Custom, Excise & Service Tax Tribunal
M/S. Rukmani Concrete Pvt. Ltd vs Cce, Lucknow on 9 July, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Excise Appeal No. 3590-3591/2010-EX[SM]
[Arising out of Order-In-Appeal No. 159-160-CE/LKO/2010 Dated 27.07.2010 passed by CCE, Lucknow]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial 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?
No
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Rukmani Concrete Pvt. Ltd. Appellant
Vs.
CCE, Lucknow Respondents
Appearance:
None for the Appellant Shri S.K. Panda, AR for the Respondent Coram: Honble Ms. Archana Wadhwa, Judicial Member Date of Hearing: 12.06.2013 Date of Decision: 09.07.2013 FINAL ORDER NO. 56888-56889/2013_ Per Ms. Archana Wadhwa:
Both the appeals are being disposed of by a common order as they arise out of the same impugned order passed by Commissioner (Appeals) vide which he has confirmed duty of Rs. 1,78,582/- along with imposition of penalty of identical amount in one appeal and has confirmed the demand of duty of Rs. 36,622/- along with imposition penalty of identical amount in the other appeal. After hearing both the sides, I find that the appellant is engaged in the manufacture of PCC Poles. During the course of audit, it was found that the appellant has shown 824 pcs of PCC Poles as broken during inspection/testing after recording the production in their production and clearance register i.e. daily stock accounts. Similarly during the period April 2008 to March 2009 & numbers of PCC Poles were shown as broken. The appellants explained to the audit team that as they are supplying the PCC Poles to Electricity Board, the same are examined and inspected by the representative of the Electricity Board and during the course of such examination, some of them get broken. The jurisdictional Superintendent asked the appellants to place on record documentary evidence of the said breakage of PCC Poles, which the appellant failed to show.
2. Accordingly proceedings were initiated against the appellant by way of issuance of show cause notices dated 11.11.2008 and 05.05.2009, which culminated into an order passed by the original adjudicating authority confirming demands, along with interest and imposition of penalties on the allegation and findings of clandestine removal. The said order of the original adjudicating authority stands upheld by Commissioner (Appeals) on the ground that the appellant did not produce documentary evidence showing inspection/testing by the Electricity Department and breaking of the same during storing etc. and as such, the findings of clandestine removal are required to be upheld.
Hence the present appeal by the appellant.
3. I have heard both the sides and have perused impugned order. The demands stand confirmed against the appellant on the ground of clandestine clearance of the goods inasmuch as some PCC Poles as entered in their daily stock register were shown as broken either as such or during testing by the Electricity Board or otherwise. Revenues contention is that such Poles stand cleared by the appellant without payment of duty inasmuch as the appellant has not been able to substantiate their stand of damage. I find that it is well settled that the goods, which require testing and get consumed during such testing cannot be held to be marketable and hence excisable and duty not required to be paid on the said poles. Tribunal in the case of Collector of Central Excise M/s Sudershan Beopar Co. Ltd., 1993(64) E.L.T. 359(Tribunal) has rejected the revenues appeal by observing that testing of PCC Poles is essential for making the goods marketable and without such testing the goods cannot be sold. Accordingly, it stands held that no duty is required to be paid in respect of such Poles which get utilized in the factory for testing purposes. To the similar effect is another decision of the Tribunal in the case of Collector of Central Excise M/s. General Cement Products. Pvt. Ltd. 1989 (39) E.L.T. 689 (Tribunal), wherein it was held that quality control test in respect of cement concrete Poles, being a mandatory requirement before the goods produced could be considered as fully manufactured are not required to discharge duty liability when such cement concrete Poles get destroyed. Further, Tribunal in the case of Collector of Central Excise M/s. PCC Poles Factory 1989 (41) E.L.T. 676 (Tribunal) has held that breaking and scrapping of defective cement poles is not a process of manufacture, hence not liable to duty.
4. As such, it is seen that the law is clear on the disputed issue. The lower authorities have not accepted the appellant stand of scrapping the poles as broken on the ground that they have not produced any documentary evidence to reflect upon such fact. The question which arises is as to whether failure on the part of the appellant to maintain records about such broken poles would automatically lead to the fact of clandestine removal. It has to be born in mind that the appellant have duly entered such PCC Poles in their daily stock account. If there was any malafide intention on the part of the appellant to clear the said poles without payment of duty, the same would not have been entered by them in the statuary records. As such, I am of the view that no duty liability can be fastened on the appellants in respect of such damage/broken poles.
5. I further find that the lower authorities have arrived at a finding of clandestine removal by the appellant, without their being any other evidence to reflect upon the said fact. As per the settled law, onus to prove the clandestine clearance is on the Revenue, which is required to be discharged by production of sufficient evidence. In the present case their being none and entire case having been made out on the basis of non production of records in respect of broken poles, I find no justification to uphold the said charge.
6. Accordingly the impugned orders are set aside and both the appeals are allowed with consequential relief to the appellant.
(Pronounce in the open Court on 09.07.2013) (Archana Wadhwa) Member (Judicial) Jyoti* ??
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