Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs S & S Power Switch Gear Ltd on 2 May, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/354/2004
[Arising out of Order-in-Original No.19/2003 dt. 30.4.2003 passed by the Commissioner of Central Excise, Chennai]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
Honble Dr. Chittaranjan Satapathy, Technical Member
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? : No
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? : Yes
3. Whether the Members wish to see the fair copy of
the Order? : Seen
4. Whether Order is to be circulated to the Departmental
Authorities? : Yes
Commissioner of Central Excise,
Chennai
Appellant/s
Versus
S & S Power Switch Gear Ltd.
Respondent/s
Appearance :
Shri Parmod Kumar, SDR Shri N. Venkatraman, Sr. Advocate Shri Muthuvenkatraman, Advocate For the Appellant/s For the Respondent/s CORAM:
Ms. Archana Wadhwa, Honble Judicial Member Dr. Chittaranjan Satapathy, Honble Technical Member Date of hearing : 2.5.2012 Date of decision : 2.5.2012 Final Order No.____________ Per Archana Wadhwa Being aggrieved with the order passed by the commissioner in de novo proceedings, vide which he has confirmed the demand of duty of Rs.37,611/- against the respondents, the Revenue has filed the present appeal.
2. We have heard Shri Parmod Kumar, SDR for the Revenue and Shri N. Venkatraman, Senior Advocate and Shri Muthurvenkatraman, Advocate for the respondent.
3. As per the facts on record, the respondents are engaged in the manufacture of Ht circuit breakers of various types. During the relevant period, they were discharging duty on the said goods @ 5% in terms of Notification No.52/93-CE dt. 28.2.93 by classifying the same under Heading 8535.00. They were issued three SCNs, detailed below, raising demands of duties on the allegation that the goods were not classifiable under Heading 8535.00 but the same are properly classifiable under Heading 85.37 and as such the benefit of Notification was not available to them :-
S.No. SCN Date Period Duty (Rs.)
1. 1.3.1994 1.3.93 to 31.12.93 1,51,95,379
2. 13.4.1994 1.1.94 to 31.3.94 8,91,603
3. 29.8.1994 April94 to July94 1,48,75,640
4. When the above SCNs were still in the process of adjudication, the CBEC vide an order No.32/8/94-CX.4. vide F.No.151/6/94-CX.4 dt. 14.7.94 issued under Section 37B of the Central Excise Act held that circuit breakers mentioned in the list appended to the said order were classifiable under Heading 8437.00 of the Central Excise Act, 1985.
5. Subsequently, the Order-in-Original was passed by the Commissioner on 17.11.2000 confirming the total demands of Rs.3,09,62,619/- covered by three SCNs and imposing penalty of Rs.75 lakhs. The said order of the Commissioner was appealed against by the respondents before the Tribunal. Vide Majority Order No.681/02 dt. 31.5.02, the Tribunal remanded the matter for re-determination of classification issue and held that demand of duty has to be restricted to 6 months period only.
6. During the de novo proceedings, the respondents contested before the Commissioner that inasmuch as the classification is being changed in terms of the Boards circular dt. 14.7.94, the demand of duty should be confirmed only for the prospective period. For the above proposition, they relied upon the Honble Supreme Courts decision in the case of HM Bags Manufacturer Vs Collector - 1997 (94) ELT 3 (SC) as also on the decision in the case of Collector Vs Cotspun Ltd.-1998 (99) ELT 24 (SC).
7. The Commissioner, while quantifying the demand, took note of the Tribunals decision in the case of Southern Switch Gear Ltd. Vs CCE Chennai- 2003 (155) ELT 145 (Tri.-Chennai) laying down that Boards circular dt. 14.7.94 classifying the goods under Heading 8537 would have only prospective effect and, therefore, classification of the product has to be adopted under Heading 8537.00 only from 14.7.94, confirmed the demand of duty of Rs.37,611/- for the period 14.7.94 to 31.7.94.
