Custom, Excise & Service Tax Tribunal
M/S. Paragon Polymer Products Pvt. Ltd vs Cce, Hyderabad on 20 October, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 15/07/2010
Date of decision:..
Appeal No.E/819/08
(Arising out of Order-in-Appeal No.38/2008(H-I)CE dt. 31/7/2008 passed by Commissioner(Appeals), Hyderabad)
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Paragon Polymer Products Pvt. Ltd.
..Appellant(s)
Vs.
CCE, Hyderabad
..Respondent(s)
Appearance Ms. Radha Arun, Advocate for the appellant.
Mr. K.S. Chandrasekar, JDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per M.V.Ravindran This appeal is directed against Order-in-Appeal No.38/2008(H-I)CE dt. 31/7/2008.
2. The relevant facts that arise for consideration are that the appellants herein are manufacturers of Hawai Chappals having a brand name Paragon, Solid rubber tyres which are unconditionally exempt by Notification No.3/2005-CE (Sl.No.57) dt. 24/2/2005; during the manufacturing of items, rubber waste is generated which is also cleared as waste without payment of duty. It was noticed by the Revenue authorities that the appellants had not considered the value of the exempt goods i.e. Paragon brand hawai chappals for computing the aggregate value of clearances for the purpose of availment of benefit of SSI exemption under Notification No.8/2003-CE as amended. Show cause notice was issued invoking extended period for demand of differential duty and also for imposition of penalties and demand of interest. Appellants contested the show cause notice before the Adjudicating Authority. Adjudicating Authority confirmed the demands raised and also imposed equal amount of penalties besides seeking demand of interest. Aggrieved by such an order, the appellants preferred an appeal as per statutory provisions. Ld. Commissioner(Appeals) considered the oral and written submissions made by the assessee before hi, upheld the Order-in-Original on merits, but set aside the demand which was raised invoking extended period. He also remanded back the matter, to the Adjudicating Authority for re-quantification of amount within the period of limitation and also to come to a conclusion whether the waste rubber can be covered under the excisable products or not. Aggrieved by such an order on merits, the appellants are before the Tribunal.
3. Ld. Counsel appearing on behalf of the appellant would submit that the impugned order suffers from non-application of mind. It is her submission that the first appellate authority has observed that there is no suppression of facts but he has not set aside the penalty imposed under Section 11AC of the Central Excise Act, 1944. It is her submission that he has failed to take cognizance of their submission as regards the exclusion of branded goods from the calculation of the aggregate value of the clearances as per para 4 of the Notification No.8/2003-CE. It is also her submission that the impugned order has advanced a new ground to deny them the exemption and hence, show cause notice alleges that it was incorrect to exclude exemption value of Paragon Hawai chappals and the Original Authority confirmed the demand holding that they are ineligible to the exemption benefit of Notification No.8/2003, by including the value of the Paragon chappals in the value of previous years clearances for the reason that they seem to be owners of the brand name of the chappal and the said goods were not covered under para 4 of the Notification No.8/2003-CE and relied upon the clarification given by Ministry; against this, the assessee filed an appeal claiming that these goods were not only exempt but also are bearing a brand name of other person, and in terms of Notification No.8/2003-CE, the said value must be excluded as per para 3A of the said notification. It is also her submission that they have cited various case laws which were not considered by the ld. Commissioner(Appeals). It is her submission that basis for denial of exemption is incorrect inasmuch as the exemption granted to the product under different notification cannot be considered as out of the purview of SSI exemption notification. For this proposition, she relied upon the decision of the Tribunal in the case of Universal Electricals Vs. CCE [1994(70) ELT 279 (Tri.)] which was confirmed by the Honble Supreme Court as reported at 2003(153) ELT 266 (SC). It is her submission that this case was of computation of aggregate value of clearances and the majority opinion of the Tribunals decision supports her claim. It is her submission that they had correctly excluded the value of the clearances of Paragon brand Hawai chappals, since the goods bore the brand name of another person. It is her submission that par 4 of the notification stipulated that the exemption contained in Notification No.8/2003-CE would not apply to the specific goods bearing a brand name of another person with certain exceptions. It is her submission that it is undisputed fact that the Hawai chappals bore a brand name which belongs to another person. By applying ratio, the value of the clearances of said branded products should have been excluded for arriving at the correct value of aggregate clearances of previous year. It is her submission that the rubber waste and scrap is not at all excisable and the Adjudicating Authority had not given any findings on this plea. It is her submission that the first appellate authority has also not given any finding but remanded the matter back to the lower authority. She would submit that the decision of the Honble High Court of Delhi in the case of Modi Rubber Vs. UOI [1987(29) ELT 502 (Del.)] and Honble Supreme Courts judgment in the case of UOI Vs. Ahmedabad Electricity Company Ltd [2003(158) ELT 3 (SC)] would squarely cover this proposition. It is her submission that having held that the demand is hit by the limitation, ld. Commissioner(Appeals) should have set aside the penalties imposed. It is her alternate submission that even if any duty is payable, the duty liability needs to be correctly computed inasmuch as the cum-duty benefit should have been granted and also the benefit of Cenvat Credit should be given to them.
