Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Blue Star Limited on 15 January, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/2468/05-MUM [Arising out of Order-in- Appeal No. AT/M-III/76/2005 dtd. 25/2/2005 passed by the Commissioner of Central Excise(Appeals), Mumbai Zone III] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. Raju, Member (Technical) =======================================================
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Commissioner of Central Excise, Mumbai-III
:
Appellants
VS
M/s. Blue Star Limited
:
Respondent
Appearance
Shri. Devinder Singh Maan, Asstt. Commissioner(A.R.)for the Appellants
Shri. Siladitya Sarkar, C.A. with Shri. Raghunath Nair, of D.B. Desai Associates for the Respondent CORAM:
Honble Mr. Ramesh Nair, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of hearing: 15/1/2016 Date of decision 15/1/2016 ORDER NO.
Per : Ramesh Nair This Revenues appeal is directed against Order-in- Appeal No. AT/M-III/76/2005 dtd. 25/2/2005 passed by the Commissioner of Central Excise(Appeals), Mumbai Zone III, wherein Ld. Commissioner allowed the appeal of the Respondent.
2. The fact of the case is that the respondent are the manufacturer of Air Conditioners, Pre-fabricated building consisting of insulated panels etc. falling under Chapter 84 and 94 of the First Schedule to the Central Excise Tariff Act, 1985 and have been availing modvat/Cenvat facility. They were clearing one of their products namely Blue Star Pre Fabricated Building consisting of insulated panels from January, 1999 onwards. The said goods were exempted vide Notification No. 17/98 CE dated 18/9/1998 during the period from 18/9/1998 to February, 1999 and vide Notification No. 5/99 CE dated 28/2/1999 from March, 1999 to February, 2000. The tariff rate on the said goods was 8% during the period 18/9/1998 to February, 2000 while w.e.f. 1/3/2000 onwards, it was NIL. The respondent, despite the aforesaid exemption, they were paying 8% duty and such duty was recovered from their customers. From March, 2000 onward tariff rate being NIL, they paid an amount of 8% of the value of the said goods under Rule 57 CC of the erstwhile Central Excise Rules, 1944. In the show cause notice it was alleged that the appellant should have availed the exemption vide notification No. 17/98-CE and 5/99-CE and clear the said goods under NIL rate of duty and paid an amount of 8% of the value of the said goods under Rule 57CC. It was further alleged that the amount of 8% of price of the exempted goods was not the Central Excise duty and therefore it was not recoverable from the customers. The amount so recovered has to be treated as payment in terms of Rule 57CC ibid. Since, March, 2000 onwards, when the tariff rate on the said goods was NIL they reversed the modvat credit at the rate of 8% of the value of the said goods under the Rule 57CC and the same was recovered from customers separately as cost. They were asked to submit the proof of the debit of modvat under Rule 57CC recovered separately from the customers for the period March, 2000 onward, they did not furnish any proof. In the show cause notice it was proposed to appropriate an amount of Rs.5,95,493/- paid by the respondent against demand of same amount for the period 18/9/1998 to February, 2000 and also proposed demand duty of Rs. 6,47,313/- for the period March, 2000 onwards under Section 11D ibid in respect of amount paid under Rule 57CC and alleged to have been collected from the customers. In the adjudication the proposal has been confirmed and following order was passed.
1. I confirm the demand of Rs. 5,94,493/- collected as Central Excise duty on the said goods during the period from January, 1999 to February, 2000 and the amount of Rs. 6,47,313/- paid under erstwhile Rule 57CC of Central Excise Rules, 1944 and recovered from their customers fro the period from March, 2000 to October, 2001 payable to the credit of Central Government under the provisions of Section 11D(1) of the Central Excise Act, 1944.
2. I also confirm the appropriation of amount of Rs. 5,94,493/- paid by the assessee vide TR6 Challan No. 008/2001-2002 dated 20/11/2001 towards the amount payable to the Government in terms of Section 11D(1) of Central Excise Act, 1944.
Aggrieved by the aforesaid order-in-original dated 23/1/2004 the respondent filed appeal before the Commissioner(Appeals) which was allowed by setting aside the order-in-original therefore the Revenue is before us.
3. Shri. Devinder Singh Maan, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue(Appellant) reiterating the grounds of appeal submits that during the exemption till February, 2000 the respondent were supposed to avail the exemption and accordingly instead of paying duty they should have reversed the 8% under Rule 57CC and the same should not have been recovered from the customers therefore the demand of amount under Rule 57CC and recovery of the same under Section 11D is correct. As regard the period March, 2000 onward, though the respondent availed exemption and reversed 8% under Rule 57 CC, the same is recoverable for the reason that the respondent have recovered the said amount from their customers.
4. Shri. Siladitya Sarkar, Ld. C.A. with Shri. Raghunath Nair, C.A. of D.B. Desai & Associates appearing for the Respondent submits that till February, 2000 though the product was exempted but there was mandatory provision to avail exemption. It was option to the assessee either to avail exemption or to pay the duty as per tariff rate of the product which was 8%, therefore the whole basis of demand on this issue is not tenable. As regard the demand of Rs. 6,47,313/- for the period from March, 2000 onward under Section 11D solely on the ground that the respondent have recovered this amount, he submit that the 8% amount under Rule 57CC was paid on the invoiced value and the same was not added in the invoice value, hence the amount so paid under Rule 57CC was not recovered from customers. He shown some sample invoices wherein it is very clear that the respondent have not recovered the amount of 8% reversed under Rule 57CC.
5. We have carefully considered the submissions made by both sides.
6. We find that the respondent have paid the excise duty at the tariff rate i.e. 8% despite the exemption . Notification No. 17/98 CE dated 18/9/1998 and Notification No. 5/99 CE dated 28/2/1999 were available. The question whether the appellant has option to pay the duty despite the exemption under notifications, we refer to Section 5(a) which is reproduce below:
(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon:
Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured -
(i) in a free trade zone or a special economic zone and brought to any other place in India; or
(ii) by a hundred per cent export-oriented undertaking and brought to any place in India.
Explanation. - In this proviso, "free trade zone", "special economic zone" and "hundred per cent export-oriented undertaking" shall have the same meanings as in Explanation 2 to sub-section (1) of section 3.
(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.
(2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from payment of duty of excise, under circumstances of an exceptional nature to be stated in such order, any excisable goods on which duty of excise is leviable.
From the above Section prior to insertion of subsection (1A) w.e.f. 13/5/2005 it was not mandatory for a assesse to avail the exemption notification accordingly it was a option available to the assesee either to avail the exemption or to pay the duty as per rate specified in the Central Excise Tariff. Therefore the revenue cannot insist the respondent that they should have compulsorily availed the exemption notifications nos. No. 17/98 CE dated 18/9/1998 and Notification No. 5/99 CE dated 28/2/1999, for this reason in our view whole proceedings for recovery of an amount of Rs. 5,94,493/- and appropriation thereof was illegal. As regard the demand of Rs. 6,47,313/- paid under Rule 57CC by invoking Section 11D, we find that it is very clear from the invoices that respondent have not recovered the amount of 8% reversed by them under Rule 57CC. This was correctly observed by Ld. Commissioner(Appeals). The revenue also, on the contrary, could not produce any evidence to support their allegation of recovery of the said amount by the respondent, therefore the demand under Section 11D is not correct. As per our above discussion, we do not find any merit in the Revenues appeal, the impugned order is upheld and the Revenues appeal is dismissed.
(Operative order pronounced in court) Raju Member (Technical) Ramesh Nair Member (Judicial) sk 8 E/2468/05