Customs, Excise and Gold Tribunal - Bangalore
Chamundi Die Cast (P) Ltd. vs Commissioner Of Central Excise on 16 November, 1999
Equivalent citations: 2000(68)ECC187
ORDER
K. Sreedharan, J. (President)
1. Appellants are engaged in the manufacture of Aluminium castings. The products manufactured by them include side cover, Fan Bracket, Real Cover, Oil supply Ring, Balancer Shaft cover. These parts are manufactured at the instance of M/s. Kerala Agro Machinery Corporation Ltd., Angamalli (for short KAMCO). KAMCO manufactured power tillers classified under sub-heading 8432.00 of the Tariff Act. While filing the classification list they described these above-mentioned products as parts of power tillers and claimed exemption from payment of duty because power tillers were not liable to duty.
2. The department took the view that parts manufactured by the appellant go in for manufacture of I/C Engines which are utilised by KAMCO in their power tillers. The fact that those engines were captively consumed in the manufacture of power tillers cannot make the parts manufactured by the appellant ipso facto parts of power tillers which is exempt from duty. According to the department, I/C Engines have their separate existence independent of the power tillers and so the parts which went in the manufacture of I/C Engines could not be treated as parts of power tillers and exempt from duty. In this view, the show cause notice was issued requiring the appellant to pay duty of Rs. 30,42,131 for the period from December'92 of June'97.
3. Learned Counsel representing the appellant urged before us two main points. The first one is that the parts manufactured by the appellant went in for manufacture of I/C Engines which were integral part of the power tillers. Since this part manufactured by the appellant was the part of engine which itself was captively consumed for power tillers, same should also get the benefit of exemption from payment of duty. The second argument advanced by Learned Counsel was that there was no intention on the part of manufacturer/appellant herein to wilfully evade payment of duty. Since there was no wilful intention to evade payment of duty, the authorities were not justified in invoking the extended period of limitation of 5 years.
4. To properly appreciate the above arguments by Learned Counsel, we feel that all the factual materials are not before us. The goods manufactured by appellant were sold to KAMCO. KAMCO manufactured I/C Engines utilising these parts manufactured by the appellant. Those engines subsequently were fitted in power tillers. In other words, I/C Engines manufactured by KAMCO were captively consumed for production of power tillers. It is a common fact that power tillers were not liable to duty from Feb'1994. Upto Feb'94, it is submitted before us by Learned Counsel representing the appellant that appellant paid duty on these products and KAMCO was claiming the modvat credit. To find whether this contention is correct or not, one has to examine the records in more detail. Such an exercise, we are afraid, cannot be done by us on the materials now placed before us.
5. On the question of limitation, Ld. Counsel submits that Revenue could claim the benefit of the extended period only if they establish the intention to evade payment of duty and this intention to evade payment of duty should also be shown to be a wilful one. The argument advanced by the Counsel is on the basis that had appellant paid duty on the articles manufactured by them which went into the manufacture of I/C Engines, KAMCO could have claimed modvat credit. In such a situation, the entire exercise would have led revenue neutral. In support of this argument, Learned Counsel brought to our notice of letter No. 492/97 dated 7.4.1997 sent by the Superintendent Angamalli Range-II to Superintendent Range-I, Tumkur. In that letter, the Superintendent Angamalli specifically stated that duty liability would have been neutralised by modvt. In such a situation, it is the argument of the Counsel that the wilful intention on the part of appellant, manufacturer is clearly absent. In the absence of such an intent to evade duty on the part of appellant manufacturer, the department was clearly in error in invoking the extended period of 5 years. To strengthen this argument, Learned Counsel brought to our notice the following observations made by the adjudicating authority in para-17 of the impugned order:
17.Supplementing the submission made by the Learned Counsel the Managing Director also submitted that they were not aware that these were used in the manufacture of power tiller till 1992 until their buyer advised them to declare their goods as parts of power tiller. It was submitted by the Managing Director that had they known that the goods were dutiable, they would have purchased raw materials from manufacturer and availed modvat credit.
From the above circumstances, it would appear that the situation now sought to be created by the Revenue would have led to a position of Revenue neutral. In such a situation can there be a wilful intention to evade payment of duty? Reference was made to the decision of the Supreme Court in Cosmic Dye Chemical v. CCE Bombay in support of the contention that the department was not justified in invoking the extended period.
6. Learned Counsel representing the appellant further submitted that appellant paid duty on the goods manufactured by them upto 31.1.1994, till the power tillers were exempt from duty liability. If this statement is correct, then we think that the demand of duty for the period from December'92 to 31.1.1994 cannot be sustained. On this aspect also we are not in a position to enter a clear finding because of the absence of factual materials.
7. In view of what has been stated above, we feel that the entire matter must go back to the adjudicating authority for a decision de novo in the light of the observations made by us above. Since this is an old matter, we direct the adjudicating authority to pass the final order on the issue after affording a reasonable opportunity to the appellant, within 4 months from the date of receipt of copy of this order.
8. The appeal is disposed of in the above terms. Registry shall forward a copy of this order to the Commissioner without any delay.