Custom, Excise & Service Tax Tribunal
M/S Indorama Synthetics (I) Ltd vs Commissioner Of Central Excise, Nagpur on 22 July, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. E/09/07-Mum (Arising out of Order-in-Appeal No. SVS/315/NGP-II/2006 dated 05.10.2006 passed by the Commissioner of Central Excise, (Appeals), Nagpur.) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) =====================================================
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M/s Indorama Synthetics (I) Ltd.
Appellant
Vs.
Commissioner of Central Excise, Nagpur
Respondent
Appearance:
Ms. Anjali Hirawat, Advocate Advocate
for Appellant
Shri N.N. Prabhudesai, Supdt. (A.R.)
for Respondent
CORAM:
HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL)
HONBLE SHRI DEVENDER SINGH, MEMBER (TECHNICAL)
Date of Hearing: 22.07.2016
Date of Decision: 22.07.2016
ORDER NO.
Per: M.V. Ravindran:
This appeal is directed against Order-in-Appeal No. SVS/315/NGP-II/2006 dated 05.10.2006 passed by the Commissioner of Central Excise, (Appeals), Nagpur.
2. The relevant facts that arises for consideration whether the appellant who is engaged in the manufacture of Partially Oriented Yarn (POY) is eligible for the benefit of Notification No. 46/2003-CE dated 17.05.2003 which exempted goods falling under Chapter No. 54.02 of the Central Excise Tariff Act, 1985 is applicable to NCCD also. It is the case of Revenue that there is no exemption for NCCD imposed on PFY and POY, even if the same is cleared to 100% EOU. It is the case of the Revenue that the appellant is required to discharge the duty of NCCD cleared to 100% EOU. Both the lower authorities held against the appellant.
3. Learned Counsel would draw our attention to the facts and submit that the issue is no more res integra. An identical issue had been decided in this Tribunal in the case of Filatex India Ltd. Vs. CCE & ST 2014 (302) ELT 446 (Tri.-Ahmd.), J.B.F. Industries Ltd. Vs. CCE -2009 (246) ELT 286 (Tri.- Ahmd.) and M/s Chiripal Industries Ltd. Vs. Commissioner of Central Excise and Service Tax, Ahmedabad 2015-TIOL1637-CESTAT-AHM, wherein it was held that NCCD on POY and cleared to 100% EOU are exempted under Notification No. 46/2003-CE dated 17.05.2003.
4. Learned departmental representative submits that the issue involved is regarding the exemption on NCCD. It is the submission that during the relevant period goods in question were cleared to 100% EOU and NCCD was claimed as exemption under Notification No. 22/2003-CE dated 31.03.2003 and NCCD was applicable on the goods cleared for captive consumption. That issue was decided in this Tribunal in the case of Hero Honda Motors Ltd. Vs. Commissioner of Central Excise, Meerut 2011 (273) ELT 89 (Tri.-Del.). It is his submission that notification should be construed strictly and there is no reason for any intendment as held by the Hon'ble Supreme Court in the case of Hemraj Gordhandas Vs. H.H. Dave 1978 (2) ELT (J350) (SC), Grasim Industries Ltd. and Another Vs. State of Madhya Pradesh and Another AIR 2000 SC 66. He would also rely upon various decisions of Hon'ble Supreme Court in the case of Excon Bldg. Material Manufacturing Co. Pvt. Ltd. Vs. Commissioner of Central Excise, Bombay - 2005 (186) ELT 263 (SC), Commissioner of Central Excise, Hyderabad Vs. Sunder Steels Ltd. 2005 (181) ELT 154 (SC), wherein it has been held that exemption notification has to be interpreted on its wording. It is also his submission that exports to 100% EOU are not physical export hence there cannot be claim for exemption from NCCD.
5. We have considered the submissions made at length by both sides and perused the records.
6. We find that the issue involved in this case is regarding National Calamity Contingency Duty leviable under Section 136 of the Finance Act, 2001 (14 of 2001), read with Section 169 of the Finance Act, 2003 (32 of 2003) as mended by Section 3 of Finance Act, 2004 for the period April, 2004 to August, 2004. It is not in dispute that the demand of NCCD is on POY cleared to captive consumption for goods manufactured export in an 100% EOU.
