Customs, Excise and Gold Tribunal - Hyderabad
Cce vs Deccan Cements Ltd. on 26 March, 2001
Equivalent citations: 2001(97)ECR204(TRI.-HYDERABAD)
ORDER S.S. Sekhon, Member (T)
1. The respondents M/s. Deccan Cements Ltd. (hereinafter referred to as DCL) are manufacturers of cement and were issued with show cause notice dated nil of August 1993, demanding duty for the period from 1.7.1990 to 23.7.1991 asking as to why:
(a) differential duty of Rs. 1,87,23,165.04 should not be demanded from them under proviso to Section 11A of the CE Act, 1944;
(b) a penalty should not be imposed on them under Rule 173Q of CE Rules, 1944; and
(c) the land, building, plant & machinery used in relation to the manufacture of the said excisable goods, should not be confiscated to the Government under the provision of Rule 173Q ibid.
2. Show cause notice was also issued to Shri MB Raju, Chairman of the respondents Company asking him as to why penalty under Rule 209A should not be imposed on him.
3. The Commissioner, after hearing the respondents, found that as pleaded before him by the respondents, the show cause notice was hit by time bar on the following grounds:
(a) The Classification Lists submitted from time to time were duly approved by the Department without any change;
(b) The relevant RT 12 Returns were duly assessed by the Department without any objection;
(c) On the same issue, as Show-cause Notice No. 302/90-Adjn. dated 28.9.1990 was issued demanding duty of Rs. 90.20 lakhs for the period September, 1989 to June, 1990. The proceedings initiated under that Show-cause notice were dropped by CCE, Hyderabad vide his Order-in-Original No. 97/91-Adjn. dated 18.7.1991 based on the Standing Order (Tech) No. 61/91 (C. No. IV/16/274/90-MPI) dated 6.6.1991 of the Hyderabad Central Excise Collectorate which was issued on the authority of the Board's letter F. No. 115/4/91-Cx 3dated 10.5.1991.
(d) Another show-cause notice dated 28.1.1991 was issued on the same issue for an amount of Rs. 35.28 lakhs towards the differential duty during the period from July, 1990 to October. 1990. Thus, the Department was aware of the alleged misdeclaration on 28.1.1991.
(e) The issue of non-availability of exemption under Notification No. 25/91-CE dated 25.7.1991 was raised by the Department by not approving their Classification List. Being aggrieved by the Assistant Collector's Order, they filed an appeal before Collector (Appeals), Hyderabad who vide his Order-in-Appeal No. 57/58/92 dated 31.3.1992 had clearly and categorically held hat they were entitled to the benefit of the said exemption notification and set aside the order of Assistant Collector.
4. The present appeal has been filed by the Revenue of the following grounds:
i) The learned Commissioner ought to have examined the merits of the case, as assessee wilfully violated the substantial conditions of Notification 154/90-CE dated 7.11.1990 in regard to "installed capacity" or "licensed capacity" of their factory, availed concessional rate of duty. Though they had obtained letter of intent for raising capacity from 99,000 TPA to 1,98,000 TPA and after completion of substantial expansion even applied for re-endorsement; they deliberately withheld these facts from the department, inviting invoking of proviso of Section 11A of the Act. Moreover, merits of the case are so inter-related, inter-dependent, that 'suppression of fact' cannot be examined in isolation. Hence, the findings of the learned Commissioner exclusively on 'limitation of time' appears to be erroneous.
ii) It is on record the classification list under Rule 173-B of Central Excise Rules 1944 claiming exemption under notification 154/90-CE dated 1.11.1990 was filed on 7.1 1.1990. At that particular juncture, the assessee was fully aware that substantial expansion was almost completed as is evident from a letter dated 17.9.1990 submitted to 1DBI, and production limits also crossed. When such was the case, the assessee was statutorily obliged to furnish these facts in the classification list dated 7.11.1990. Contrary to the above, the asseessee was statutorily obliged to furnish these facts in the classification list dated 7.11.1990. Contrary to the above, the assessee claimed licensed capacity as 99,000 TPA only. Even the said misdeclaration was furnished in the classification list as a sort of "Note" and there was no note of completion of expansion or stage at which it stood. This does not mean any omission need to be construed as 'deliberate'. It was held in the case of Lucas TVS v. Collector Tribunal that "suppression means an act of deliberateness". The Commissioner's finding that there was no suppression in this case to be misappreciation of facts and require to be set aside,.