8. Revenue is in appeal against the above order on the ground that the demand raised against the respondents should have been confirmed for the entire period Jan93 to July94 inasmuch as subsequent to passing of the order by the Tribunal vide which matters were remanded, vide Section 110 of Finance Act 2000 provisions of Section 11A were amended retrospectively revalidating the issuance of SCNs under Section 11A for a period of 6 months or 5 years from the relevant date notwithstanding any approval of classification list or price list during the said period. Learned AR appearing for the Revenue submits that in view of above amendment to Section 11A, brought vide Section 110 of the Finance Act 2000, demands raised against the assesses by way of SCNs stand validated irrespective of the fact that as to whether the classification lists were approved or not. In such a scenario, it is his submission that the entire duty raised against the respondents by invoking the longer period of limitation is required to be confirmed.
9. Countering the arguments, learned Senior Advocate Shri N.Venkatraman, submits that the earlier remand order of the Tribunal specifically observed that the Boards circular is effective only prospectively. In an identical matter, the Tribunal in the case of Southern Switch Gear Ltd. Vs CCE Chennai - 2003 (155) ELT 145 (Tri-Chennai) has held that the demand should have been confirmed by the lower authorities w.e.f. 14.7.94 onwards i.e. from the date of issuance of the Boards circular. He also relies upon the Tribunals decision in the case of CCE Pondicherry Vs Micro Controls - 2007 (214) ELT 547 (T) wherein following the Honble Supreme Courts decision in the case of HM Bags, the demand was confirmed only prospectively from the date of issuance of the Boards circular. As such, he supports the impugned order of the Commissioner, confirming the demand for the period 14.7.94 to 31.7.94 only.
10. We have appreciated the submissions made by both sides. The present impugned order has been passed by the Commissioner in de novo proceedings, when the matter was earlier remanded by the Tribunal vide their order reported as 2003 (160) ELT 555 (Tri.-Chennai). On going through the said order of the Tribunal, we find that originally there was difference of opinion between the Members and the matter was referred to third Member. As per the majority order, the matters were remanded with the direction to restrict the demand to a period of 6 monthly only. For proper appreciation, we reproduce the relevant paragraphs from the order of Member (Technical) who first authored the order and the order of the third Member.
Per Shri S.Sekhon, Member (T) Since we are setting aside the order by restricting the demands to a period of six months and remanding the matter back to the learned Commissioner to requantify the demands, we would consider leaving the issue on merits to be kept open, to both sides. Therefore we do not arrive at any findings on submissions made on merits and also on the logic of the Section 37B orders, as made before us. We keep the same, to be redetermined in the remand proceedings Order Per Shri Jeet Ram Kait, Member (T) 18. I am also in agreement with the finding? recorded by learned Member (T) in para 3(e) at page 7 that as there was no suppression of facts the proviso to Section 11A(1) cannot be invoked for demand of duty. I also agree with the view taken by learned Member (T) Shri S.S. Sekhon that the demands have to be restricted to six months only following the ratio of the decision of the Tribunal in the case of Muzzaffarnagar Steel reported in 1989 (44) E.L.T. 552, page, 555 as contained in page 8 of the order recorded by present case. Therefore, the extended period cannot be invoked for demand of duty in the absence of deliberate suppression or misstatement of facts with intent to evade payment of duty. The Tribunal judgment in the case of Muzzaffarnagar Steel was also followed by the West Regional Bench of the Tribunal in the case of Bombay Drums Manufacturing Co. v. CCE reported in 2000 (124) E.L.T. 908. Further in the case of Fricks India Ltd. v. CCE reported in 2000 (119) E.L.T. 676, the Bench presided over by Justice K. Sreedharan, Ex-President has held that if the goods are cleared pursuant to approval of the classification list it is not open to the department to justify demand of duty invoking the longer period of limitation in terms of Section 11A.
19. In view of the above discussion, I agree? with the view taken by learned Member (T) Shri S.S. Sekhon that the appeal is required to be remanded for re-determination of the classification issue and the demand of duty has to be restricted to six months period only. Final Majority order recorded is as under :-
In terms of majority order, the appeal is allowed by remand for re- determination of classification issue and the demand of duty has to be restricted only to six months period only as held by both learned Members (Technical) in their respective orders.
