff 1511 and not under CET 3823. The Revenue had filed an Appeal before the Hon'ble Apex Court, wherein the issue was finally settled by the Hon'ble Supreme Court vide its order on 15th December 2010. Subsequent to this judgement, the Board rescinded the earlier Circular No.81/2002 Cus dated 03.12.2002 by way of Circular No. 31/2011-Customs dated 26.07.2011, clarifying that the product is required to be classified under CET 3823.
(2) Therefore, the appellant was carrying the bonafide belief that their product is classifiable under CET 1511 and were clearing the same accordingly.
(3) Further, the appellant was regularly filing their monthly ER 1 Returns showing that they were clearing the goods under CET 1511 and were availing the benefit of exemption in terms of Notification No. 3/2006-CE dated 01.03.2006. (4) Soon after the decision finalizing the issue was rendered by the Hon'ble Supreme Court, the appellant started clearing their goods under CET 3823 with effect from 26.3.2011. On the other hand, the CBIC took some more months to clarify the issue by way of Circular on 26.07.2011. This shows the bonafides of the appellant who has reclassified the product immediately after coming to know of the Apex Court's judgement, without even waiting for any clarification from the CBIC.
(5) All the above factual details show that absolutely no case of suppression can be made out against the appellant and on the other hand, the appellant, carrying the bonafide belief have disclosed all the facts in their ER 1 Returns.
6. In view of the above submissions, he submits that the entire confirmed demand, which has been raised by invoking the extended period provisions, is required to be set aside on account of time bar. 5
Excise Appeal Nos. 76270,76334 of 2016
7. He further submits that the issue as to whether in such cases, the extended period can be invoked or not is no more res integra. He relies on the following case law, wherein the issue was identical with regard to application of extended period, in respect of the classification of Palm Stearin :
a. Arani Agro Oil Industries Ltd. v. CCE, Cus & ST, Visakhapatnam - II, 2020 (9) TMI 502 - CESTAT Hyderabad [Pg. 25-27 of the Compilation] b. Krishnapatnam Oils & Fats Pvt. Ltd., & Ors. v. CCE, Cus. & ST, Guntur, 2017 (9) TMI 1487 - CESTAT Hyderabad [Pg. 28-29 of the Compilation] c. Nikhil Refineries Pvt. Ltd. v. CCE, Cus. & ST, Visakhapatnam-II, 2018 (11) TMI 815 - CESTAT Hyderabad [Pg. 30-32 of the Compilation]
8. In view of the above submissions, he prays their appeal may be allowed by setting aside the impugned order on account of time bar.
9. The Learned AR, representing the Revenue, submits that the issue stands decided against the appellant as held by the Hon'ble Supreme Court. Only after investigation by the DGCEI, the Revenue could come to know that the appellant had adopted the classification under CET 1511, thereby availing the exemption from Excise Duty, which would not have been available to them, had they correctly followed the CET 3823 in the first place. Hence, he justifies the confirmed demand.
10. Heard both sides and perused the Appeal papers and further submissions made at the time of Hearing.
6
Excise Appeal Nos. 76270,76334 of 2016
11. We find that without any dispute from any side, the issue stands covered against the appellant with regard to the classification of the goods in question, in view of the judgement of the Hon'ble Supreme Court in the case of of CCE, Vishakhapatnam v. JOCIL Ltd., 2011 (263) E.L.T. 9 (SC), wherein it has been held that the product would be classifiable under CET 382321112. This judgement was pronounced on 15th December 2010. Therefore, we hold that on merits the appellant does not have any case.
12. Now coming to the submissions made by the appellant with regard to the confirmed demand for the extended period, we find that the Show Cause Notice was issued on 05.01.2015, for the clearances effected by the appellant during the period December 2009 to 25.03.2011.
13. We see considerable force in the submissions made by the appellant on various points like their being covered by the Board's Circular No.81/2002 Cus dated 03.12.2002, till it was replaced by Circular No. 31/2011-Customs dated 26.07.2011. The Tribunal case of Jocil rendered in 2009 had held that the product would be classifiable under CET 1511, which was subsequently overturned by the Apex Court on 15.10.2011. Once this decision became public, without dispute, the appellant has changed the classification on their own, without waiting for the clarification which was issued on July 2011. They have also been 7 Excise Appeal Nos. 76270,76334 of 2016 filing their monthly Returns, because of which Revenue would have come to know about their adoption of CET 1511 for their product and their claiming of exemption under 3/2006-CE dated 01.03.2006. Further, the Revenue had the knowledge about the overturning the Tribunal decision by Apex Court by July 2011 when they issued the Board Circular. Still, the present SCN has been issued on 05.01.2015, i.e. after about 3 years from this date, for which no plausible explanation has been given by the Revenue. All these would show that the appellant was open about their clearances and Dept has not adduced any evidence towards any suppression on the part of the appellant.