4. Ld. DR on the other hand reiterated the findings of the ld. Commissioner(Appeals) as regards the merits of the case. It is his submission that the provisions of para 3A and 4 of Notification No.8/2003-CE read with Boards circular No.733/49/2003-CX dt. 6/8/2003, would clearly indicate that the value of the clearances of the exempted goods should also be considered for determining aggregate value of the clearances under para 3A of the notification. It is his submission that para 4 which has been relied upon by the ld. Counsel is granting exemption only to those branded goods which are enumerated in the said clause. He would submit that the ld. Commissioner(Appeals) has correctly come to the conclusion on the merits of the case. On a specific query from the Bench, it has been submitted by the ld. DR that he is not aware of any appeal having been filed against the finding of the ld. Commissioner(Appeals) on the limitation.
5. We have considered the submissions made at length by both sides and perused the records.
6. At the outset, we would like to record that the impugned order has set aside that part of the demand which has been confirmed by the Adjudicating Authority by invoking extended period of limitation. Both sides submit that they are not aware of any appeal having been filed by the Revenue against the said setting aside of the demand by the ld. Commissioner(Appeals). In the absence of any appeal being filed and not brought to our notice, we hold that the impugned order to the extent it sets aside the demand by invoking first proviso to Section 11A of the Central Excise 1944 is correct and does not suffer from any infirmity. We also agree with the ld. Commissioner(Appeals) that the demand of duty needs to be re-quantified for the period of one year from the date of show cause notice and to that extent the remand order of the ld. Commissioner(Appeals) is also upheld.
7. As regards the merits of the case, we find that the undisputed facts are that the appellants have been availing benefit of Notification No.8/2003-CE. This notification is available to SSIs subject to fulfillment of the conditions enumerated therein. The bone of contention between the Revenue and the appellants is regarding the determination of aggregate value of the clearances of excisable goods cleared by the appellants for the previous year. Ld. Counsel has taken us through the specific clause of the Notification No.8/2003-CE. We may reproduce herein below the relevant portions of the notification which are needs to be addressed by us for the purpose of arriving at a conclusion.
SSI Exemption to manufacturers not availing Cenvat Notification No. 8/2002-C.E. superseded In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) (herein after referred to as the Central Excise Act) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2002-Central Excise, dated the 1st March, 2002, published in the Gazette of India vide number G.S.R. 129(E), dated the 1st March, 2002, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts clearances, specified in column (2) of the Table below (hereinafter referred to as the said Table) for home consumption of excisable goods of the description specified in the Annexure appended to this notification (hereinafter referred to as the specified goods), from so much of the aggregate of, -
(i) the duty of excise specified thereon in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the First Schedule); and
(ii) the special duty of excise specified thereon in the Second Schedule to the said Central Excise Tariff Act, 1985 (hereinafter referred to as the Second Schedule), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table :
Provided that nothing contained in this notification shall apply to a manufacturer who has availed the exemption under notification No. 39/2001-Central Excise, dated the 31st July, 2001, published in the Gazette of India vide number G.S.R. 565 (E), dated the 31st July, 2001, in the same financial year.
Table S. No Value of clearances Rate of duty (1) (2) (3)
1.
First clearances up to an aggregate value not exceeding one hundred lakh rupees made on or after the 1st day of April in any financial year.