7. We find that the learned Counsel was correct in bringing to our notice that the issue is no more res integra, the Tribunal has considered an identical issue in the case of Filatex India Ltd. (supra) and held as under:-
1. Main appellant M/s. Filatex India Limited is a manufacturer of POY out of duty paid chips and clearing part of its POY to 100% EOU availing exemption under Notification No. 22/2003-CE dated 31.03.2003. Main appellant is also clearing a part of POY manufactured to the job workers, gets the fabrics back and clear the same on payment of duty. In respect of the clearances to 100% EOU, it is the case of the Revenue that NCCD is leviable on the ground that exemption under Notification No. 22/2003-CE does not cover exemption from NCCD. Regarding second issue of clearance of POY to job-worker for manufacture of grey fabrics, it is the case of the appellant that the same is covered by Rule 4(5) (a) of the Cenvat Credit Rules and no duty is payable.
2. Shri Anand Nainawati (Advocate) appearing on behalf of the appellants argued that NCCD is basically a duty of excise and Rule 19 of the Central Excise Rules provides for the removal of excisable goods without payment of duty for further use in the manufacture of export gods. It was thus his case that NCCD can not be demanded in respect of clearance of POY made to 100% EOU for goods which are ultimately exported. He relied upon the order NO. A/2094/WZB/AHD/2011 dated 10.06.2011 passed by this bench in the case of M/s. Modern Petrofils vs. CCE Vadodara (Appeal No. E/2748/2006) and argued that the present appeals are squarely covered by the latest law laid down by this bench. He also relied upon CBEC Circular No. 641/32/2002-CX dated 26.06.2002 on the issue.
3. Shri K. Shivakumar (AR) appearing on behalf of the Revenue defended the orders passed by the adjudicating authority. He also relied upon the judgment of CCE vs. Mahendra Petrochemicals Limited [2010 (256) ELT 473 (Tri. Ahmd.)].
4. Heard both sides and perused the case records. On the issue of export of goods and chargeability of NCCD, CBEC vide Circular No 641/32/2002-CX dated 26.06.2002 has issued following clarification:-
i I am directed to refer to Section 129 of the Finance Act, 2001 relating to imposition of National Calamity Contingent Duty (NCCD) and Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 relating to export of goods without payment of duty under bond and to say that reportedly some of the field formations are issuing demands for collection of National Calamity Contingent Duty (NCCD) on goods exported under bond. The duty demands are issued on the ground that the said notification does not apply to NCCD.
ii Board has examined the matter. Though NCCD is levied under Finance Act, 2001, it is a duty of excise. Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 issued under Rule 19 of Central Excise Rules, 2001 read with Central Excise Rules, 2002 allows goods to be exported without payment of duty. Further, it is the policy to grant relief form element of domestic taxes on goods, which are exported. Accordingly, it is clarified that no NCCD leviable under Section 129 of Finance Act, 2001 to be paid on the goods exported under bond. No doubt if export does not eventually take place the goods would be subject to all duties of excise including NCCD as applicable.
The above Circular was followed by CBEC 60/1/2006-CX dated 13.01.2006 and 232/16/2004-CX dated 30.01.2006, issued under Section 37B of the Central Excise Act, 1944.
5. With respect to chargeability of NCCD on captive consumption of goods, it has been held in the case of M/s. Modern Petrofils vs. CCE Vadodara (supra) by this bench that NCCD is not leviable. In view of the latest view point held by this bench NCCD is not payable by the appellant. Secondly, CBEC circulars issued on an issue are binding on the departmental officers and cannot be challenged in appeal. In view of the above observations appeals filed by the appellants are allowed. In the case of M/s Modern Petrofils Ltd. Vs. CCE 2012-TIOL-132-CESTAT-AHM, Bench held as under:-
1. This is an appeal filed by M/s. Modern Petrofils against the Order-in-Appeal No. Commr.(A)/ 127/VDR-II/2006, dt.10.08.06.