iii) There was adequate evidence that substantial expansion was completed by November 1990, and the assessee requested for re-endorsement of Industrial Licence with the additional capacity vide their letter DCL: MD: dated 4.10.1990. Depositions of Shri K. Mohan Rao, General Manager (works), Shri T. Ranga Rao, General Manager (Finance) dated 5.6.1991 confirmed the above position. Even the chairman of Deccan Cements Limited Shri M.B. Raju also gave an interview to News Today highlighting the achievements of substantial expansion. From the above facts it can reasonably be said the only compliance to be done by the assessee is to get re-endorsement done by the Development Commissioner for Cement, Government of India, Ministry of Industry, New Delhi which appear to be only formal routing matter. Viewed these facts in the light of proviso to Notification No. 154/90-CE i.e. certification of "installed and licensed capacities", it appears that" licensed capacity" refers to the letter of intent issued by Government of India and "installed capacity" refers real installation of plant & machinery commensurating to capacity permitted by letter of intent. As the installation of plant & machinery depends upon various factors affecting the additional expansion programme, resulting in either excess or falling short of licensed capacities, the Director of Industries in the state Government or Development Commissioner for Central Government was empowered to certify the "installed capacity".
In this case, neither the licensed capacity as borne by letter of intent, nor "installed capacity" as evidenced production figures/depositions of company officials was in dispute. It was not the case of assessee that they have not completed the expansion programme or achieved the "installed capacity". Their contention was that- "installed capacity" was not re-endorsed by the Development Commissioner. Such frivolous objection ought not to have been admitted by learned Commissioner, ignoring the substantial wilful acts done by the assessee. In fact, what is contemplated under the proviso to Notification 154/90-CE dated 1. 11.1990 is one of the two certification i.e. either "installed capacity" certified by the Director of Industry, State Government of "licensed capacity" as certified by the Development Commissioner/Secretary. Ministry of Industry by issue of Letter of intent, and installed capacity was reached by production figures, the assessee ought to have furnished these particulars in classification list under Rule 173-B of Central Excise Rules 1944, filed on 7.11.1990. Deliberate withholding of vital information constitute "suppression within the meaning of proviso to Section 11A of the Act, and learned Commissioner ought to have appreciated factual position before giving finding on "suppression of fact".
iv) The reliance placed by the learned Commissioner on O.R. No. 302/90 Adjn. dated 18.7.1991 (A.O. No. 97/91) appears to be not proper. The impugned order was based on exclusively Notification No. 23/89-CE dated 1.3.1989 which lays down only criteria of "licensed capacity" certified by Development Commissioner of Cements, Government of India or Director of Industries, whereas Notification No. 154/90-CE. dated 1.11.1990 (amendment to Notification No. 23/89-CE) envisages "licensed capacity" with provision of certification by competent authorities either of two capacities. Even clarification issued vide standing Order 61/91, Chapter 25 (Cements) No. 3/91 dated 6.6.1991 appears to be applicable only to Mini Cement Plants in excess of permissible quota of 25% over and above the installed capacity i.e. 65,000 TPA. Whereas in the present case, the assessee obtained from Development of Industrial Development for an installed capacity of 600 tonnes per day as is evident from the production on dates 16.11.1990/620 tonnes, 20.1.1991/720 tonnes. Hence, clarification issued appears to be applicable only per annum (TPA) criteria but not to per day criteria.
v) The second reliance placed by Commissioner on show cause notice dated 28.1.1991 to prove that the Department was aware of misdeclaration on 28.1.1991 is also not correct, as it was a periodical show cause notice subsequent to period covered by show cause notice 302/90 i.e. July, 1990 to October, 1990. These two show cause notices deal with identical issue i.e. production in excess of permissible limits. Substantial expansion scheme was never on issue in these cases, and the facts of such a scheme was not brought to the notice of department either in statutory documents or by any categorical declaration, amounting to suppression with an intent to evade duty. The learned Commissioner's reliance on these two documents appears to be misconceived.
vi) The reliance placed by the learned Commissioner on the issue of nonavailability of exemption under Notification No. 25/91-CE dated 25.7.1991 was also not correct, as the Notification No. 25/91-CE dated 25.7.1991 deals with exemption to soap stone falling under chapter sub-heading 25.05 of Central Excise Tariff Act 1985, and had no relevancy to concessional rate of duty to the mini cement plants.
Moreover, the impugned order classification list which was said to have not been approved, and order-in-appeal No. 57/58/92 dated 31.3.1992 are not on record for examination and scrutiny, though these were stated to have been submitted to Commissioner.
vii) It was observed by the learned Commissioner that the department was aware of the actual quantities of cement manufactured through the assessments of R.T. 12s finally, and approval of Classification Lists and check of R.G. 1 stock etc., and no suppression can be alleged in such cases. There is no dispute that these documents/registers were dealt with by the Department and by all accounts presumed to have been aware of it. But all these facts depend upon the basic and material fact as to what type and amount of information was statutorily furnished to the department by the assessee. In this case, it was not only misleading but also misstatement as to a haphazard note made in Classification List 'our existing capacity is 99000 TPA'. It was held in the case of Jaishree Engineering Company v. Collector "that the fact that the department visited the factory and should have been aware of the goods in question was no reason for the appellant not to truely and properly describe the goods". Hence, a statutory obligation is cast upon the assessee to declare properly and correctly, failing which "misstatements" as contemplated in proviso to Section 11(A) cannot but said to be present.
