Customs, Excise and Gold Tribunal - Bangalore
Suma Sugiyama Plastics And Electronics ... vs Collector Of Central Excise on 9 January, 1996
Equivalent citations: 1996(64)ECR413(TRI.-BANGALORE)
ORDER S. Kalyanam, Vice-President 1. This appeal is directed against the order of Collector of Central Excise, Bangalore, dated 23.8.1990 levying of duty of Rs. 11,82,912.45 besides a penalty of Rs. 1.00 lakh under the provisions of the Central Excises & Salt Act, 1944. 2. Shri Parameswaran, the learned Counsel submitted that the appellants are manufacturing plastic injection moulding component and proceedings were instituted against the appellants by issue of a show cause notice dated 22.1.1990 invoking the longer period of limitation levying the duty in respect of the clearances of the goods in question for the period 1.3.1986 to 16.8.1989. 3. The learned Counsel, at the outset, submitted that in the miscellaneous petition 229/94 he is raising additional grounds which may be allowed and for the reasons stated in the petition and keeping in mind the nature of the plea and the grounds, the same is allowed. 4. Shri Parameswaran, the learned Counsel for the appellant submitted that the learned Collector is in error to have invoked the longer period of limitation against the appellants by levy of duty for the goods in question and referred to the declaration filed by the appellants on 15.4.1986 enclosing the return for the year 1985-86 containing all the particulars, namely full description of the goods manufactured by the factory, value/quantity of the goods, tariff item and subheading under which the same are classifiable according to the appellants and also the process of manufacture, etc. It was submitted that similar monthly returns containing all the particulars were furnished on 6.5.1986, 16.5.1988 & 17.8.1989. The learned Counsel assailed the findings of the learned Collector who has held that the information furnished is not adequate. It was contended that if the adjudicating authority had felt that the description of the goods given in the monthly simple returns did not indicate that the items are components/parts of machinery etc. falling under Chapters 84, 85, 90 & 91, the Department in all fairness should have put the appellant on notice to offer further clarification. The learned Counsel therefore submitted that the impugned order is not sustainable in law. The learned Counsel also relied on para 4 of Notfn. No. 175/86 dated 1.3.1986 and urged that the turn-over of the excisable goods of the appellants during the financial year preceding 1986 and 1987 did not exceed Rs. 13.6 lakhs and therefore the appellants would be eligible to exemption under Notfn. No. 175/86. The learned Counsel fairly conceded that this aspect of the matter was not specifically canvassed before the learned Collector and therefore the learned Colletor in para 13 of the impugned order has only adverted to the fact that the appellant was not in possession of the necessary SSI certificate in terms of Notfn. No. 175/86 from 1.3.1986 and obtained the same only thereafter effective from 25.4.1990. This being a question of law with reference to interpretation of the notification, the learned Counsel submitted that the appellants would be entitled to urge the same for consideration. 5. The learned DR in general adopted the reasoning in the impugned order and urged that in regard to the plea of limitation, the information furnished by the appellant in the monthly return is not adequate. 6. We have considered the submissions made before us. In regard to the plea of applicability of the bar of limitation, we note that the appellants classification was refused only by the authorities in 1990 and proceedings initiated. For the period in question, namely, 1.3.1986 to 16.8.1989, the appellant has filed the necessary declarations on various dates referred to above. We note that monthly returns have been filed on 12.4.1986, 6.5.1986, 16.5.1988 & 17.8.1989. The declarations filed contains description of the goods manufactured, value/quantity of the goods cleared during the preceding financial year and the tariff item/subhead under which the appellant had chosen to classify the same and also the exemption notifications applicable and the basis of the exemption notification, etc. It would also be seen that the appellants had stated in the declaration in regard to the process of manufacture by describing the same as "plastic injection moulding machine". We note that the Cochin Collectorate have by a Trade Notice No. 3/87 dated 16.1.1987 issued instructions for maintenance of records by small scale units availing exemption from excise duty and for purpose of convenience, we extract the same below: Maintenance of Records by the Small Scale Units availing exemption from Excise Duty: The manufacturers of excisable goods availing of exemption from payment of Central Excise duty linked with clearances during a financial year under various notifications issued under Rule 8(1) of Central Excise Rules, 1944 and also availing of relaxation from licensing control under Notfn. No. 111/78-CE dated 9.5.1978 are not always maintaining proper accounts of excisable goods manufactured and cleared by them. The units availing of exemption referred to above often do not furnish any figures of production and clearances of their excisable goods, to the jurisdictional officers to enable them to watch the progress of the exemption availed of by them during a financial year. Further no regular system is followed by them to clear their goods under the cover of documents like gate pass, delivery challan invoices. 