Custom, Excise & Service Tax Tribunal
Shri Anoop Thapar, Director vs Cce, Ludhiana on 19 May, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING : 23/04/2014. DATE OF DECISION: 19/05/2014. Excise Appeal Nos. 2202, 2206, 2267, 2303, 2339 and 2355 of 2005 [Arising out of the Order-in-Original No. 10/LDH-05 dated 06/04/2005 passed by The Commissioner, Central Excise, Ludhiana .] For Approval and signature : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Thapar Concast Ltd. ] M/s Jagan Tubes Ltd. ] Shri Anoop Thapar, Director ] Appellants M/s L.S.R. Ispat Ltd. ] M/s R.K. Machine Tools Ltd. ] Versus CCE, Ludhiana Respondent
Appearance Shri Sudhir Malhotra, and Ms. Surabhi Sinha, Advocates for the appellants.
Ms. Suchitra Sharma, Authorized Representative (Jt. CDR) for the Respondent.
CORAM : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 52199-52204/2014 Dated : 19/05/2014 Per. Rakesh Kumar :-
The facts leading to filing of these appeals are, in brief, as under.
1.1 M/s Thapar Concast Ltd. are engaged in manufacture of hot rolled products out of MS Ingots. Shri Anoop Thapar is the Director of M/s Thapar Concast Ltd. M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. are manufacturers of bars from hot re-rolled products and they claimed to have purchased alloy steel re-rolled products from M/s Thapar Concast Ltd. during the period from 01/10/98 to 20/11/99. During period prior to 01/10/98, M/s Thapar Concast Ltd. were manufacturing non-alloy steel hot re-rolled products out of non-alloy steel ingots, purchased from M/s Thapsons Steel Ltd. and were operating under compounded levy scheme of Rule 96ZP of Central Excise Rules, 1944, readwith Section 3A of Central Excise Act, 1944 and were selling the non-alloy steel hot re-rolled products to various customers, including M/s L.S.R. Ispat Ltd., M/s Jagan Tubes Ltd. and M/s R.K. Machine Tools Ltd. M/s Thapar Concast Ltd. submitted a letter to the Department informing that they are opting out of the compounded levy scheme w.e.f. 01/10/98. W.e.f. 01/10/98 they showed the receipt of alloy steel ingots from M/s Thapsons Steel Ltd. and accordingly showed the manufacture of alloy steel rolled products which were shown to have been sold to M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. Subsequent inquiries by the Department revealed that even during the period w.e.f. 01/10/98, M/s Thapar had continued to manufacture non alloy steel hot re-rolled products out of the non-alloy ingots received from M/s Thapsons Steel and in fact M/s Thapsons Steel were supplying only non-alloy steel ingots to M/s Thapar Concast in the guise of alloy steel ingots. Accordingly, the department was of the view that during the period from 01/10/98 to 20/11/99 the duty should be charged from them under the compounded levy scheme of Rule 96 ZP. As regards M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. since they had taken Cenvat credit of Rs. 93,956/-, Rs. 9,96,072/- and Rs. 5,28,933/- respectively on the basis of the invoices for alloy steel re-rolled products issued by M/s Thapar Concast Ltd., the show cause notice also sought recovery of this credit from M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. and also sought imposition of penalty on them. As regards M/s Thapar Concast Ltd., the department sought recovery of duty amounting to Rs. 20,74,990/- from them under Rule 96 ZP (3) alongwith interest and also imposition of penalty on them. Accordingly, a show cause notice dated 17/05/2000 was issued to M/s Thapar Concast Ltd. for recovery of central excise duty amounting to Rs. 20,74,990/- alongwith interest and also for imposition of penalty on them. This show cause notice also sought recovery of the wrongly availed Cenvat credit, as mentioned above, alongwith interest from M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools and also sought imposition of penalty on them. The show cause notice also sought imposition of penalty under Rule 209A of Central Excise Rules, 2004 on Shri Anoop Thapar, Director M/s Thapar Concast Ltd. Beside this, the show cause notice sought confiscation of 6.2 MTs of bars and rods of non-alloy steel and 43.2 M.T. of flats of non-alloy steel collectively valued at Rs. 5,93,775/- which had been seized from the premises of M/s Thapar Concast Ltd.
