Custom, Excise & Service Tax Tribunal
Vilsons Particle Board Indus Ltd vs Commissioner,Central Goods And ... on 13 July, 2023
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
EXCISE APPEAL NO: 1093 OF 2012
[Arising out of Order-in-Original No. 04/CEX/COMMR/KOP/2012 dated 29th
February 2012 passed by the Commissioner of Central Excise & Service Tax,
Kolhapur.]
Vilsons Particle Board Industries Ltd
Vilsons Tower, 1220/47 'E' Ward, Rajarampuri
1st Lane, Kolhapur, Maharashtra - 416 008. ... Appellant
versus
Commissioner of Central Excise
Vasant Plaza, Commercial Complex, Rajaram Road,
Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent
WITH EXCISE APPEAL NO: 86127 OF 2013 [Arising out of Order-in-Original No. 29/CEX/COMMR/KOP/2012 dated 17th December 2012 passed by the Commissioner of Central Excise & Service Tax, Kolhapur.] Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234. ... Appellant versus Commissioner of Central Excise & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 85759 OF 2014 [Arising out of Order-in-Appeal No. PUN-EXCUS-003-APP-322-323-13-14 dated 3rd December 2013 passed by the Commissioner of Central Excise (Appeals), Pune - III.] Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234. ... Appellant E/1093/2012 & Ors 2 versus Commissioner of Central Excise & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 85760 OF 2014 [Arising out of Order-in-Appeal No. PUN-EXCUS-003-APP-322-323-13-14 dated 3rd December 2013 passed by the Commissioner of Central Excise (Appeals), Pune - III.] Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234. ... Appellant versus Commissioner of Central Excise & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 86838 OF 2014 [Arising out of Order-in-Appeal No. PUN-EXCUS-002-APP-199-13-14 dated 28th February 2014 passed by the Commissioner of Central Excise (Appeals), Pune - III.] Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234. ... Appellant versus Commissioner of Central Excise & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 85967 TO 85971 OF 2017 [Arising out of Order-in-Appeal No. KLH-EXCUS-000-APP-126 TO 130 2016- 17 dated 4th January 2017 passed by the Commissioner of Central Excise & Service Tax (Appeals), Pune - II.] Vilsons Particle Board Industries Ltd E/1093/2012 & Ors 3 Vilsons Tower, 1220/47 'E' Ward, Rajarampuri 1st Lane, Kolhapur, Maharashtra - 416 008 ... Appellant versus Commissioner of Central Goods & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 85523 OF 2018 [Arising out of Order-in-Appeal No. PUN-EXCUS-001-APP-666-667-17-18 dated 13th November 2017 passed by the Commissioner of Central Tax (Appeals), Pune - I.] Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234 ... Appellant versus Commissioner of Central Goods & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 85525 OF 2018 [Arising out of Order-in-Appeal No. PUN-EXCUS-001-APP-666-667-17-18 dated 13th November 2017 passed by the Commissioner of Central Tax (Appeals), Pune - I.] Vilsons Particle Board Industries Ltd Vilsons Tower, 1220/47 'E' Ward, Rajarampuri 1st Lane, Kolhapur, Maharashtra - 416 008 ... Appellant versus Commissioner of Central Goods & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 88533 OF 2018 [Arising out of Order-in-Appeal No. PUN-EXCUS-001-APP-0049-2018-19 dated 27th April 2018 passed by the Commissioner of Central Tax (Appeals), Pune - I.] E/1093/2012 & Ors 4 Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234 ... Appellant versus Commissioner of Central Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 86780 OF 2019 [Arising out of Order-in-Appeal No. PUN-EXCUS-001-APP-705-2018-19 dated 26th March 2019 passed by the Commissioner of Central Tax (Appeals), Pune - I.] Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234 ... Appellant versus Commissioner of Central Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ...Respondent WITH EXCISE APPEAL NO: 85817 OF 2014 [Arising out of Order-in-Appeal No. PUN-EXCUS-003-APP-322-13-14 dated 29th November 2013 passed by the Commissioner of Central Excise (Appeals), Pune - III.] Commissioner of Central Excise Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ... Appellant versus Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234 ...Respondent WITH EXCISE APPEAL NO: 85818 OF 2014 [Arising out of Order-in-Appeal No. PUN-EXCUS-003-APP-323-13-14 dated E/1093/2012 & Ors 5 29th November 2013 passed by the Commissioner of Central Excise (Appeals), Pune - III.] Commissioner of Central Excise Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ... Appellant versus Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234 ...Respondent AND EXCISE APPEAL NO: 85816 OF 2017 [Arising out of Order-in-Appeal No. KLH-EXCUS-000-APP-126 TO 130 2016- 17 dated 4th January 2017 passed by the Commissioner of Central Excise (Appeals), Pune - III.] Commissioner of Central Excise & Service Tax Vasant Plaza, Commercial Complex, Rajaram Road, Near Bagal Chowk, Kolhapur, Maharashtra - 416 001. ... Appellant versus Vilsons Particle Board Industries Ltd S. No.378-A, Halsavade, Tal: Karveer Dist: Kolhapur, Maharashtra - 416 234 ...Respondent APPEARANCE:
Shri Mayur Shroff, Advocate and Shri Prasad S Tendulkar, Advocate for the assessee-appellant Shri Amrendra Kumar Jha, Deputy Commissioner (AR) for the Revenue CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: A /86117-86133/2023 DATE OF HEARING: 31/01/2023 DATE OF DECISION: 13/07/2023 PER: C J MATHEW E/1093/2012 & Ors 6 Briefly, these several appeals, involving M/s Vilson Particle Board Industries Ltd, challenge the culmination of proceedings in several notices for demand of duties of central excise on 'intermediate goods' that had been cleared by them from 2003-04 to 2009-10 and in 2008-09 till September 2008 and for the periods thereafter covered by regular notices. 'Plain boards' manufactured by the appellant were sent to M/s Pragati Plywood India Pvt Ltd for lamination with paper 'impregnated with chemicals' by a short cycle of hot pressing. The lamination paper was prepared by M/s Shri Shankar Vijay Saw Mills from paper and chemicals supplied by the appellant; a solution obtained by heating melamine resin and formaldehyde in a kettle was, after cooling, added with some other chemicals for application on the 'base paper' and the finished product stored at temperature between 190and 220 C owing to limited shelf-life.
2. It was alleged that the chemical treatment on paper at the facility of M/s Shri Vijay Shankar Saw Mills is manufacture of excisable goods, conforming to description corresponding to tariff item 4811 5900 of Schedule to Central Excise Tariff Act, 1985 and not entitled to exemption, otherwise available to 'intermediate goods' used captively for manufacture of final products in accordance with notification no. 67/1995-CE dated 16th March 1995, as 'pre-laminated boards' are exempted from duty extended by notification no. 6/2002-
CE dated 1st March 2002 and no. 6/2006-CE dated 1st March 2006 for E/1093/2012 & Ors 7 the respective periods. The first of the notices dated 3rd February 2009, for the period from February 2004 to March 2008 seeking recovery of ₹ 1,85,58,032, and two other notices, dated 5th November 2009 and 1st December 2009 demanding ₹ 6,36,243 and ₹ 5,68,664 for October and November 2008 respectively, were adjudicated in November 2011 but, by order1 of the Tribunal, found its way back to the fount. The remand proceedings culminated in demand of duty of ₹ 1,97,62,939 under section 11A of Central Excise Act, 1944, along with interest as applicable, and imposition of penalty of ₹ 1,85,58,032 under section 11AC of Central Excise Act, 1944 besides penalty of ₹ 1,97,62,939 under rule 25 of Central Excise Rules, 1944 in order2 of Commissioner of Central Excise, Kolhapur leading to appeal3 before us.