Nil
2. All clearances of the specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods.
Nil
2. The exemption contained in this notification shall apply subject to the following conditions, namely : -
(i) a manufacturer has the option not to avail the exemption contained in this notification and instead pay the normal rate of duty on the goods cleared by him. Such option shall be exercised before effecting his first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year;
(ii) while exercising the option under condition (i), the manufacturer shall inform in writing to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise with a copy to the Superintendent of Central Excise giving the following particulars, namely :-
(a) name and address of the manufacturer;
(b) location/locations of factory/factories;
(c) description of inputs used in manufacture of specified goods;
(d) description of specified goods produced;
(e) date from which option under this notification has been exercised;
(f) aggregate value of clearances of specified goods (excluding the value of clearances referred to in paragraph 3 of this notification) till the date of exercising the option;
(iii) the manufacturer shall not avail the credit of duty on inputs under rule 3 or rule 11 of the CENVAT Credit Rules, 2002 (herein after referred to as the said rules), paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearances of which, as calculated in the manner specified in the said Table does not exceed rupees one hundred lakhs;
(iv) the manufacturer also does not utilise the credit of duty on capital goods under rule 3 or rule 11 of the said rules, paid on capital goods, for payment of duty, if any, on the aforesaid clearances, the aggregate value of first clearances of which does not exceed rupees one hundred lakhs, as calculated in the manner specified in the said Table;
(v) where a manufacturer clears the specified goods from one or more factories, the exemption in his case shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each factory;
(vi) where the specified goods are cleared by one or more manufacturers from a factory, the exemption shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer;
(vii) the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, does not exceed rupees three hundred lakhs in the preceding financial year.
For the purposes?3. of determining the aggregate value of clearances for home consumption, the following clearances shall not be taken into account, namely : -
clearances bearing the?(a) brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4;
clearances of the?(b) specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods;
clearances of strips?(c) of plastics used within the factory of production for weaving of fabrics or for manufacture of sacks or bags made of polymers of ethylene or propylene.
The exemption?4. contained in this notification shall not apply to specified goods bearing a brand name or trade name, whether registered or not, of another person, except in the following cases :-
where the specified?(a) goods, being in the nature of components or parts of any machinery or equipment or appliances, are cleared for use as original equipment in the manufacture of the said machinery or equipment or appliances by following the procedure laid down in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 :
Provided that manufacturers, whose aggregate value of clearances of the specified goods for use as original equipment does not exceed rupees one hundred lakhs in the financial year 2002-2003 as calculated in the manner specified in paragraph 1, may submit a declaration regarding such use instead of following the procedure laid down in the said Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001;
(b) where the specified goods bear a brand name or trade name of -
(i) the Khadi and Village Industries Commission; or
(ii) a State Khadi and Village Industry Board; or
(iii) the National Small Industries Corporation; or
(iv) a State Small Industries Development Corporation; or
(v) a State Small Industries Corporation;
(c) where the specified goods are manufactured in a factory located in a rural area.
This notification?5. shall come into force on the 1st day of April, 2003.
Explanation. - For the purposes of this notification, -
(A) brand name or trade name means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person;
8. From the above reproduced relevant portions of the notification, we are more concerned with para 3A and 4. It can be seen from the para 3A that for determining the aggregate value of clearances, the value of clearances of excisable goods for home consumption needs to be considered. The said para also excludes few of the clearances from the aggregate value of the clearances. We are not concerned with clause a, c, d and e of para 3A. We are concerned with sub-para (b) of para 3A of the said notification. A plain reading of the said sub-clause (b) would indicate that value of the clearances which are bearing brand name or trade name of another person, which are ineligible for grant of exemption in terms of para 4, needs to be excluded from the determination of aggregate value of clearances. Ld. first appellate authority has concluded that the brand name or trade name affixed by the appellant herein being not covered under the category of the exemption granted under para 4 of the notification, the value of such clearances would automatically be considered as a value which needs to be taken into consideration for determination of aggregate value of clearances of all excisable goods for home consumption for the previous year. It is undisputed that the brand name or trade name affixed by the assessee i.e. Paragon would not get covered under the para 4 of the exemption Notification No.8/2003-CE. It can be seen from the reading of the clause (b) of para 3A that the value of the clearances shall not be taken into consideration which are ineligible for the benefit of exemption under para 4, would indicate that all other values of the clearances of the goods having brand name of other persons would be includable for determination of aggregate value of excisable goods for home consumption. If that be so, the impugned order which holds this view cannot be faulted and seems to be in accordance and in consonance with the law. We do not find any infirmity in the said order on this point.
9. As regards the claim of the assessee that the value needs to be re-quantified by considering the cum-duty value and also eligibility to Cenvat Credit on the goods on which the demand of differential duty raised and also on the question whether the rubber waste is an excisable product or not, we agree with the first appellate authority that these things needs to be re-considered by the Adjudicating Authority.
10. Accordingly, we reject the appeal on merits to the extent challenged by the assessee and remand the matter back to the Adjudicating Authority to re-consider the issue as indicated hereinabove.
(Pronounced in court on ..) (P.KARTHIKEYAN) Member (Technical) (M.V. RAVINDRAN) Member (Judicial) Nr 11