Custom, Excise & Service Tax Tribunal
Howrah Commissionerate vs Shalimar Paints Ltd on 13 June, 2022
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
REGIONAL BENCH - COURT NO.3
Excise Appeal No. 75772 of 2016
And
Excise Cross Objection No. 75568 of 2016
(Arising out of Order-in-Original No.14(DENOVO)/COMMR/CE/KOL-II/Adjn/2015-
16 Dated 11.02.2016 passed by the Commissioner of Central Excise, Kolkata-II
Commissionerate.)
Commissioner of CGST & CX, Howrah Commissionerate
(15/1, M. S. Building, Custom House
Strand Road, Kolkata-700001)
Appellant
VERSUS
M/s. Shalimar Paints Limited
(P. O. Danesh Shaik Lane, Howrah, W. B. 711109)
Respondent
APPERANCE:
Shri A. Roy Authorized Representative for the Appellant Shri Rajesh Chibber, Advocate for the Respondent CORAM:
HON'BLE SHRI P.K.CHOUDHARY, MEMBER (JUDICIAL) HON'BLE SHRI P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO.75380/2022 DATE OF HEARING : 13 June 2022 DATE OF DEISION: 13 June 2022 PER BENCH :
Present appeal has been filed by the department against the order of Commissioner of Central Excise, Kolkata whereby the Commissioner dropped the total demand of Rs.1,26,86,591.00 for the period from 01.12.1991 to 28.02.1994 raised vide show cause notice dated 07.10.1993 for the period from Dec.1991 to Aug.1993, show cause notice dated 22.04.1994 for the period from Sept.1993 to Jan.1994 and show cause notice dated 28.06.94 for the month of Feb.1994 on identical charges.
2. Facts of the case in brief are that during the relevant period the respondent was manufacturing thinner along with over hundred other varieties of paints/varnishes and allied 2 Excise Appeal No. 75772 of 2016 material since long. Earlier they were availing exemption under Notification No.179/1977. Later they started claiming exemption under Notification No.230/86 dated 03.04.1986. The department proposed denial of exemption under the said notification on the pretext that since the respondent was using power for transferring the material to over head tanks/barrels, the exemption under Notification No.230/1986 was not available.
Before adverting to the present case, certain additional facts are required to be referred to which shall have a direct bearing on the present case.
It has been submitted by the respondent that since they were claiming benefit of said notification since long, the Department issued show cause notice dated 13.03.1992 proposing denial of exemption under Notification No.230/86, which was adjudicated upon by the Commissioner, Central Excise Kolkata vide order-in-original dated 26.05.2000 confirming denial of benefit of exemption. The respondent herein challenged the said order before this Tribunal which vide its order reported in 2001 (136) ELT 451 (Tri.-Kol) held that the assessee was entitled for exemption. The appeal filed by the Department against the said order of the Tribunal has been dismissed by the Hon'ble Supreme Court as reported in 2002 (143) ELT A76 (SC).
In the meantime, the Department issued show cause notices dated 7.10.93 (12/91 to 8/93), 22.04.1994 (9/93 to 1/94) and 28.06.94 (Feb.94) on identical charges. The said show cause notices were duly adjudicated and appeals were filed against such adjudication orders. While considering the said appeals, this Tribunal remanded the matter to the original authority.
In remand proceedings, the respondent heavily relied upon the decision of the Tribunal in their own case passed vide Final Order No. A/704/CAL/2020 dated 26.05.2000 passed in 3 Excise Appeal No. 75772 of 2016 respect of the immediate preceding period relying upon the judgment of Hon'ble Supreme Court in the case of CCE vs. Rajasthan State Chemical Works reported in 1991 (55) ELT 444 (SC). It was also brought to the notice of the lower authority that against the said decision of the Tribunal, appeal filed by the Department was also rejected long back. It was categorically brought on record by the respondents that the facts and circumstances of manufacture of thinner without the aid of power remained unchanged prior to and after 1991 i.e. during the period involved in the earlier case and the present case.
Vide the present impugned order, the lower authority has dropped the demands by granting benefit of exemption under Notification No.230/86. While granting the benefit of exemption, the lower authority has followed the decision of this Tribunal as upheld by the Supreme Court in the present respondent's own case. Apart from the same, the lower authority has discussed merits of the case which otherwise was not required as once the case for earlier period was settled in favor of respondent, the benefit could not be denied for subsequent period.
3. The department has filed the present appeal against the order of the Commissioner whereby benefit of exemption has been granted to the respondent primarily on the basis that there was nothing to dislodge the department's basic position that electrically operated pumps were used to handle/transfer/lift raw material before being used in the manufacturing process.
Department has heavily relied upon the judgment of the Hon'ble Supreme Court in the case of CCE vs. Rajasthan State Chemical reported in (supra) and Waxpol Industries reported in 2000 (126) ELT 1001 (Tri.Kol.)