1.2 The above show cause notice was adjudicated by the Commissioner vide order-in-original dated 06/04/05 by which
(a) duty demand of Rs. 20,74,990/- was confirmed against M/s Thapar Concast Ltd. under Rule 96 ZP (3) of Central Excise Rules, 1944 alongwith interest thereon under Section 11AB and beside this, penalty of equal amount was imposed on them under Section 11AC ;
(b) Cenvat credit demand of Rs. 9,96,072/-, Rs. 5,28,933/- and Rs. 93,956/- were confirmed against M/s L.S.R. Ispat Ltd., M/s R.K. Machine Tools Ltd. and M/s Jagan Tubes Ltd. respectively under Rule 57 (I) of the Central Excise Rules, 1944 for taking Cenvat credit fraudulently on the basis of improper/invalid invoices and beside this, penalties of equal amount were imposed on them under Rule 57 (I) (4) readwith Rule 173Q (1) (bb) of the Central Excise Rules, 1944 ;
(c) penalty of Rs 1,50,000/- was imposed on Shri Anoop Thapar under Rule 209A of Central Excise Rules, 1944; and
(d) the seized goods were confiscated with option to be redeemed on redemption fine of Rs. 80,000/-.
Against the above order passed by the Commissioner, these appeals have been filed.
2. Heard both the sides.
3. Shri Sudhir Malhotra, Advocate, the learned Counsel representing M/s Thapar Concast Ltd. and Shri Anoop Thapar, Director, pleaded that Rule 96 ZP has been omitted without saving clause w.e.f. 01/03/01 and Section 3A of Central Excise Act, 1944 under which Rule 96ZP alongwith Rule 96ZO and 96ZQ have been notified, has been omitted without saving clause w.e.f. 11/05/01, that in this case, while the show cause notice to M/s Thapar Concast Ltd. for demand of duty and imposition of penalty had been issued on 17/05/2000, the same was adjudicated by the Commissioner vide order-in-original dated 06/04/05, that on account of omission of Rule 96 ZP without saving clause w.e.f. 01/03/01 and Section 3A of Central Excise Act, 1944 w.e.f. 11/05/01 without saving clause, the proceedings initiated against M/s Thapar Concast Ltd. and their Director Shri Anoop Thapar vide show cause notice dated 17/05/2000 would not survive and that in this regard he relies upon the judgment of Honble Gujarat High Court in the case of Krishna Processors vs. Union of India reported in 2012 (280) E.L.T. 186 (Gujarat), wherein Honble High Court has held that in view of omission of Section 3A of Central Excise Act, 1944 without saving clause w.e.f. 11/05/01 and omission of Rule 96 ZO, 96 ZP and 96 ZQ of Central Excise Rules, 1944 w.e.f. 01/03/05 without saving clause, neither the proceedings for recovery of duty could be initiated after omission of the above sections and the rules nor the proceedings initiated for recovery of duty or imposition of penalty by show cause notice issued prior to the omission and which were pending adjudication, would survive. He, therefore, pleaded that the impugned order confirming duty demand against M/s Thapar Concast Ltd., imposing penalty on it and its Director and ordering confiscating the goods, is not sustainable.
4. Ms. Surabhi Sinha, Advocate, the Learned Counsel representing the other three appellants M/s L.S.R. Ispat Ltd., M/s R.K. Machine Tools Ltd. and M/s Jagan Tubes Ltd. pleaded that since in view of omission of Section 3A w.e.f. 11/05/01 and Rule 96 ZP w.e.f. 01/03/01 without saving clause, the proceedings against M/s Thapar Concast Ltd. do not survive, the proceedings against M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. for recovery of allegedly wrongly taken Cenvat credit also would not survive. She also pleaded that M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. had received the goods and used the same in the manufacture of final product which had been cleared on payment of duty. She, therefore, pleaded that the impugned order confirming the Cenvat credit demand against M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools and imposing penalty on them is not sustainable.
5. Ms. Suchitra Sharma, the learned Jt. CDR, defended the impugned order by reiterating the findings of the Commissioner.
