Customs, Excise and Gold Tribunal - Delhi
Jagatsons Industries vs Commissioner Of C. Ex., New Delhi-Iii on 15 February, 2002
Equivalent citations: 2002(141)ELT803(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. These are three appeals, arising out of three different Adjudication Orders and are being taken up for disposal simultaneously as the issue involved is same in all the appeals.
2. Shri J.S. Agarwal, learned Advocate, appearing on behalf of M/s. Jagatsons Industries and M/s. Pragati Metals (P) Ltd., submitted that the Appellants manufacture stainless steel utensils which are exempted from payment of duty under Notification No. 4/97-CE., dated 1-3-1997; that the duty paid S.S. Flats purchased from market are cut into small pieces which are hot rolled which are chargeable to nil rate of duty; that after annealing/ pickling, these hot rolled pieces are subjected to cold-rolling; that then these are cut into circles in untrimmed condition which are trimmed subsequently, trimmed circles are sold on payment of duty and are also used for captive consumption in the manufacture of utensils; that there is nil duty in respect of trimmed circles used for captive consumption as per sub-heading 7220.50 of the Schedule to the Central Excise Tariff Act; that, however, the Appellants discharged duty on trimmed circles cleared for captive consumption also after issuing proper invoices which were enclosed with RT12 Returns. The learned Advocate, further submitted, that the Commissioner, under the impugned Order, has confirmed the demand of Central Excise duty and imposed penalty in respect of cold rolled strips cleared for manufacture of S.S. Circles; that the Supreme Court in the case of CCE, Chandigarh v. Steel Strips Ltd., 1995 (77) E.L.T. 248 (S.C.) has held that cold-rolled steel strips produced out of duty paid hot-rolled steel strips do not undergo a process of manufacture and hence not liable to Central Excise duty; that the Appellate Tribunal in the case of Sugar Industries v. CCE, Delhi - 2001 (128) E.L.T. 206 (T) remanded the matter as the question whether the process of cold-rolling of the hot-rolled products amounts to manufacture had not been considered by both the lower authorities. He also relied upon the decision in the case of Garson Metal Rolling Mills v. CCE, Chandigarh, 2000 (120) E.L.T. 376 (T), wherein it was held that the process of cold-rolling of hot rolled product does not amount to manufacture, following the decision of the Apex Court in Steel Strips case. Reliance has also been placed on the decision in National Steel Industries Ltd. v. CCE, Indore, 2000 (41) RLT 156 (T) and Steel Strips Ltd. v. CCE, Chandigarh, [2001 (130) E.L.T. 137 (T) = 2001 (42) RLT 35 (CEGAT)]. He also mentioned that there was no suppression of any facts and extended period is not attracted as they held bona fide belief that process of cold rolling does not amount to manufacture.
3. Shri R. Santhanam, learned Advocate, appearing on behalf of M/s. P.R. Industries, submitted, in addition to the arguments advanced by Shri J.S. Agarwal, learned Advocate, that the demand of excise duty made from the Apellants is for the period from 1-3-1997 to 31-3-1998 whereas the show cause notice was issued on 11-7-2000 and accordingly the entire demand is hit by time limit as the proviso to Section 11A(1) of the Central Excise Act is not applicable; that the Appellants entertained a bona fide belief that the process of cold rolling does not amount to manufacture; that there was no wilful mis-statement of facts or suppression; that their sale invoices clearly show that S.S. circles were consumed captively after payment of excise duty; that duty already paid should be adjusted against the demand of duty. He also relied upon the decision in the case of S.S. Pharmaceuticals (P) Ltd. v. CCE, Allahabad, 1999 (111) E.L.T. 55 (T) wherein it was held that second show-cause notice for extended period does not survive as already a show cause notice had been issued earlier on the same facts; that in the present matter also a show cause notice had been issued earlier which was adjudicated vide Order No. 252/99 passed by the Assistant Commissioner; that Commissioner (Appeals) decided their appeal along with other appeals under Order No, 563-577/CE/DLH/2000, dated 22-5-2000 which was remanded by the Tribunal vide Final Order No. 1914-1928/2000-B, dated 23-11-2000 [2001 (128) E.L.T. 206 (T)].