2. In the circumstances it is considered necessary that manufacturers availing of exemption from Central Excise duty and also relaxation from licensing control should maintain a simple account in the proforma appended below and also submit monthly return, showing the production and removal made during the month to their jurisdictional Range Officers in the following month. The said monthly return is to be prepared from the simple Account prescribed below. 3. The figures of production and removals should also be shown in the return progessively for the financial year. When a manufacturer is manufacturing more than one item the account should be maintained in respect of each commodity separately. PROFORMA Date Description Production Removal Remarks Closing of goods Oty. Value Oty. Value No. and date balance G.O./D.C. invoices under which issued 1 2 3 4 5 6 7 8 The manufacturers of exempted excisable goods are further required to clear their goods under the cover of printed, serially numbered GP, Delivery challans Invoice. These documents must bear the code Nos. allotted to them by the Asstt. Collectors concerned. 4. Where the manufacturers are maintaining Accounts of production and clearances for their own purposes the same should be got approved from the jurisdictional Asstt. Collector of Central Excise in lieu of the prescribed accounts referred to above, to enable the required particulars adequately available in their own records. Otherwise their accounts may be suitably modified and adopted. The manufacturers are also required to produce the records maintained by them for their own purposes to Central Excise officers whenever they visit their factories. 7. The learned adjudicating authority has observed as under: The declaration of goods given in the monthly simple returns does not also indicate clearly that the items are components/parts of machinery etc., falling under Chapters 84, 85, 90 and 91 for example the description given as PI 1, PI 3, PI 6 and PI 16 does not indicate the nature of items this is misleading. 8. We are of the view that in the light of the information furnished by the appellant in the declaration indicated above, if the authorities had felt that it is not adequate, they should have put the appellant on notice of this issue asking for further clarification. We therefore without expressing any opinion on the merits of the issue feel that the plea in regard to bar of limitation has to be reconsidered in the light of the plea taken by the appellant and also advanced before us and the evidence available on record and also in the light of the ratio of the rulings of the Supreme Court in the case of Tamil Nadu Housing Board v. CCE, Madras reported in 1994 (55) ECR 7 (SC) and M's Padmini Products v. CCE, Bangalore reported in 1989 (25) ECR 289 (SC) : ECR C 1507 SC. We also note that inasmuch as a plea has been taken that the appellant would become eligible to the benefit of notification 175/86 in terms of para 4 of the said notification in the light of the appellants clearances during the preceding financial year and this being a question of law which has not been considered in the impugned order because it was not raised before the learned Collector, we feel that the issue should be considered afresh. 9. Therefore, in the light of the above observations without expressing any opinion on the merits of the issue, we set aside the impugned order and remand the matter to the learned adjudicating authority for reconsideration of the issue afresh in accordance with law after affording the appellants a reasonable opportunity of being heard. It is open to the appellants to put forth all pleas that are open to them under law before the adjudicating authority. We order accordingly. Sd/- Dt. 16.12.1994 (S. Kalyanam) Vice-President V.P. Gulati, Member (T)