4. The contention of the respondents is that the appeal filed by the Department is devoid of merits on the basis that when 4 Excise Appeal No. 75772 of 2016 the issue involved was settled in their favor by the Tribunal and the appeal of the Department was rejected by the Hon'ble Supreme Court, the same was binding on the Department. In the appeal of the Department, no submissions have at all been made on the findings of the lower authority that the facts of present case were similar to earlier. Once that was so, judicial discipline requires that the earlier decision of the Tribunal in the case of respondent herein on the same issue and upheld by the Supreme Court will be binding.
It is the contention of the respondents that the Department in its appeal has not distinguished the facts of the earlier case with the present case and, therefore, the appeal of the Department is not maintainable.
As regards the decision of this Tribunal in the case of Waxpol (supra), it is the contention of the respondent that the Department has wrongly applied the said decision in the present case as in the said case it was observed by this Tribunal that the use of power driven pump for transfer of denatured spirit from the tankers to mild steel drums where solvents/additives are added for the manufacture of 'thinners' amounts to 'use of power'. Further in the decision of this Tribunal in the case of Waxpol, the earlier decision of this Tribunal in the case of Premier Credits Ltd. was the basis to deny the exemption benefit, whereas the said decision has already been distinguished by this Tribunal in the respondent's own case for the earlier period. As regard the judgment of the Supreme Court in the case of Rajasthan Chemical Works, it is contended by the respondent that the said judgment has been followed in favor of the respondent herein by this Tribunal in their own case for the earlier period and even by the Commissioner while dropping the demand.
Apart from the above, it is contended that part of the demand is otherwise time barred as the show cause notice dated 7.10.93 was issued for the period from December 1991 5 Excise Appeal No. 75772 of 2016 to August 1993 whereas during the said period, the normal period for raising demand was six months and hence the demand for the period prior to 07.04.1993 was otherwise time barred as the issue being of recurring nature, the Department had already issued notice for the immediate preceding period.
The respondent has also contended that in any case, penalty cannot be imposed as the issue involved in the instant case was of classification and it is a settled legal position that where the issue of classification is involved no penalty is called for, especially when for the earlier period the issue was settled in their favor.
5. We have heard the parties and perused the appeal records.
6. The issue involved in the present case relates to admissibility of exemption Notification No.230/1986 dated 03.04.1986. It is also an undisputed fact that the respondent was claiming exemption under the said notification since long and in the immediate preceding period, the demand was confirmed by the department, against which the appeal filed by the respondent herein before this Tribunal was allowed. The appeal filed by the Department against the said decision was rejected by the Hon'ble Supreme Court as reported in 2002 (143) ELT A76 (SC). The lower authority while allowing the benefit of exemption notification, apart from other findings, has followed the decision of this Tribunal in the case of respondent herein. From the grounds of appeal of the department, it is noticed that no submissions have been made on the stand of the respondent and the findings of the lower authority that the issue involved in the present case being similar to earlier case, the decision of this Tribunal, as upheld by the Hon'ble Supreme Court, would be binding on both sides. Since the Department in its appeal has not made any submission to distinguish the decision of this Tribunal, on facts, we are bound by the earlier decision of this Tribunal, especially when the appeal of the 6 Excise Appeal No. 75772 of 2016 department was rejected by the Supreme Court. Therefore, without going into the submissions of the Department in its appeal, we hold that since the facts and circumstances of the present case are similar to the facts of the earlier case, the earlier decision given by the Tribunal (supra) is required to be followed. We also take note of the submissions of the appellant that the decision of this Tribunal in the case of Waxpol (supra) followed the earlier decision of this Tribunal in the case of Premier Credits Ltd. vs. Collector reported in 1994 (114) ELT 271 (Tribunal) which was distinguished by this Tribunal in the case of respondent herein. It is also observed that the Tribunal in its earlier decision while allowing the appeal and the lower authority while dropping the demand in the present case has relied upon the judgment of Hon'ble Supreme Court in the case of Rajasthan State Chemical (Supra) whereas the Department in its appeal also has referred to the said judgment in its favor. When the said judgment has already been referred and relied upon by the Tribunal in the case of respondent herein, mere placing reliance on said judgment without earlier decision is of no help to the Department.
Since we are deciding the appeal by following the earlier decision of the Tribunal in the case of the respondent herein, we are not going into other grounds of appeal contesting the reasoning on the basis of which lower authority has dropped the demand.
7. Accordingly, the appeal filed by the department is dismissed. The cross objection filed by the respondent also gets disposed in the above manner.
(Dictated and pronounced in the open Court.) Sd/-
(P. K. Choudhary) Member (Judicial) Sd/-
(P. Anjani Kumar) Member (Technical) Pooja