Custom, Excise & Service Tax Tribunal
Cce Aurangabad vs Ujwal Metals Pvt. Ltd on 17 May, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
REGIONAL BENCH - COURT NO. 02
Excise Misc. Application (CO) No. 91172 of 2015
(on behalf of Respondent)
Excise Appeal No. 86669 of 2015 (Arising out of Order-in-Oppeal No. 15/CEX/C/2015 dated 21.05.2015 passed by Commissioner of Central Excise, Customs, & Service Tax, Aurangabad) Commissioner of Central Excsie .....Appellant Aurangabad N-5, Town Centre, CIDCO, Aurangabad VERSUS M/s Ujwal Metals Pvt. Ltd. .....Respondent MIDC Industrial Area, Nanded Appearance:
Shri Bidhan Chandra, Authorized Representative for the Appellant Shri M.H. Patil, Advocate for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Hon'ble Mr. C.J. Mathew, Member (Technical) FINAL ORDER NO. A/85919 / 2019 Date of Hearing: 18.01.2019 Date of Decision: 17.05.2019 Per: S.K. MOHANTY This appeal is directed against the impugned order dated 21.05.2015 passed by the Commissioner of Central Excise, Customs & Service tax, Aurangabad. Pursuant to the appeal filed by Revenue, the respondent has also filed the cross objection.
2. Brief facts of the case are that the respondent was engaged in the manufacture of excisable goods namely, "Galvanized Corrugated Sheets", falling under Chapter Sub-
2Application No. E/CO/91172/2015 Appeal No. E/86669/2015 Heading No. 72104100 of the Central Excise Tariff Act, 1985. During the disputed period, the respondent was engaged in the activities of cutting and corrugation of GP Coils/Sheets received from various parties. The department had held that mere cutting of Coil/GP Coil into sheets does not amount to manufacture and accordingly, no duty was payable by the respondent on such activities. However, with regard to corrugation of sheets, it was held that such activity undertaken by the respondent amounts to manufacture, as a new entity emerges after such activity, which is distinct in name, use and character. While adjudicating the dispute arising out of the show cause notice, the Learned Commissioner of Central Excise vide the impugned order dated 21.05.2015 has held that the activity/process of corrugation of Galvanized Plane Coils into Galvanized Corrugated Sheets amounts to manufacture as per the definition provided under Section 2(f) of the Central Excise Act, 1944. Accordingly, the impugned order has confirmed the central excise duty demand of Rs.88,17,475/- along with interest and imposed equal amount of penalty on the respondent. The said adjudged demands were confirmed under the normal period of limitation provided under Section 11A of the Act. However, the impugned order has dropped the proposed duty demands for the said goods manufactured during February' 2012, holding that proposal for recovery was made beyond the normal period of one year and thus, the show cause proceedings initiated were barred by limitation of time.
3. Feeling aggrieved with the impugned order dated 21.05.2015, Revenue has filed this appeal before the Tribunal on the ground that the adjudicating authority had not invoked the extended period of limitation for confirmation of the proposed duty demand. It is specifically stated in the grounds of appeal that non-payment of central excise duty on the manufacturing activity undertaken by the respondent was entirely owing to 3 Application No. E/CO/91172/2015 Appeal No. E/86669/2015 reason of fraud, suppression etc., with intent to defraud the Government Revenue. Thus, it is contended by Revenue that the proviso to Section 11A of the Act has been rightly invoked in the show cause notice, seeking for recovery of the duty amount within the limitation period of 5 years.
4. We have heard Shri Bidhan Chandra, Learned AR for the Revenue-appellant and Shri M.H. Patil, Learned Advocate for the respondent and perused the records including the written note of submissions filed by both sides.
