Customs, Excise and Gold Tribunal - Bangalore
Binjrajka Steel Tubes Ltd. vs Commissioner Of C. Ex. on 11 October, 2002
Equivalent citations: 2003(85)ECC436, 2003(152)ELT71(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. The appellants are manufacturers of Steel Tubes and they were registered with the Directorate General of Technical Development (hereinafter referred to as D.G.T.D). Under the licence they had been availing exemption under the provisions of Notification No. 202/98-CE., dt. 20-5-1988, as the Steel Tubes were being manufactured out of the duty paid raw materials. Due to rescinding of this notification with effect from 1-3-1994, they had obtained a Central Excise registration Certificate No. 1/94 and filed a classification list and started clearing the goods on payment of duty at the rate of 15% adv. The D.G.T.D was abolished on 31-3-94, registration with the said authority ceased to have any effect and became void with effect from 1-4-1994. The value of the clearances in the 1993-94 was only 94.81 lakhs. Consequent on amendment to Notification No. 1/93, by Notification No. 59/94, dated 1-3-1994, any unit claiming SSI exemption was not required to be registered as SSI with the Director of Industries. Hence in view of the above reasons, they became eligible to avail the SSI exemption and therefore filed a classification list with effect from 1-4-1994 on 5-4-1994 and began clearing the goods under the concessional rate of 5% up to 50 lakhs and 10% between Rs. 50 lakhs and 100 lakhs and thereafter at 15%.
2. An objection to availing of the exemption under Notification No. 1/93, dt. 28-2-1993 by the appellants was raised by them and they were coerced to pay the differential duty of 6.25 lakhs on the clearances effected from 1-4-1994 to 4-5-1994. Certain shortages of stock in respect of some sizes and excesses in respect of some sizes was noticed. Therefore they were served a show cause notice No. OR No. 120/94, dt. 29-10-1994, proposing to recover (1) an amount of Rs. 6.25 lakhs being the differential duty, (2) to recover Rs. 45,503/- being the duty on the shortage of quantity of steel pipes of 19.540 MT, (3) to confiscate the excess quantity of steel pipes of 25.282 MT valued at Rs. 3,79,370/- and (4) to levy a penalty.
3. The original authority rejected the contentions of the appellants and confirmed the demand of Rs. 6.25 lakhs being the differential duty, ordered payment of Rs. 45,503/- being the duty on the shortage of pipes and ordered also the confiscation of the excess stock valued at Rs. 3,79,370/- and allowed the option to redeem the same on payment of fine of Rs. 1,00,000/-and also imposed a penalty of Rs. 2,00,000/- holding that since the amendment to para 3(b) of the Notification No. 1/93 was made only on 31-8-94, the appellants became eligible only on 31-8-94.
4. The Commissioner (Appeals) rejected their contentions as regards their eligibility of the SSI exemption from 1-4-1994 and the alleged shortages and upheld the order of demand for the duty of Rs. 6,25,000/- being the duty involved in the exemption and Rs. 45,5037- being the duty on the shortages and reduced the penalty to Rs. 40,000/- from Rs. 2,00,000/- and set aside the order of confiscation of excess stocks and imposition of redemption fine. Being aggrieved by that portion of impugned order as it is adverse to the appellants, they preferred this appeal.
5. We have heard both sides and considered the matter and find : -
(a) Para 3 of Notification No. 1/93 reads as under : -"3. Nothing contained in this notification shall apply : -
(a) if the aggregate value of clearances of all excisable goods for home consumption: -
(i) by a manufacturer, from one or more factories, or (ii) from any factory, by one or more manufacturers, had exceeded rupees two hundred lakhs in the preceding financial year; and
(b) to a factory registered with Directorate General of Technical Development under the provisions of the Industries (Development and Regulation) Act, 1951 (65 of 1951)."