10. I have perused the order recorded by learned Brother and I am not able to agree with him that in the facts and circumstances of this case, the matter requires to be remanded for consideration in regard to bar of limitation and also in regard to the benefit of Notification No. 175/86 dated 1.3.1986. I observe that proceedings against the appellants were initiated by issue of show cause notice for the reason that the appellants had wrongly availed of exemption Notification No. 132/86 dated 1.3.1986 with the intention of evading payment of duty by misdeclaring the products manufactured by them and duty of Rs. 11,82,912.45 has been demanded from them for the period from 1985-86 and 1989-90 and a penalty of Rs. 1,00,000 has also been imposed on them by invoking the longer period of limitation in terms of the proviso to Section 11A of the Central Excises & Salt Act, 1944, under Rules, 9(1), 52A, 53 read with Rules 226 and 173B, 173C, 173F, 173G and 174, and the appellants have been penalised under Rule 173Q(1) of the Central Excise Rules, 1944. The appellants it is seen from the records, at the relevant time had described the goods manufactured by them as plastic injection mould components falling under Chapter heading 39 and claimed the benefit of exemption under Notification Nos. 132/86 and 175/86. They were holding licence which was surrendered by them during 1983 as the goods were exempted under Notification No. 182/82 dated 11.5.1982 and subsequently under Notification No. 132/86 in terms of Notification No. 111/78. Inasmuch as licence was surrendered by them they filed a simple declaration containing the name of the goods manufactured by them and the tariff heading under which the same were assessable. In the declaration filed by the appellants after coming into force of the new tariff 1986, the description of the goods and the tariff heading are as under:
Description of the goods : Plastic Injection manufactured by the moulded components. Factory. Tariff item/sub-item under : 3922.90 which the goods are classifiable
The benefit of Notification claimed in the declaration is Notification Nos. 132/86 and 175/86 claiming that the products were manufactured out of the duty paid materials and therefore fully exempted. The appellants also maintained a simple account required to be maintained by manufacturers under Notification No. 111/78 dated 9.5.1978. They had also filed this account before the authorities. In this column, the description of the goods they had given description of the goods by name like Telex Frame moulded gany pieces, filling plugs etc. On investigations carried out by the authorities, however, it was revealed that the goods manufactured by the appellants were assessable under Chapter Heading 84, 85, 86, 90 and not under Chapter 3922.90 as declared by the appellants in the declaration filed by them annually. The appellants did not contest the classification by the authorities under various chapter headings as above and have proceeded to pay duty applicable under these headings. They are, however, resisting the demand on the plea that there was no suppression or mis-declaration on their part and that in any case they are eligible for the benefit of Notification No. 175/86. For the purpose of staking the benefit under Notification No. 175/86 the appellants have sought to file additional evidence and filed application for the same which was also heard along with the appeal. The pleas of the learned Counsel are that they had taken out a licence in 1982 and started manufacturing the goods in question and consequent on the issue of Notification No. 182/82 they surrendered their licence and they wrote to Central Excise authorities in November 1982 and undertook to file declaration annually as per Notification No. 111/78 dated 11.5.1978 and also to furnish simple account every month which they had been doing all along. He pleaded that the appellants had furnished all the necessary details and in that background they cannot be said to have suppressed or held back any information from the authorities warranting invoking of longer period of limitation under the proviso to Section 11A of the Act. He pleaded that this declaration and returns were filed periodically as required under the prescribed procedure and rules. He further pleaded that in any case the appellant would be eligible for the benefit of Notification No. 175/86 dated 1.3.1986. He pleaded that no doubt, this plea of the appellant was considered by the learned lower authority but it was rejected for the reason that they were not in possession of SSI certificate right from 1.3.1986 covering the period in question till 25.4.1990 when they obtained SSI certificate. He pleaded that he has filed application for additional evidence in support of the appellants' claim for consideration of the benefit of Notification No. 175/86 and referred us to the same. He pleaded that initially the appellants were registered with the DGTD and subsequently the limit for SSI was raised and they remained as SSI Unit. The learned Counsel also referred us to the SSI certificate and also the Director of Industries letter dated 21.3.1991 filed along with the application for additional evidence and he also drew our attention to the clarification given as under:
We would like to mention that since your investment in Plant and Machinery did not exceed Rs. 35 lakhs as per your above letter you are eligible to be treated as SSI from 19th March, 1985 the day of raising investment in Plant and Machinery to Rs. 35.00 lakhs as per Government of India, Ministry of Industry, Department of Industrial Development Press Note No. 13, dated 31.5.1988.