5. We have herd learned Shri S. Kannan, learned DR for the department and Shri Arvind P. Datar, learned Counsel along with Shri J. Sankararaman, learned Counsel for the respondents and considered the submissions and after considering the submissions we find that:
(a) the issue involved is eligibility of Notification No. 154/90 dt. 1.11.1990. This Notification exempts cement "manufactured in a factory of the description specified in column (2) of the Table hereto annexed". The appellants admittedly qualify as a factory described at serial No. 4 column (2) of this table. The explanatory note below this notification, reads as-
this Notification seeks to supersede notification No. 23/89-Central Excises so as to provide installed capacity limits for units not required to obtain an industrial licence and convert the daily capacity limits into annual capacity limits.
We find that there is a standing order (Tech) No. 61/91 dt. 6.6.1991 issued by Office of the Collector of Central Excise, Hyderabad wherein eligibility under Notification No. 23/89-CE dated 1.3.1989 and 134/90-CE dt. 1.11.1990 has been clarified in the following notes-
Please refer to this Office letters C. No. IV/16/274/90 MP-l dated 13.3.1991 and 15.4.1991 wherein instructions were issued that the assessments in respect of cement produced in Mini Cement plants in excess of the permissible quota of 25% over and above the installed capacity of 6600 tonnes or 99000 tonnes per year, as the case may be, should be assessed to duty provisionally till receipt of clarification from the Board.
Board has since clarified that the issue has been examined in depth and it is viewed that benefit of exemption as contained in Notification No. 23/89-CE dated 1.3.1989 as amended is available to cement manufactured in a factory satisfying the description of the factory stipulated in the Notification. Therefore, the benefit as contained in the said Notification could be available irrespective of the quantity of cement produced.
In the light of Board's clarification the instructions issued under this office letters C. No. IV/16/274/90 MP-l dated 13.3.1991 and 15.4.1991 may be treated as withdrawn.
(b) The appellants are a manufacturer of cement and were availing the benefit of Notification No, 23/89-CE dt. 1.3.1989 and other Notifications prior to the impugned notification and were issued a show cause notice dated 28.1.1991, wherein the issue was licensed capacity and eligibility Notification No. 23/89 as amended. This was made answerable to Assistant Collector of Central Excise, Hyderabad which was found to be finally not sustainable by Commissioner (Appeals). Another show cause notice was also issued on 28.9.1990 on the eligibility of the same manufacturer assessee under Notification No. 23/89-CE dated 1.3.1989 read with Notification No. 172/89 dt. 1.9.1989 and CL file effective from 1.8.1989 on the very same issue the Collector ordered the withdrawal of the proceedings vide his order dated 8.7.1991 relying on the standing order (Tech) No. 61/91 dated 6.6.1991 (supra). Thus the issue was well within the knowledge of the department and nothing that was required to be declared was kept away from the department.
(c) Since Standing Order (Tech) No. 61/91 dt. 6.6.1991 of the Collectorate has not been proved to be withdrawn and is based on clarifications, wherein the Board after examining the issue in depth has held that the benefit, as contained in the said notification could be available irrespective of quantity of cement produced. This standing order, a clarification on the issue, for the exemption under Notification No. 23/89-CE dt. 1.3.1989 as amended would, in our view, be applicable to the Notification No. 154/90. Which as per the explanatory notes given therein, indicates the same to be issued only to supersede Notification No. 23/89-CE dt. 1.3.1989. Therefore, we do not find any material, in the present appeal to upset the findings of the adjudicating authority, that the present proceedings are barred by limitation. We would also find that the Revenue cannot argue against their own interpretations for the eligibility of the Notification as amended. The interpretation given by the Board, that the benefit of the notification is available irrespective of quantity of cement, with the stipulation in the Notification of the eligibility of the factory to avail the said exemption, as given for manufacturer in Column (2) would settle the issue. There is no material to come to a conclusion that the assessee factory, in the present case, is not one of the manufacturers as made eligible in column (2) of the said Notification. We find that there is no cause made out even in merits.
(d) In view of the fact that no demand can be determined and also the demands are barred by limitations, we cannot find any reason revoking in penalty of manufacturer and the Managing Director.
6. In view of our findings, the appeal is dismissed.
Pronounced on 27.4,2001.