3. In the meanwhile, periodical notices continued to be issued and even as the ones supra came to be re-adjudicated, order4 of Commissioner of Central Excise, Kolhapur confirmed demand of duty of ₹ 62,07,836 under section 11A of Central Excise Act, 1944 for the period from April 2008 to September 2008 and from December 2008 to March 2010, while imposing penalty of ₹ 62,07,836 leading to another appeal5 before us. Four appeals, then been pending before 1 [order no. A/337/12/EB/CII dated 15th May 2012] 2 [order-in-original no. 29/CEX/COMMR/KOP/2012 dated 17th December 2012 3 [appeal no. E/86127/13-MUM] 4 [order-in-original no. 04/CEX/COMMR/KOP/2012 dated 29th February 2012] 5 [appeal no. E/1093/12-MUM] E/1093/2012 & Ors 8 Commissioner of Central Excise (Appeals) for total duty demand of ₹ 62,07,836 under section 11A of Central Excise Act, 1944 and penalty of ₹ 3,46,000, were also decided against the assessee leading to another set of appeals 6 before us. Likewise, another set of seven notices pertaining to December 2013 to March 2015, for demand of duty of ₹ 43,92,538 under section 11A of Central Excise Act, 1944, having been decided against them by Assistant Commissioner of Central Excise, Kolhapur and upheld in appeal, are also in appeal7 before us. Commissioner of Central Goods & Services Tax, Kolhapur is also before us in appeals8 challenging orders of the first appellate authority for having taken up appeals for decision even in the absence of pre-deposit as well as setting aside of penalties imposed under rule 25 of Central Excise Rules, 2002. All of these appeals are taken up for disposal together.
4. The 'intermediate goods' were, in line with the decision of the Hon'ble Supreme Court in Dunlop India Ltd v. Union of India [1983 (123) ELT 1566 (SC)] prescribing tests for being subject to duties, considered as excisable. The marketability test was decided on similitude with goods imported by M/s Decorative Laminates (India) Pvt Ltd and availability elsewhere in the world through search in world wide web. The appellant, in the business of manufacturing 6 [appeal no. E/85967 -85971/2017] 7 [appeal no. E/85523, 85525 and 88533/2018 and E/86780/2019] 8 [appeal no. E/85817 and 85818/2014 and E/85816/2017] E/1093/2012 & Ors 9 'particle boards', undertook further activity through 'job workers' exclusively contracted with them, viz., M/s Shri Shankar Vijay Saw Mills and M/s Pragati Plywood Industries Ltd and it is thus that duty liability came to be fastened on them as principal manufacturer. The value, arrived at by recourse to rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, for charging duties of central excise had, therefore, been resorted to. As the appellant had not been discharging duty liability, the proposal in the show cause notice implicitly brings classification of the 'intermediate goods' to the fore along with determination of value under section 4 of Central Excise Act, 1944.
5. However, before proceeding to determine the correctness of the classification adopted in the impugned order and the appropriateness of the method resorted to for computation of value, the jurisdiction of Central Excise Act, 1944 over the impugned goods must bear looking into. Our reason for doing so are several of which not the least is the foundation of the impugned proceedings: denial of exemption, otherwise extended to 'intermediate goods', on manufacture of 'impregnated paper' upon undeniability of 'laminated boards' to exemption from duties of central excise rests on inevitability of levy on excisable goods. The adjudicating authority concluded so from a search of the 'world wide web', its existence even if under controlled atmospheric conditions for a while and the imports effected by M/s E/1093/2012 & Ors 10 Decorative Laminates (India) Pvt Ltd - whether that meets the criteria of marketability and, thereby, of excisability was the question that should have been answered. With the statute offering no assistance beyond '(d) "excisable goods" means goods specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt;' in section 2 of Central Excise Act, 1944, that is, doubtlessly, a judicial exercise and it devolves on us to ascertain approximation of the finding to legal and proper.
6. That lack in the statute is mystifying as a plethora of judgements have subjected excisability of a variety of goods to the test of 'marketability' as a necessary consummation to transformation of material having 'distinctive name, character or use' to pre-qualify for the next step of invoking the jurisdiction to assess. It certainly was not the impending exercise, midway through the life of the statute, to enact the comprehensive, universally approved tariff into law which impeded. Even as far back as the judgment in Union of India & Anr v. Delhi Cloth & General Mills Co Ltd [AIR 1963 SC 791], the Hon'ble Supreme Court placed emphasis on goods being marketed which found elaboration in South Bihar Sugar Mills Ltd & Anr v. Union of India & Anr [AIR 1968 SC 922] and its relevance continued into the age of the comprehensive tariff even as that welcome substitute for E/1093/2012 & Ors 11 the residual entry, in the form of 'tariff item 68', assured felicity of amenability to near certain fitment. Several of these decisions even resolved the controversy in the reliance placed by Revenue on the specificity of entries in the pre-1985 tariff as sufficient to determine excisability and we cannot but take notice that the proposed classification in the impugned proceedings too claims affinity with a residual entry though, undeniably, that the name of the 'intermediate product' appears to have its provenance in ''paper and paper board, coated, impregnated or covered with plastics (excluding adhesive)' corresponding to tariff item 4811 5900 of Schedule to Central Excise Tariff Act, 1985 to which we may have to return should the impugned goods pass muster for excisability.