2. The facts of the case are that the appellants are manufacturing Polyester chips falling under sub-heading 3907.60 of CETA, Partially Oriented Yarn (PTY) falling under sub-heading 5402.32 and Polyester Filament Yarn (PFY) falling under sub-heading 5402.52 of the CETA. The National Calamity Contingent Duty (NCCD) was imposed @ 1% Adv. with effect from 01.03.2003 on the said goods as per section 136 of the Finance Act, 2001 read with clause 161 of the Finance Bill 2003 (now section 169 of the Finance Act, 2003). It appeared that the exemption from the payment of National Calamity Contingent Duty (NCCD) was not available to the manufacturer of the above goods cleared to 100% EOU, Further, whereas the notification no.46/2003-CE dated 17.5.2003 was issued to exempt the goods falling under heading no.54.02 from the whole of the NCCD leviable thereon under Section 136 of the Finance Act, 2001 read with clause 161 of the Finance Bill, 2003 (now section 169 of the Finance Act, 2003) if such goods are manufactured from the goods falling under heading no.54.02. However, there was no specific exemption notification that exemption notification that exempted NCCD imposed on POY cleared for captive consumption.
3. On adjudication, the original adjudicating authority confirmed the demand and imposed penalty and directed the company to pay interest. On appeal, the Commissioner (Appeals) upheld the impugned order and rejected the assessee's appeal.
4. We find that the issue had already been decided by this Bench in a case of the same appellant (M/s. Modern Petrofils Ltd.) in Appeal No.E/1640/05 reported in 2009-TIOL-515-CESTAT-AHM.
5. The facts are identical and the issue is no more res-integra. The decision of this Bench is as follows:
The appellants have challenged the impugned order confirming the demand for NCCD in respect of clearance of Partially Oriented Yarn (POY) to 100% EOUs and for captive consumption with interest and penalties.
2. The learned Advocate on behalf of the appellants submits that the issue is no more res Integra and submits that in respect of captive consumption, the following decisions of the Tribunal in support his stand that NCCD is not leviable in respect of clearance for captive consumption:-
(i) Tatra Trucks India Ltd. Vs. CCE, Chennai reported in 2008 (227) ELT 269 (Tri-Chennai) = (2008-TIOL-1209-CESTAT-MUM)
(ii) CCE, Trichy Vs. Kulavi Tobacco industry reported in 2008 (227) ELT 416 (Tri-Chennai)
3. As regards clearances to 100% EOUs, he submits that in the case of Toyota Krloskar Motor Pvt Ltd. Vs. CCE, Bangalore reported in 2007(217) ELT 403 (Tri-Bang) = (2007-TIOL-1422-CESTAT-BANG), it was held that NCCD is not leviable in respect of goods cleared availing the benefit of Notification No. 108/95-CE dated 28.8.95. He submits that ratio of this judgment can be applied for the purpose of clearance to 100% EOU also.
4. We find that as pointed out by the learned Advocate, the issue is no more res Integra and we also agree with the contention of the learned Advocate that the judgment of the Tribunal in relation to clearance under Notification No. 108/95 can be applied and, therefore, NCCD is not leviable in respect of clearance to 100% EOUs also. Accordingly, the appeal is allowed with consequential relief to the appellants.
6. In view of these facts and the legal position, we find that the Order-in-Appeal does not stand. The appeal filed by the appellants is therefore allowed with consequential relief. 7.1 In the case of J.B.F. Industries Ltd. (supra) held as under:-
1. The appellant is engaged in the manufacture of POY, which was being supplied by them to other 100% EOU as also was being sent to their job workers for conversion into texturised yarn.
2.?The dispute in the present appeal is in respect of the National Calamity Contingency Duty (hereinafter referred as NCCD). Duty of Rs. 6,73,288/- has been confirmed against the appellant in respect of POY cleared to other 100% EOU on the ground that such clearances has to be treated as deemed export and inasmuch as the same was not physically export, the benefit of Circular No. 641/32/2002-CX., dt. 26-6-02 cannot be extended to the appellant, clarifying the NCCD as duty of excise, the same is not liable to be paid at the time of export of the goods. We find that Tribunal in the case of M/s. Modern Petrofils Ltd. being Order No. A/2689/WZB/AHD/2008, dt. 3-2-08, by taking note of the precedent decisions, has held that NCCD is not leviable in respect of the goods cleared to other 100% EOU. As such, we find that the issue is settled in favour of the assessee. We, accordingly, set aside the demand of duty of Rs. 6,73,288/-.