He pleaded that in view of this notwithstanding the date of SSI certificate being 25.4.1990 the appellants may be treated as SSI Unit right from 1975 onwards and in that event no liability will accrue in regard to payment of duty as the appellants are covered by exemption Notfn. No. 175/86.
11. The learned DR adopted the reasoning in the impugned order.
12. I have considered the pleas made by both the sides. It is observed that the plea is that there was no suppression of facts warranting invoking of the longer period of limitation, and in any case, the benefit of Notification No. 175/86 should be given to them and in that case, the appellants will have no duty liability in respect of the goods cleared by them. The appellants seek to take shelter in the declaration filed by them for the purpose of availing of the benefit of Notifications No. 132/86 and 175/86 on the plea that they have given the description of the goods i.e. moulded components and thereafter have been filing simple monthly accounts of the clearances made by them giving the description of the goods cleared and the value thereof. It is pertinent to note that the appellants have given description in the declaration filed annually as plastic injection moulded components showing classification of the same under tariff item 3922.90. They have also sought to avail of the benefit of Notification No. 132/86. At this stage it is relevant to refer to tariff item 3922.90 and Chapter notes to Chapter 39 and also Notification No. 132/86. Tariff entry 3922 reads as under:
39.22 : Baths, shower-baths, wash basins, bidets lavatory pans, seats and covers flushing cisterns and similar sanitary ware of plastic.
3922.10 : Baths, shower-baths and wash-basins 3922.20 : Lavatory seats and covers 3922.90 : Other.
The items manufactured by the appellants are nowhere near the items described under item 3922. The appellants have not shown as to how their goods could be covered by description of the various goods specified under tariff heading 3922. Further, it is seen that the appellants have classified the goods in the declaration filed under Chapter heading 39 and have also claimed the benefit of Notification No. 132/86 applicable to items falling under this Chapter and it has to be presumed that they filed this declaration after fully understanding the scope of the entry 3922.90 and also items covered under Chapter 39 of the Central Excise Tariff with full knowledge of the end use of the items. The appellants' goods admittedly fall under Tariff Headings 84, 85, 89, 90 and 91 which are clearly excluded from the purview of Chapter 89. There is no plea from the appellants that they had any doubt about the use of the items manufactured by them or about ' the tariff headings under which these would fall taking into consideration the Chapter notes. It is also not their plea that there was any doubt in their mind about the scope of the items falling under Chapter 39 and other Chapters 84, 85, 89, 90, 91 of Central Excise Tariff in regard to classification of the goods or there is any ambiguity in regard to the tariff heading. It was within their knowledge that the goods were intended to be used with items falling under Tariff Headings 84, 85, 90 and 91 of the tariff. There is no explanation forthcoming as to why they declared the classification of their goods under tariff heading 3922.90 of the CET when the description of the goods under this heading cannot by any stretch of imagination cover the goods manufactured by them. In this background, therefore, it has to be held that the appellants knowingly had given a misleading description in the declaration filed with a view to avail the benefit of Notification without elaborating on the moulded components manufactured by them and also given wrong tariff heading when the heading clearly shows type of items covered are totally different from the items manufactured by the appellants. The other plea of the appellants is that they had been filing simple monthly account as prescribed by the authorities giving the name of the parts manufactured by them and their value regularly. It is observed that this simple account has been prescribed to watch the progress of the availment of the exemption by the appellants. This statement of account basically is to ascertain as to the quantum of the goods which are cleared in terms of the description given by the appellants in their annual declaration. The authorities having been misled by the appellants in regard to the description of the goods manufactured by them stating the same to be moulded components falling under tariff 3922.90 would have reviewed the monthly statements as per the declaration filed and since no assessment of this monthly account was called for, it can be taken to have taken only a cursory note of the same to watch the quantum of exemption availed. The authorities can be taken to have accepted this monthly return as conforming to the declaration as filed by the appellants as there is no column prescribed in this account as regards the classification of the goods. In view of the above, it has to be held that the appellants were guilty of suppression of facts as regards the description and tariff heading of the goods with a view to avail the benefit of exemption Notification No. 132/86 and therefore, the lower authority has rightly invoked the longer period of limitation.