7. Suffice it to say, for the nonce and merely as an example, that, in Bata India Ltd v. Commissioner of Central Excise, New Delhi [2010 (252) ELT 492 (SC)], the Hon'ble Supreme Court was not particularly impressed even by the commonplace description from Schedule to Central Excise Tariff Act, 1985 in controversy there to erase 'marketability' from the threshold evaluation for dutiability under Central Excise Act, 1944. And yet, adjudicating authorities soldier on to garner revenues for the Central exchequer by relying upon 'marketability' and their own prescription for it. The impugned order is yet another brick in the wall barring the path to dispute-free E/1093/2012 & Ors 12 taxation.
8. According to Learned Counsel for the appellant, the finding on excisability is contrary to law as the paper prepared for laminating of boards had not been subjected to any chemical test by the tax authorities and its storage in climatically controlled premises amply testifies to absence of excisability. It was also contended that the reliance placed on availability of an allegedly like article in India is on shaky foundation as central excise authorities declined to furnish any information about that imported article. Reliance was placed by him on the decisions of the Hon'ble Supreme Court in Moti Laminates Pvt Ltd v. Collector of Central Excise, Ahmedabad [1995 (76) ELT 241(SC)], in Union of India v. Delhi Cloth & General Mills Co Ltd [1997 (92) ELT 315 (SC)], in Bata India Ltd v. Commissioner of Central Excise, New Delhi [2010 (252) ELT 492 (SC)] and in Commissioner of Central Excise, Bangalore - II v. Osnar Chemical Pvt Ltd [2012 (276) ELT 162 (SC)].
9. Furthermore, he argued that, in the absence of an undertaking by the appellant to discharge the duty liability, if any, devolving on a 'job worker', it is the de facto manufacturer who is liable for compliance with such statutory liability and reliance was placed on the decision of the Hon'ble Supreme Court in Servo-Med Industries Pvt Ltd v. Commissioner of Central Excise, Mumbai [2015 (318) ELT E/1093/2012 & Ors 13 578 (SC)] and in Kartar Rolling Mills v. Commissioner of Central Excise, New Delhi [2006 (197) ELT 151 (SC)] and of the Tribunal in Thermax Babcock & Wilcox Ltd v. Commissioner of Central Excise, Pune-I [2018 (364) ELT 945 (Tri-LB)] and in Desh Rolling Mills v. Commissioner of Central Excise, Delhi [2000 (122) ELT 481 (Tri)].
10. Learned Authorized Representative narrated the causes that led to issue of notices and contended that the claim of lack of 'shelf life' was belied by the statements of the production head and that even limited 'shelf life' sufficed for levy of duty as held by the Tribunal in Garware Marine Industries Ltd v. Commissioner of Central Excise, Aurangabad [2012 (279) ELT 152 (Tri)]. It was further submitted by him that ownership and control of the materials, and deployment thereof, remained with the appellant besides which an undertaking had been furnished, in terms of notification 214/86-CE dated 25th March 1986, by the appellant to Kolhapur Central Excise; consequently, duty liability devolved on the M/s Vilsons Particle Board Industries Ltd. Reliance was placed by him on the decision of the Tribunal in Desh Rolling Mills v. Commissioner of Central Excise, Delhi [2000 (122) ELT 481(Tri)].