It is an accepted fact that Clause 3(b) of this Para was deleted with effect from 31-8-94 and the eligibility of the appellant from that date i.e 31-8-94 is not in dispute. The office of D.G.T.D, constituted under the provisions of Industries (Development and Regulation) Act, 1951 (65 of 1951) was abolished with effect from 31-3-94 is also not in doubt. Therefore, the registration with D.G.T.D office, prior to 1-4-94 would be applicable for ruling out the benefit of Notification as per Para 3(b) extracted supra or not w.e.f. 1-4-94 is to be determined. If a factory is not registered with D.G.T.D, since it is not existing on and after 1-4-94, then the exclusion by Clause 3(b) from 1-4-94 till 31-8-94 is not called for merely because it was registered with D.G.T.D at some date in the past is an attractive argument. Examining the registrations with D.G.T.D it is found that a Bench of this Tribunal in the case of Hind Rectifiers Ltd. v. CCE, Aurangabad [1999 (30) RLT 605-CEGAT] after recording the following submissions of the Id. Advocate for the appellants :
"........He submits that this registration is not a registration under the I (D&R) Act but only a registration for statistical purposes. In this connection, he referred to a Press Note issued by the Ministry of Industries (Department of Industrial Development) dt. August 13, 1979 which clarifies that "all industrial undertakings which fulfil the conditions for exemption from industrial licensing, as laid down in the notifications issued by the Government from time to time under section 29B of the I (D&R) Act, undertakings employing less than 50/100 workers with/without the aid of power, and those engaged in non-scheduled industries do not require a licence under I (D&R) Act, but are expected to get themselves registered for statistical purposes, with the concerned Central Technical Authority like D.G.T.D, Jute Commissioner, Textile Commissioner, etc. This registration for statistical purposes does not carry with it any commitment on the part of Government to provide raw materials etc. Such registered undertakings are required to furnish return in Form 'G' appended to the Registration and Licensing of Industrial Undertakings Rules, 1952, in respect of progress made by the undertaking and also to submit production returns every month in such form as may be notified under the provisions of the said Rules to the concerned Technical Authority. On the other hand, there are industrial undertakings which are granted Registration Certificates under Section 10 of the I (D&R) Act. These undertakings are issued the Registration Certificate by virtue of the fact that they were the existing industrial undertakings operating in the country when the I (D&R) Act came into effect or when the industries in which they were engaged were included in the Schedule to the I (D&R) Act by virtue of amendments to the Act. Such industrial undertakings have to produce their Registration Certificate within the time-limits as specified by the Government from time to time, for getting their production capacity endorsed on the Registration Certificate which is treated on a par with licences issued under the Act," Shri Shiv Das submits that it is clear from the Press Note that the registration in respect of exempted units is to be made with various authorities like D.G.T.D, Jute Commissioner, Textile Commissioner, etc., and this registration is for statistical purposes only. He also submits that treating this registration of such units with D.G.T.D as excluding such units from, small-scale exemption would lead to anomalous situation whereby units registered with Textile Commissioner and Jute Commissioner could be eligible for exemption while similarly placed units registered with D.G.T.D will be ineligible. Such an interpretation of the notification could not be correct or proper. He also submits that once the small-scale unit is exempt from registration or licence under Sections, 10 and 11 of the I.D.R Act, the question of D.G.T.D registration under I.D.R Act did not arise at all."
found that SSI units had been exempted from registration or licensing under the Industries (Development and Regulation) Act, 1951 from registration or licensing under I.D.R Act vide Notfn. S.O. 98(E) dt. 16-2-1973 and registration, if any, with D.G.T.D was to be treated only for statistical purposes and not under I.D.R Act as clarified by the Press Note. It is also found that Notfn. S.O. 629(E) dt. 30-6-88 superseded Notfn. No. S.O. 98(E), dt. 16-2-73. This Notfn. dt. 30-6-88 exempted unconditional SSI undertakings from the requirements of Sections 10 and 11 etc. This Notification did not make registration with D.G.T.D a condition for exemption even for large undertakings. Therefore Registration with D.G.T.D under Industries (Development and Regulation) Act, 1951 is a redundant phrase after 30-6-88. If at all there is a registration, it is only for a statistical purpose and not a registration under Industries (Development and Regulation) Act, 1951. Therefore, the abolition of D.G.T.D would abolish even the statistical record w.e.f. 1-4-94 and there is no case for any registration under D.G.T.D to be existing after 1-4-94. The denial of Notfn. 1/93 benefit will be eligible from 1-4-94 in this case.
(b) As regards the demand of duty of Rs. 45,503/- being the duty on the alleged shortages of steel tubes confirmed by the lower authorities, we find that the appellant has made a plea that as per the technical data of ISI specification, loss of tolerance of 8-10% is reported shortage of 19.540 MTs and excess of 25.282 MTs is only working out to 5.7% which is in the tolerance limit cannot be accepted since no ISI specifications have been produced before us or the lower authorities. The plea of the shortages not being established by weighing the total lot is similarly dismissed as it is being made for the first time and no mahazar or panchnama has been enclosed in the paper book to demonstrate as to how exactly the weighments were resorted to. However, since we find that the appellants are eligible for the benefit of Notification No. 1/93 with effect from 1-4-94, the duty is to be worked out as per the exemption notification rates and recovered.
(c) As regards the penalty of Rs. 40,000/- imposed, we find that there is force in the plea of the appellants that they were under a bona fide belief that they became eligible with effect from 1-4-94 as U.G.T.D had ceased to exist on 31-3-94 and their value of clearances were within the SSI limits and we have found that they were eligible to the benefit of this notification. The penalty of Rs. 40,000/- therefore cannot be upheld. The same is therefore set aside.
6. In view of our findings, the appeal is allowed as regards eligibil ity of notification and penalty and the matter remanded back to the original authority to work out the duty, if any.