14. We also find that the very issue was before the coordinate Bench of Hyderabad, which in the case of Arani Agro Oil Industries Ltd. v. CCE, Cus & ST, Visakhapatnam - II, 2020 (9) TMI 502 , wherein CESTAT Hyderabad, has held as under :
"5. After hearing both sides and perusing the records, we find that on merits, the issue has been settled by the Hon'ble Apex Court in October, 2010 and it has been held that Palm Stearin is classifiable under Central Excise Tariff Heading 3823 and not under CTH 1511. Thus, it has been decided against assessee and in favour of the revenue. Respectfully following the judgment of the Hon'ble Apex Court in the case of JOCIL Ltd (supra), we hold that the appellant's product is classifiable under CTH 3823 and not under CTH 1511 as claimed by the appellant. Consequently, the exemption notification claimed by the appellant is also not applicable as the relevant entry pertains to only goods falling under Chapter Heading 1507 to 1515. Clearly the appellant's product falling under CTH 3823 is not covered.8
Excise Appeal Nos. 76270,76334 of 2016
6. However, we find that the appellant has been filing ER-1 returns claiming the product's classification under CTH 1511 and there has been correspondence between the department and the appellant in this regard. On 03.12.2008 the department advised the appellant that the classification of Palm Stearin in ER-1 returns is not correct to which the appellant responded on 06.01.2009 justifying their classification. Thus, the department was fully aware of the appellant's classification. There is no delay in the appellant responding to the revenue's letter. It was open for the revenue to issue a show cause notice if they did not find the appellant's reply acceptable. However, this was not done. No action was taken until the expiry of normal period of limitation and thereafter, demand has been raised invoking extended period of limitation. We do not find any evidence of fraud, collusion, wilful misstatement or suppression of facts or violation of the Act or Rules with intention to evade payment of duty. All that can be said against the assessee is that they made a wrong claim of classification based on their own arguments, although, consequent upon the decision of the Hon'ble Apex Court, the assessee's classification is not correct. The entire demand is based on the information provided by the assessee in their ER-1 returns. Making a wrong claim of classification, per se, is neither fraud nor collusion nor wilful misstatement nor suppression of any facts. It is just a wrong claim. If the claim is wrong in the ER-1 returns, it was open for the revenue to have raised demand by issuing a show cause notice immediately. Therefore, we find that there is no ground for invoking extended period of limitation in this appeal. Accordingly, the appeal is allowed on the ground of demands being time barred.
15. In case of Krishnapatnam Oils & Fats Pvt. Ltd., & Ors. v. CCE, Cus. & ST, Guntur, 2017 (9) TMI 1487, CESTAT Hyderabad has held as under :
"6. On careful consideration of the submissions made, we find that appellant is contesting the demand of duty as confirmed by the adjudicating 9 Excise Appeal Nos. 76270,76334 of 2016 authority only on the ground of limitation. We find strong force in the submissions made by the Ld. Counsel for more than one reason.
7. Firstly, it is undisputed that appellants were indicating clearances of palm stearin on nil rate of duty by availing benefit of Notification No. 03/2006. These clearances are indicated in the monthly returns filed by the appellant; this is an evident from the fact that the queries raised by the Audit Department on 03.12.2012 that emanate from the scrutiny of records of monthly returns. It would mean that appellant had in fact recorded the clearances and indicated the same in their monthly returns as to availment of benefit of notification.
8. Secondly, we do find that the appellants could have entertained a bona fide belief as to the classification of the product RBD Palm Stearin will be covered under Chapter 15, seems to be correct as during the relevant period, various decisions of the Tribunal indicated that the classification of RBD palm stearin is under Chapter 15. We find that the Apex Court in the decision of Jocil Ltd., reversed the said view and the said judgment was delivered by Apex Court on 15.12.2010. In our view, till 15.12.2010, these appellants could have entertained a bona fide belief that there product merits classification under Chapter 15 hence, in our view, the plea of limitation as raised by the appellant has to be answered in their favour.
10. In view of the foregoing, we hold that the impugned order confirming the demands with interest and imposing penalties is liable to be set aside only on the ground of limitation and we do so.
16. We find that based on our observations at Para 13 above, the ratio laid down in the cited case laws are squarely applicable. Therefore, we set aside the impugned order on account of limitation alone and allow the appeal.
10
Excise Appeal Nos. 76270,76334 of 2016
17. Thus the appeal stands allowed, with consequential relief, if any, as per law (Dictated and pronounced in the open court) Sd/-
(R. Muralidhar) Member (Judicial) Sd/-
(Rajeev Tandon) Member (Technical) Tushar Kr.