6. We have considered the submissions from both the sides and perused the records.
7. The main appellant M/s Thapar Concast Ltd. during the period prior to 01/10/98 were engaged in manufacture of non-alloy steel re-rolled products from non-alloy steel ingots and, as such, during the period prior to 01/10/98 were operating under compounded levy scheme of Rule 92 ZP of Central Excise Rules, 1944 which was applicable only to non-alloy steel re-rolled products. They intimated the department that w.e.f. 01/10/98 they have switched over to manufacture of alloy steel re-rolled products to which the compounded levy scheme of Rule 96ZP does not apply and in this regard they claimed to have purchased alloy steel ingots from M/s Thapsons steel Ltd. However, it is now admitted that even during the period w.e.f. 01/10/98 i.e. during the period of dispute, M/s Thapar had continued to receive non-alloy steel ingots from M/s Thapsons and had continued to manufacture of non-alloy steel hot re-rolled products and Rule 96ZP would be applicable to them for the period of dispute. It is on this basis that the duty of Rs. 20,74,990/- has been demanded from them. However, we find that while the show cause notice for demand of the above duty alongwith interest and for imposition of penalty on M/s Thapar Concast Ltd. and its Director Shri Anoop Thapar had been issued on 17/05/2000, this show cause notice was adjudicated only on 06/04/05, that is after the omission of Rule 96ZP w.e.f. 01/03/01 and omission of Section 3A of Central Excise Act, 1944 w.e.f. 11/05/01 without saving clause. Honble Gujarat High Court in the case of Krishna Processors vs. Union of India (supra) has held that in view of omission of Rule 96ZO, 96ZP and 96 ZQ of the Central Excise Rules, 1944 w.e.f. 01/03/01 by Notification No. 6/2001-CE (NT) dated 01/03/01 and omission of Section 3A of Central Excise Act, 1944 w.e.f. 11/05/01 both without saving clause providing for initiation of proceedings for liabilities incurred during their currency or providing that the liability under then Rules would continue under regular provisions after their omission, not only the proceedings for recovery of duty short paid or non paid cannot be initiated after the omission of Section 3A of the Central Excise Act and Rule 96 ZO, 96 ZP and 96 ZQ, the proceedings initiated prior to omission would also lapse. In this judgment Honble Gujarat High Court also considered the contrary view expressed by Honble Punjab & Haryana High Court in the case of Shree Bhagwati Steel Rolling Mills vs. Commissioner reported in 2007 (207) E.L.T. 58 (P&H) and relying upon the Apex Court judgment in the case of Rayala Corporation (P) Ltd. vs. Director of Enforcement reported in AIR 1970 SC 494 held that the view expressed by Honble Punjab & Haryana High Court in the case of Shree Bhagwati Steel Rolling Mills vs. Commissioner (supra) is not correct. In view of this judgment of Honble Gujarat High Court, the impugned order upholding the duty demand against M/s Thapar Concast Ltd. alongwith interest, imposing penalty on them and also imposing penalty on Shri Anoop Thapar, Director M/s Thapar Concast Ltd. and ordering confiscation of the goods seized from M/s Thapar Concast Ltd. would not be sustainable and hence the same is set aside.
8. As regards, the appeals filed by M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. the allegation against them is different. These parties had availed Cenvat credit on the basis of the invoices issued by M/s Thapar Concast Ltd. showing the supply of alloy steel re-rolled products, while as per the evidence on record and as per the admission of M/s Thapar Concast Ltd., even during period w.e.f. 01/10/98, they had manufactured only non-alloy steel hot re-rolled products, not the alloy steel re-rolled products and the steel ingots received by them during this period from M/s Thapsons Steel were only non-alloy steel ingots, not the alloy steel ingots. When M/s Thapar Concast Ltd. had not manufactured any alloy steel re-rolled products during the period of dispute, they could not have supplied such goods to M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. Therefore the Cenvat credit would not be admissible to M/s L.S.R. Ispat Ltd., M/s Jagan Tubes Ltd. and M/s R.K. Machine Tools Ltd. on the basis of the invoices for alloy steel re-rolled products, issued by M/s Thapar Concast Ltd. and therefore, the demand for such Cenvat credit has been correctly confirmed and penalty has been correctly imposed on them.
9. In view of the above discussion, while the appeals filed by M/s Thapar Concast Ltd. and its Director Shri Anoop Thapar are allowed, the appeals filed by the other three appellants M/s Jagan Tubes Ltd., M/s L.S.R. Ispat Ltd. and M/s R.K. Machine Tools Ltd. are dismissed.
(Order pronounced in the open court on 19/05/2014.) (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) PK ??
??
??
??
2