4. Countering the arguments, Shri M.P. Singh, learned DR, submitted that the decision in the case of Steel Strips is not relevant to the present matters as facts are different; the Appellants manufacture steel patti-pattas in respect of which no duty was paid by them; that they had paid duty only at the stage of circles; that as per the principles laid down by the Punjab and Haryana High Court in the case of Hansa Metallics Ltd. v. U.O.I., 2001 (133) E.L.T. 543 (P&H), the process of cold rolling undertaken by the Appellants amounts to manufacture; that in Sugar Industries case, it was held that Patti and Pattas of steel are liable to duty. He, further, submitted that the bona fide belief claimed by them is not backed by any basis; that they were availing of Modvat credit and paying duty; that captive use was not disclosed by them to the Department and as such use of patti-pattas captively was not in the knowledge of the Department. In reply Shri J.S. Agarwal, learned Advocate, mentioned that for the Appellants the final product was circles which were cleared by them on payment of duty and accordingly they had taken the Modvat Credit of the duty paid on S.S. flats purchased from the market; that Department was aware of the fact of the payment of duty as the same was accepted by the Department; that the duty paid by them has to be adjusted against the demand of duty, if any payable by them. The learned DR mentioned that adjustment of duty may be considered.
5. We have considered the submissions of both the sides. The Central Excise duty has been demanded from the Appellants on cold rolled patties/ pattas. The Adjudicating Authority has confirmed the demand of duty holding that cold-rolled patties/pattas are being made by them from SS flats and are being cleared without payment of duty. According to the process of manufacture detailed by the learned Advocate, we observe that duty paid SS flats purchased by them are cut into small pieces and are hot rolled. Thus first the Appellants get hot-rolled products which are then cold-rolled and circles are cut which after trimming are being sold as well as captively consumed. It has been held by the Supreme Court in the case of CCE, Chandigarh v. Steel Strips Ltd., 1995 (77) E.L.T. 248 (S.C.) that the Revenue had not proved that hot rolled strips undergo a process of manufacture before they become cold rolled strips. The Tribunal also in the case of Steel Strips Ltd. v. CCE, Chandigarh, [2001 (130) E.L.T. 137 (T) = 2001 (42) RLT 35] observed that "it is not sufficient for the Revenue to state that Apex Court judgment in their own case is not relevant in the context of new tariff. The department is required to adduce evidence that the process of cold rolling of steel strips from hot rolled strips amounts to manufacture of A new excisable commodity." No such evidence, in our view, has also been adduced in the present matters so as to give rise to duty liability. As observed earlier, the Appellants are first getting the hot rolled products out of SS flats purchased from the market and this has not been rebutted by the Department. In Sagar Industries case, (supra), the Tribunal only observed that removal of cold rolled pattas/patties for manufacture of circle shall amount to removal of goods for the purpose of payment of duty of excise. However, the Tribunal further observed that "the question whether the process of cold rolling of the hot rolled products amounts to manufacture has not been considered by both the lower authorities." The Tribunal, therefore, remanded the matter to the Adjudicating Authority "to decide the issue as to whether the process of cold rolling of hot rolled products amounts to manufacture in terms of Section 2(f) of the Central Excise Act and whether a new distinct product with different name, use or character comes into existence as a result of applying the process of cold rolling." The Punjab and Haryana High Court also in Hansa Metallics has laid down the similar proposition for 'manufacture' by holding that "the particular activity or process would amount to manufacture if new and different goods emerge having distinctive name, use and character by applying such activity or process." In the instant matters before us there is nothing on record to show that a new and different goods has emerged having distinctive name, use and character. The Appellants are availing of Modvat Credit of duty paid on flats and clear part of the circles manufactured by them on payment of duty and part of the circles are captively consumed in the manufacture of S.S. Utensils which are exempted from payment of duty. The Appellants are making payment of duty even in respect of circles which are captively consumed though duty is nil. Perhaps the duty is paid by them as they avail of Modvat credit of duty paid on S.S. flats. We find substance in the submissions of the Appellants that if any duty is held to be payable by them on cold-rolled products, the duty already paid by them has to be adjusted towards such duty payable. In view of the various decisions of Supreme Court and the Appellate Tribunal, it cannot be claimed that there was suppression of any fact by the Appellants and larger period of limitation is not invokable. In the facts and circumstances of the case we are of the view that no penalty is imposable on the Appellants and set aside the same. Thus we allow all the three appeals and remand the matter to the Adjudicating Authority to determine as to whether the process of cold rolling of hot rolled products amount to manufacture and if such process is held to amounting to manufacture and if any duty is payable, the duty already paid is to be adjusted against such duty payable.
All the three appeals are disposed of in these terms.