Custom, Excise & Service Tax Tribunal
C.C.E., Chandigarh vs M/S Baba Asia Ltd on 21 September, 2010
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing: 21.9.2010 Date of pronouncement:23.11 .2010 Central Excise Appeal No.634 of 2005 Arising out of the order in appeal No.770/CE/CHD/2004 dated 30.11.2004 passed by the Commissioner (Appeals), Central Excise, Chandigarh For Approval and Signature: Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Technical Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes C.C.E., Chandigarh Appellant Vs. M/s Baba Asia Ltd. . Respondents
Appearance:
Ms. Monika Batra, Authorized Departmental Representative (SDR) for the Revenue and Shri T.R. Rastogi, Advocate for the respondents Coram: Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Technical Member Order No.__________________________ Per Shri Justice R.M.S. Khandeparkar:
Heard the DR for the appellant and Advocate for the respondents.
2. This appeal arises from the order dated 30.11.2004 passed by the Commissioner (Appeals), Chandigarh. By the impugned order, the appeal filed by the respondents against the order of the Deputy Commissioner, Shimla was allowed and the said order of the Deputy Commissioner was set aside. The Deputy Commissioner, Shimla vide his order dated 28.7.2004 had confirmed the demand of duty to the tune of Rs.54,007/- against the respondents along with interest and had imposed penalty of Rs.50,000/-.
3. The respondents were manufacturing Additive Mixture (Tobacco Essences) which was utilised by them captively for manufacture of their final product, namely, chewing tobacco during the period from 1.4.2002 to 16.10.2002. Though during the relevant period, the duty of BED, SED and AED were exempt for captive consumption of goods classifiable under Chapter 24 in terms of Notification No.121/94 dated 11.8.94, no such exemption was available in respect of National Calamity Contingency Duty (NCCD) which was leviable with effect from 1.3.2001 under Finance Act, 2001 in respect of specific goods cleared and consumed captively by the manufacturer for the manufacture of final products. The exemption in respect of NCCD for captive consumption, the product was allowed only with effect from 17.10.2002 under Notification No.52/2002 dated 17.10.2002 which superceded the earlier Notification No.121/94. Accordingly, a show cause notice dated 2.4.2003 came to be issued to the respondents. The respondents did not file any reply to the show cause notice nor contested the proceedings before the adjudicating authority. The adjudicating authority after considering the materials on record passed the order as stated above. Being aggrieved , the respondents filed appeal before the Commissioner (Appeals), who framed three issues for consideration of the matter namely,
i) Whether the additive mixtures prepared by the assessees are excisable products?
ii) whether the exemption under Notification No.121/94-CE dated 11.8.04 is available to NCCD during the period 1.3.2001 to 16.10.2002?
iii) whether the revenue neutral situation comes in the instant case and consequently, the entire exercise is academic.
4. As regards the first point for consideration referring to the Boards Circular in relation to the clarification about excisablity of Agarbathi mix during the course of manufacture of Agarbathi, it has been held that additive mixture by the respondents for their own use cannot be considered to be marketable in commercial parlance and therefore, is not excisable product.
5. As regards the second point for consideration, it has been held by the Commissioner (Appeals) that though the NCCD was not mentione din the Central Excise Tariff Act, 1985 and was separately levied under clause 129 of the Finance Act, 2001 and therefore, was not covered under Notification No.121/94-CE dated 11.8.94, yet it was subsequently included for the grant of exemption under Notification No.52/2002 dated 17.10.2002 which was issued in supercession of Notification No.121/94 and therefore, there is no doubt about the chargeability of duty of NCCD during the relevant period. However, NCCD duty is a duty of excise and Policy of the Government that all goods should be exempted from duty of excise if the same are captively consumed would also apply in relation to NCCD and hence the exemption from payment of the said duty would also available to the assessees during the relevant period.
6. As regards the third point for consideration, it has been observed that if NCCD was required to be paid on additive mixture captively consumed in the manufacture of branded chewing tobacco then the said NCCD so paid was available to the respondents as cenvat credit and therefore, the revenue neutral situation was clearly attracted and in that view of the matter, the entire exercise is of academic nature.