11. 'Pre-laminated boards' are a convenience to customers substituting for buying 'board' and 'laminate' separately and labouring over the fusing of the two. The 'shelf life' of a store-bought E/1093/2012 & Ors 14 laminate needs necessarily to be more than that intended for consumption in the factory. The threshold of excisability is enumeration in the Schedule to Central Excise Tariff Act, 1985. The description corresponding to tariff item 4811 5900 is 'paper and paperboard, coated, impregnated or covered with plastics (excluding adhesives) other than bleached, weighing, weighing more than 150mg/m2' and no reason has been adduced by appellant-assessee to suggest that this is not a description of the impugned goods or that a more accurate heading exists. Neither is there a suggestion that it is only adhesive that coats the base paper supplied by appellant to M/s Shri Shankar Vijay Saw Mills. There is no doubt that in Ion Exchange (India) Ltd v. Collector of Central Excise, Baroda [1999 (112) ELT 746 (SC)], the Hon'ble Supreme had held that '7. We are of the opinion that in view of the judgments of this Court in Moti Laminates Pvt. Ltd. & Others v. Collector of Central Excise, Ahmedabad [1995 (76) ELT 241 (S.C.) = 1995 (3) SCC 23] which has been re-affirmed in Union of India v. Delhi Cloth & General Mills Co. Ltd. & Another [1997 (92) ELT 315 (S.C.) = 1997 (5) SCC 767], the reasoning of the majority Members that specification in the tariff is proof of marketability, cannot be accepted. The evidence as to marketability that the Revenue may produce is, in our opinion, to be separately gone into in conjunction with other evidence that is produced by the assessee. In the present case, the two members who have gone merely by the specification, have not gone into the evidence produced by E/1093/2012 & Ors 15 the parties on the question of marketability. Hence on that question, the matter has to be remitted to the Tribunal. On the other question relating to whether the intermediate product falls within the Tariff Item 15A(1)(ii) or not, one of the members has directed a remand while the reasoning given by the other two members is rather cryptic and not elaborate. We, therefore, think that even on this point as to whether the beads fall within Tariff Entry 15A(1)(ii), the matters have to be remitted to the Tribunal.' requiring us to go beyond mere ascertainment of entry in the Schedule to Central Excise Tariff Act, 1985. Indeed, the primary claim of the appellant is that the laminate lacks the shelf-life for marketability and hence is not excisable. However, it is on record that the product in question is stored, even if in controlled condition, and is also sent to M/s Pragati Plywood India Pvt Ltd for affixing the laminate on the board. The length of shelf-life is not relevant in these circumstances. The impugned goods are marketable and, hence, excisable.
12. On record are intimations of movement for job work dated 9th April 2003 as prescribed in notification no. 214/86-CE dated 25th March 1986. All the materials are supplied by appellant to the job- worker. The appellant is, thus, the principal manufacturer and they have assumed the liability to pay duty. The claim that the job-worker is liable does not hold.
13. The appellant is no stranger to disputes on leviability of duty on pre-laminated boards. In Darshan Boardlam Ltd and another v. Union E/1093/2012 & Ors 16 of India [2013 (287) ELT 401 (Guj)], the Hon'ble High Court of Gujarat took note of the dropping of proceedings in adjudication thus '55. Mr. Dave also contended that under Section 35E(1) of the Central Excise Act, the Board has power to review orders passed by any Commissioner of Central Excise as an adjudicating authority. But the adjudication orders passed by Commissioner of Central Excise, Pune and that by the Commissioner of Central Excise, Lucknow are not reviewed by the Board nor by the concerned committees of Chief Commissioners. As is recorded in the said orders of Commissioner, Pune and also in the order of Joint Commissioner, Kolhapur in case of Vilson Particle Board, conscious decisions have been taken by the Board as well as the committees of Chief Commissioners for not filing appeals against these orders.' (emphasis supplied) It cannot, therefore, be a credible claim that appellant was unaware that duty was not leviable on the final product and, thus, rendered intermediate product, entrusted to the job-worker owing to their known capability to produce the laminate, liable to duties of central excise. The plea of bar of limitation also fails.
14. As far as the appeal of Revenue on disposal without pre-deposit is concerned, in the light of our findings supra, any relief for the reasons stated in grounds of appeal would have the effect of nullifying the order to recover duty. Accordingly, that appeal is dismissed as infructuous. The other appeal, pertaining to setting aside of penalty under rule 25 of Central Excise Rules, 2000, is misdirected as the E/1093/2012 & Ors 17 Rules cannot enable imposition of penalty for non-payment of duties which transcends the penalties specified in section 11AC of Central Excise Act, 1944. That rule cannot be invoked de hors the action taken under section 11A of Central Excise Act, 1944 and, therefore, all penalties imposed under section 25 of Central Excise Rules, 2000 in the several orders impugned by us are set aside.
15. The impugned orders are modified to that limited extent in all the appeals and, save thar, we uphold the orders of the lower authorities.
(Order pronounced in the open court on 13/07/2023) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as