13. Coming next to their plea for the benefit of Notification No. 175/86 I observe that the appellants have mis-declared in the declaration filed that they are eligible for the benefit of this Notification. I observe that the appellants have now filed some documents in support of their plea for their eligibility to the benefit of Notification No. 175/86 as they were a small scale unit all along and cited the clarification given by the Director of Industries, Government of Karnataka in this regard. It is seen that the SSI certificate produced by the appellants is dated 25.4.1990. The benefit of Notification No. 175/86 is contingent upon production of SSI certificate. The appellants' plea is that the Director of Industries vide letter dated 21.3.1991 has clarified that they continued to be SSI Unit inasmuch as the value of Plant and machinery installed in their unit did not exceed Rs. 35 lacs. It is observed that this clarification has been given by the Director of Industries after the adjudication order was passed and it states that inasmuch as they have stated in their letter that the value of their Plant and machinery did not exceed Rs. 35 lacs they are eligible to be treated as SSI Unit as on 19.3.1985. This clarification cannot be a substitute for possession of SSI certificate more so when there is nothing to show that the Director of Industries had verified and authenticated the value of Plant and machinery installed in the appellants' factory. He has only gone by what the appellants have stated in their communication regarding the value of Plant and machinery and the clarification is not based on any verification. This clarification does not advance the case of the appellants so far as the benefit of Notification No. 175/86 is concerned. It is observed that the appellants in their declaration filed in 1986 have claimed the benefit of Notification No. 175/86 and at that time they were not in possession of SSI certificate and therefore, they wrongly claimed the benefit. The appellants therefore have to be taken to have mis-declared in their annual declaration filed as referred to supra about their eligibility to the benefit of Notification No. 175/86. In any case if they felt that they were eligible for the benefit of this Notification nothing prevented them from going before the Director of Industries and coming clean before the Central Excise authorities for staking their claim for eligibility as an SSI Unit without being equipped with SSI Govt. certificate and for issue of the SSI certificate. It is seen that the appellants were already registered with DGTD and they obtained a licence IL-90 (75) as seen from the statement of their Director in the year 1975 and earlier they had registered as SSI Unit vide reference No. 01 (Rural) IV/182/b/1183 dated 16.2.1974. The appellants from 23.11.1977 had been functioning under exemption Notification available at that time. The appellants having registered with DGTD obviously could not have obtained licence as SSI Unit. In that case it was incumbent upon their part to have equipped themselves with necessary certificate before claiming the benefit of Notification No. 175/86. Even now it cannot be said that the appellants have a certificate for the purpose of availing the benefit of Notification No. 175/86 for the period for which the demand has been raised. It is seen from the Press Note No. 10/37/87-LP dated 31.5.1987 issued by the Ministry of Industries, filed by the appellants that the value of Plant and machinery for a Unit to be considered as SSI Unit, was raised from Rs. 20 lacs to Rs. 35 lacs and those Units which were registered with DGTD were given the option to transfer to the State Director of Industries or continue with DGTD and this option was to be exercised within six months. There is nothing on record that the appellants had exercised this option and in case they had exercised they would have been issued with a SSI certificate. What I find from the record is that the SSI certificate issued on 12.4.1990 is after the period for which demand has been raised. In view of the above, I hold that the appellants have no case for the benefit of Notification No. 175/86. I, therefore uphold the impugned order demanding duty as set out in the said order. Taking into account the facts and circumstances of the case I hold that so far as the penalty is concerned, interest of justice would be met, if the same is reduced to Rs. 50,000/-(Rupees fifty thousand). But for the above modification, the appeal is dismissed.