5. We find that the Learned Adjudicating Authority at paragraph 21 in the impugned order has recorded the detailed findings with regard to non-invocation of the extended period of limitation. In this context, he has specifically referred to the knowledge of the department with regard to the manufacturing activities undertaken by the respondent and grant of registration certificate in the year 1992 and subsequent revocation thereof in 2004. He has also referred to and relied upon various records/documents submitted by the respondent under the cover of its letter dated 17.04.2015 during the course of personal hearing conducted before him. The documents submitted by the respondent before him inter alia, includes the affidavit of the proprietor of Malpani Traders, Nanded, intimation under Notn. No. 214/86-CE dated 25.03.1986 of Jai Corp, intimation letter dated 06.04.2010 of M/s Suraj Depot, Nanded, to the jurisdictional Assistant Commissioner at Nanded, affidavit of partner of M/s Suraj Depot, Nanded, about compensation quantity of 3178 MT (independent witness), affidavit of M/s Suraj Deopt, Nanded, about due disclosure of facts to the Department from 2009 onwards. Considering the records/documents available in the adjudication file, the Learned Commissioner of Central Excise at paragraph 23 in the impugned order has held that the extended period of limitation cannot be 4 Application No. E/CO/91172/2015 Appeal No. E/86669/2015 invoked and the duty demand should be confined only to the normal period provided under Section 11A of the Act. In support of dropping the duty demand proposed for confirmation under the extended period of limitation, the Learned Adjudicating Authority has relied upon the judgment of Hon'ble Supreme Court, in the case of Nizam Sugar Factory, reported in 2006 (197) ELT 0465 (SC).
6. We note that the issue, as to whether, the activity of corrugation amounts to manufacture or not was highly contentious and there were divergent views by different judicial forums and finally the issue gets settled by the Hon'ble Punjab & Haryana High Court, in the case of Hansa Metallics Ltd. Vs. Union of India, 2001 (133) ELT 543 (P&H), holding that process of corrugation of plain metallic sheets and galvanized sheets undertaken by the petitioner amounts to manufacture, as a new commercial product having different identity and use come into existence. Even after pronouncement of the said judgment by the Hon'ble Punjab & Haryana High Court, the Hon'ble Supreme Court, in the case of Vardhman Industries Ltd. Vs. CCE, Chandigarh, 2008 (224) ELT 342 (SC), while remanding the matter for re-adjudication, have directed the original authority for passing of denovo order uninfluenced by the judgment of the said High Court passed in the case of Hansa Metallics Ltd. (supra), keeping the question of law open as to whether, corrugation amounts to manufacture or not. Thus, we accept the submissions of the respondent that non-payment of the duty amount was due to the bona fide belief that the activity will not amount to manufacture. Further, we also find that under identical situation, the Tribunal in the case of Hansa Metallics Ltd., vide Final Order No. 926/04-B dated 22.11.2004 has allowed the appeal on the ground of limitation, holding that the charges of suppression with intent to evade payment of duty cannot be sustained. Further, in the case of Indian Steel 5 Application No. E/CO/91172/2015 Appeal No. E/86669/2015 Corporation Ltd.-2009 (233) ELT 409 (Tri.-Ahmd.), the Tribunal has recorded the observations of the Commissioner (Appeals) that galvanized corrugated sheet is not a new product but is only a downstream product of the CR sheets manufactured by the assessee.
7. The law is well settled by the Hon'ble Apex Court, in the case of Chamundi Die Cast Vs. CCE, Banglore-2007 (215) ELT 169 (SC), Gopal Zarda Udyog Vs. CCE, New Delhi-2005 (188) ELT 251 (SC), Ugam Chand Bhandari Vs. CCE, Madras-2004 (167) ELT 491 (SC) that when the assessee acted under bona- fide belief on a particular aspect and there were difference of opinion in the department on such aspect, the extended period of limitation cannot be invoked especially, when the activities of the assessee were in the knowledge of the department officers, who regularly visit its factory.
8. In view of above discussions and analysis, we do not find any infirmity in the impugned order, so far as it dropped the proposed duty demand in the show cause notice, holding that extended period of limitation cannot be invoked. Accordingly, the appeal filed by Revenue is dismissed. Cross Objection filed by respondent is disposed of.
(Order pronounced in the open court on 17/05/2019) (S.K.Mohanty) Member (Judicial) (C.J.Mathew) Member (Technical)