11. As is clear from the above, the majority decision was to the effect that the demands have to be restricted to 6 months period. Even the recording of the majority order clarifies that the duty demands have to be quantified for 6 months period.
12. Inasmuch as the impugned order was being passed by the Commissioner in de novo proceedings, he was bound by the observations made by the Tribunal and the findings arrived at. It was not open to the Commissioner to restrict and quantify the demand for a period lesser than 6 months from the date of issuance of the SCN. His reliance to the Tribunals decision in the case of Southern Switchgear Ltd. for restricting the demand to a period from 14.7.94 to 31.7.94 is not proper inasmuch as in that case, directions were given by the earlier order of the Tribunal to restrict the demand for that period. In fact, when the matter came before the Tribunal in the second round of litigation, the Bench observed that the directions given by the Tribunal to lower authorities were required to be followed and the action on the part of the lower authorities to refuse to do the same amounts to judicial indiscipline in flouting the said directions. As such, the observations made by the Tribunal in the case of Southern Switchgear Ltd., in fact, advances the Revenues case inasmuch as the adjudicating authority was bound to follow the directions of the Tribunal, in the present case, which, in clear terms, held that the demand of duty is required to be fixed for a period of 6 months.
13. Similarly, arguments made by learned Senior advocate to seek support from the Honble Supreme Court decision in the case of HM Bags etc. cannot further his case inasmuch as, we are not deciding the appeal for the first time in the present proceedings. The appeal already stands decided by the earlier order of the Tribunal. Ld. Advocate fairly agrees that the earlier order of the Tribunal, directing confirmation of demand for six months, was not appealed against by them before any higher appellate forum. That being so, it has to be held that the same attained finality and the Commissioner was bound by the directions as contained in the said order. For the same reasons, it is not open to us to go to the merits of the case and to redecide the issue relating to the period for which the demand is required to be confirmed.
14. We also do not find any favour with the contention of the learned advocate that if we come to the reasoning recorded in the earlier decision of the Tribunal, as adopted by the Members, the same makes it clear that the Boards circular has to be given prospective effect only. Having held that the earlier order, in clear terms, restricts the demand to a period of 6 months, we need not examine the intention of the Members writing the judgement.
15. Ld. Advocate has also referred to the Tribunals decision in the case of CCE Pondicherry Vs Macro Controls - 2007 (214) ELT 547 (Tri.-Mum) wherein the Boards order issued under Section 37B was held to be effective only prospectively. ,We, at the cost of the repercussion, make it clear that we are not deciding the said issue for the first time inasmuch as the same already stands decided. As such, ld. Advocates reliance on the Tribunals decision holding to the contrary is not appropriate. The earlier order of the Tribunal having attained finality, is required to be given effect to and it is only the quantification in terms of the said order, which is required to be examined.
16. For the same reasons, we are of the view that the Revenues prayer for confirmation of entire duty by invoking the extended period cannot be accepted as the earlier order of the Tribunal had categorically held that extended period is not available to the Revenue and demand should be restricted to six months period.
17. At this stage, ld. Advocate has also made reference to the fact that the review order is not appropriately signed by the proper officer. However, apart from the fact that such preliminary objection was raised at the end of the proceedings, we find no justification in the above objection of ld. Advocate inasmuch as the review order issued on 12.12.07 by OSD (Review) bears the signature of the OSD, showing the signature of Member (L&J) as sd/- 20.11.07. In the absence of any doubt about the correctness of the same, we do not find it correct to call for the records as suggested by the learned advocate.
18. In view of the above, Revenues appeal is allowed and the matter is remanded for quantification of duty for a period of 6 months in respect of each SCNs issued to the respondents. Appeal is disposed of in the above terms.
(Operative part of the order pronounced in open court on 2.5.2012) (DR. CHITTARANJAN SATAPATHY) (ARCHANA WADHWA) TECHNICAL MEMBER JUDICIAL MEMBER gs 1 2