Sd/-
Dt.18.2.1995 (V.P. Gulati)
Member (T)
POINTS OF DIFFERENCE
Whether in the facts and circumstances of the case, the impugned order has to be set aside and the matter remanded for reconsideration for the reasons recorded by Vice-President.
OR Whether in the facts and circumstances of the case, the impugned order should be upheld and the penalty reduced to Rs. 50,000/- for the reasons recorded by Member (T).
Sd/- Sd/- (S. Kalyanam) (V.P. Gulati) Vice-President Member (T) Dt. 23.2.1995 Dt. 18.2.1995 G.A. Brahma Deva, Member (J)
14. Since there has been difference of opinion between the Hon'ble Vice-President and Hon'ble Member (T), the following points of difference has been referred to me for my opinion as Third Member:
Whether in the facts and circumstances of the case, the impugned order has to be set aside and the matter remanded for reconsideration for the reasons recorded by Vice-President.
OR Whether in the facts and circumstances of the case, the impugned order should be upheld and the penalty reduced to Rs. 50,000/- for the reasons recorded by Member (T).
15. Heard both sides with reference to the difference of opinion.
16. Shri Parameswaran, the Learned Counsel for Appellant submitted that the Collector was not just right in invoking the larger period of limitation in raising the demand for the period covered in the impugned order. It was submitted that monthly return containing all the particulars were furnished on 6.5.1986, 10.5.1988 and 17.8.1989. Since the Appellants have filed a detailed information, if the adjudicating authority had felt that the description of the goods given in the monthly simple return did not indicate that the item or components parts of the machinery falling under Chapters 84, 85, 90 & 91, the Department in all fairness should have put the Appellants on notice to offer further clarification. He submitted that this issue has been properly considered by the Hon'ble Vice-President in paras 6 & 7 of his proposed order and accordingly the concerned Collector has to consider the issue on merits afresh. He submitted that there is no finding even by the Hon'ble Technical Member that there was mis-description of the goods as such was not filed. He also referred to the decision of the Supreme Court in the case of Tamil Nadu Housing Board v. CCE, Madras 1994 (55) ECR 7 (SC), Padmini Products v. CCE, Bangalore 1984 (25) ECR 289 (SC) & Cosmo Films.
17. Shri S. Murugandi, the Learned Departmental Representative appearing for the revenue submitted that as can be seen from the relevant records at the relevant time the appellants had described the goods manufactured by them as Plastic injection mould components falling under Chapter heading 39 and claimed the benefit of exemption Notfns. No. 132/86 and No. 1.75/86. But on investigation it was found that the goods were assessable under Chapter Headings 84, 85, 86, 90 & not under Chapter 3922.90 as declared by the Appellants. The item manufactured by the Appellants are no way near the item described under item 3922 and since they have mis-declared the goods as well as tariff entry it amounts to not only mis-declaration but amounts to suppression of facts with intention to evade payment of duty and accordingly department was justified in invoking the larger period as appeal is liable to be rejected as it was rightly held ' by the Hon'ble Technical Member. In reply it was submitted that there was no suppression of facts in as much as goods manufactured were described with full description in the declaration filed by the appellants and since there were only Plastic goods, mere mention of wrong tariff entry does not amount to suppression since the process of the manufacture of the products in question was within the knowledge of the department.
18. I have considered the submission made by both sides with reference to the difference of opinion. I am also of the view that in the light of the information furnished by the Appellants in the declaration if the authorities had felt that it is not adequate they should have put the Appellant on notice for further clarification as it was rightly observed by the Hon'ble Vice-President in his proposed order. Whether the Appellants would become eligible or not to the benefit in terms of Notification No. 175/86 and this being a question of law and since neither this has been raised nor considered that can be looked into by the adjudicating authority afresh as it was held by the Hon'ble Vice-President. Accordingly, I concur with the views expressed by Hon'ble Vice-President and case file is returned to the original bench to pass an appropriate order.
Sd/-
Dt. 13.11.1995 (G.A. Brahma Deva)
Member (J)
FINAL ORDER
19. In the light of the majority view, the impugned order is set aside and the matter remanded for reconsideration.