3.?Another demand of Rs. 10,39,624/- has been confirmed against the appellant as NCCD in respect of POY cleared to their job workers. The appellant is not contesting the said demand, but submits that the non-payment of the same has occurred on account of the fact that the appellant was, prior to the period in question, paying NCCD on the final texturised yarn manufactured by their job workers. Inasmuch as subsequently, the texturised yarn became exempted from the payment of NCCD, they stopped paying the said duty under the bona fide belief that the same is not required to be paid, not realizing that the same should have been paid by them on POY cleared from their factory. This, submits the learned advocate, was under the bona fide belief on their part and as soon as the same was pointed out by Revenue, they deposited the said duty of Rs. 10,39,624/- even prior to issuance of show cause notice. As such, he submits that penalty of Rs. 5 lakhs reduced by Commissioner (Appeals) under the provisions of Rule 25 should be set aside in its totality.
4.?We find force in the above contention of the learned advocate. The POY was being sent to job workers under proper documentation and there are no allegations of any mala fide on the part of the assessee. We have already set aside the duty confirmation of Rs. 6,73,288/-.
5.?Penalty of Rs. 5 lakhs and penalty of Rs. 25,000/- imposed on the General Manager, in these circumstances, are not warranted and accordingly set aside.
6.?Both the appeals are disposed off in above terms. It can be seen from the above reproduced ratio from case laws that POY cleared to 100% EOU is not liable to NCCD.
8. As regards the POY cleared for captive consumption, the Tribunal decision in the case of M/s Chiripal Industries Ltd. (supra) held as under:-
1. This appeal has been filed by the Appellant with respect to OIA No.78/2007(Ahd-I), dt.27.02.2007, under which the first Appellate Authority has confirmed the OIO dt.22.11.2006 passed by the Adjudicating authority. The issue involved in the present proceedings is whether National Calamity Contingency Duty (NCCD) is leviable on Partially Oriented Yarn (POY) and FDY when used captively in the manufacture of the goods falling under CETH 54.02 exempted under Notification No.46/2003-CE, dt.17.05.2003.
2. Shri P.P. Jadeja, learned Consultant appearing on behalf of the Appellant argued that POY and FDY does not attract NCCD when captively consumed. That when POY is sold as such by the Appellant, NCCD is paid by the Appellant at the time of clearance from the factory. It was his case that the issue of leviability of NCCD during captive consumption is no more res integra and is covered by the following case laws decided by this Tribunal:-
a) M/s Modern Petrofils Vs CCE Vadodara-II Order No.A/2094/WZB/AHD/2011, dt.10.06.2011 (in Appeal No.E/2748/2006)
b) M/s Modern Petrofils Vs CCE Vadodara-II Order No.A/2689/WZB/AHD/2008, dt.03.12.2008 (in Appeal No.E/1640/2005)
c) M/s Filatex India Ltd Vs CCE Vapi [2014 (302) ELT 446 (Tri-Ahmd)]
3. Shri L. Patra, learned Authorised Representative appearing for the Revenue defended the order passed by the first Appellate Authority. He made the Bench go through Para 4 of the OIA dt.27.02.2007 passed by the first Appellate Authority, to drive home the point that exemption under Notification No.67/95-CE, dt.17.03.1995 is not applicable to the POY consumed captively when the end product is chargeable to Nil rate of NCCD.
4. Heard both the sides and perused the case records. The issue involved in this appeal is whether the NCCD is leviable on POY captively consumed. The Appellants has relied upon the case law of Modern Petrofils Ltd (supra) in Appeal No.E/2748/2006 passed by this Tribunal.
4.1 Para 2, 4, 5 & 6 of the above Order dt.10.06.2011 are reproduced below:-
4.2. The facts of the case are that the appellants are manufacturing Polyester Chips falling under sub-heading 3907.60 of CETA, Partially Oriented Yarn (PTY) falling under sub-heading 5402.32 and Polyester Filament Yarn (PFY) falling under sub-heading 5402.52 of the CETA. The National Calamity Contingent Duty (NCCD) was imposed @ 1% Adv. with effect from 01.03.2003 on the said goods as per Section 136 of the Finance Act, 2001 read with Clause 161 of the Finance Bill 2003 (now Section 169 of the Finance Act, 2003). It appeared that the exemption from the payment of National Calamity Contingent Duty (NCCD) was not available to the manufacturer of the above goods cleared to 100% EOU. Further, whereas the Notification No.46/2003-CE, dt.17.05.2003 was issued to exempt the goods falling under heading No.54.02 from the whole of the NCCD leviable thereon under Section 136 of the Finance Act, 2001 read with Clause 161 of the Finance Bill, 2003 (now Section 169 of the Finance Act, 2003) if such goods are manufactured from the goods falling under Heading No.54.02. However, there was no specific exemption notification that exempted NCCD imposed on POY cleared for captive consumption.
4.3 We find that the issue had already been decided by this Bench in the case of same appellant (M/s Modern Petrofils Ltd) in Appeal No.E/1640/05 reported in 2009-TIOL-515-CESTAT-AHM.
5. The facts are identical and the issue is no more res integra. The decision of the Bench is as follows:-
1. The appellants have challenged the impugned order confirming the demand for NCCD in respect of clearance of Partially Oriented Yarn (POY) to 100% EOU and for captive consumption with interest and penalties.
2. The learned Advocate on behalf of the appellants submits that the issue is no more res integra and submits that in respect of captive consumption, the following decisions of the Tribunal in support of his stand that NCCD is not leviable in respect of clearance for captive consumption:-
(i) Tatra Trucks India Ltd Vs CCE, Chennai reported in 2008 (227) ELT 269 (Tri-Chennai) = (2009-TIOL-1209-CESTAT-Mum)
(ii) CCE Trichy Vs Kulavi Tobacco Industry reported in 2008 (227) ELT 416 (Tri-Chennai)
3. As regards clearances to 100% EOUs, he submits that in the case of Toyota Kirloskar Motor Pvt.Ltd. Vs CCE, Bangalore reported in 2007 (217) ELT 403 (Tri-Bang) = (2007-TIOL-1422-CESTAT-BANG), it was held that NCCD is not leviable in respect of goods cleared availing the benefit of Notification No. 108/95-CE, dt.28.08.95. He submits that ratio of this judgment can be applied for the purpose of clearance to 100% EOU also.
4. We find that as pointed by the learned Advocate, the issue is no more res integra and we also agree with the contention of the learned Advocate that the judgment of the Tribunal in relation to clearance under Notification No.108/95 can be applied and therefore, NCCD is not leviable in respect of clearance to 100% EOUs also. Accordingly, the appeal is allowed with consequential relief to the appellants.
6. In view of these facts and the legal position, we find that the Order-in-Appeal No. does not stand. The appeal filed by the appellants is therefore, allowed with consequential relief.
7. It is observed from Para 2 of the above order dt.10.06.2011 that POY manufactured by that Appellant in this case was being supplied to 100% EOUs as well as consumed in captive consumption. After considering the facts of the case and the earlier orders passed in the case of Modern Petrofils Ltd [2009-TIOL-515-CESTAT-AHM], the Bench allowed the appeal filed by the Appellant Modern Petrofils. In the other case of Modern Petrofils Vs CCE Vadodara-II (supra) the clearances of POY were made under Notification No.108/95-CE, dt.28.08.1995 where the end product (POY) was cleared at Nil rate of duty. The same ratio has been followed by this Tribunal in the case of M/s Filatex India Ltd Vs CCE Vapi (supra). After carefully going through the records of the case, we are of the considered view that the facts involved in the present case are similar to the facts involved in the relied upon case laws decided by this Bench.
8. Respectfully following the judicial discipline, we allow the appeal filed by the Appellant with consequential relief, if any.
9. Since the issue regarding discharge of NCCD on the clearance made to EOU and captive consumption is now settled by the Tribunals decision. We find that the impugned order is unsustainable and liable to be set aside we do so. Appeal is allowed.
(Operative part of order pronounced in open Court) (Devender Singh) (M.V. Ravindran) Member (Technical) Member (Judicial) Sp 2 APPEAL NO. E/09/07-Mum