7. The appellants have assailed the impugned order on the ground that the Commissioner (Appeals) erred in ignoring the decision of the Apex Court in the matter of T.N. State Transport Corpn. Ltd. vs. C.C.E., Madurai reported in 2004 (166) ELT 433 wherein it was held that the product having shelf life of 8 to 10 hours are considered as marketable and hence chargeable to duty. Secondly, the Commissioner (Appeals) erred in ignoring that the exemption to NCCD was not available for the relevant period as there was no notification granting such exemption. Thirdly, the Commissioner (Appeals) erred in holding that the situation was not of revenue neutral.
8. The Departmental Representative placing reliance in the decision in the matter of Gopal Zarda Udyog v. C.C.E., New Delhi reported in 2005 (188) ELT 251 (SC), T.N. State Transport Corpn. Ltd. vs. C.C.E., Madurai reported in 2004 (166) ELT 433 (SC), Paras Petrofils Ltd. vs. C.C.E., Surat reported in 2009 (237) ELT 367 (Tri-Ahmd.), Khatri Kimam Co. P. Ltd. v. C.C.E., Lucknow reported in 2010 (253) ELT 157 (Tri-Del.) and Dharmapal Satyapal v. C.C.E., New Delhi reported in 2005 (183) ELT 241 (SC) and drawing our attention to the Notifications No.121/94 and 52/2002 submitted that the Commissioner (Appeals) totally misconstrued the relevant provisions of law comprised under the relevant notification as also erred in ignoring the settled law on the points in issue. Merely because the assessee is entitled to avail cenvat credit that cannot be give liberalise to the assessee to avoid payment of duty in time . Non-payment of any duty results in revenue loss in relation to first not only the principal amount of tax is kept away from the revenue treasury but even the treasury loose the interest which could accrue on such principal amount of tax. Being so, it cannot be said that availability or facility of clearing the duty by utilising cenvat credit invariably results in revenue neutrality. Revenue neutrality can only arise in cases where the duty liability is immediately discharged by utilising the cenvat credit and not otherwise.
9. Learned Advocate for the respondents on the other hand while drawing our attention to the decisions in Commissioner of Central Excise , Chandigarh vs. Dharmapal Satyapal reported in 2009 (248) ELT 810 (Tri-Del.), Commissioner of Cus. & C.Ex. vs. Textile Corpn., Marathwada Ltd. reported in 2008 (231) ELT 195 (SC) and Gopal Zarda Udyog v. C.C.E., New Delhi reported in 2001 (128) ELT 409 (Tri-Del.) submitted that the Commissioner (Appeals) on proper analysis of the materials on records has arrived at correct findings and the same do not require any interference. The decision on merits being in terms of the Boards Circular, and intention to grant exemption from payment of NCCD being made clear under Notification No.52/2002, no fault can be found with the impugned order. In any case, as rightly pointed out by the Commissioner (Appeals) that the matter has to be held to be of academic nature as demand of duty entitles the assessee to avail the credit.
10. As was rightly understood by the Commissioner (Appeals), the matter involves three issues for consideration (a) Whether the additive mixtures prepared by the assessees are excisable products? (b) whether the exemption under Notification No.121/94-CE dated 11.8.04 is available to NCCD during the period 1.3.2001 to 16.10.2002? and ( c) whether the revenue neutral situation comes in the instant case and consequently, the entire exercise is academic?
11. As regards the first point for consideration , there is no dispute that the additive mixture prepared by the respondents were being captively consumed for manufacture of final product. Indeed, it is only on this ground itself, the Commissioner (Appeals) has held that the product cannot be considered to be marketable and therefore, not excisable. The reliance placed in that regard in the Board Circular relating to Agarbathi mix for use in the manufacture of Agarbathi.
12. The law on the point of marketability of a product has been well settled. It has been clearly held by the Apex Court that merely because a product is not carried to the market that itself will not be a criteria to pronounce the product to be non-marketable. It is also not necessary that the product should have more than one purchaser or on consumption purchaser. Even a single consumption can determine the product to be marketable. It is not actual marketing of a product and that decide whether the product is marketable or not but its possibility of the product can be marketed which factor assumes importance while deciding the issue of marketability of a product.
13. The Apex Court in T.N. State Transport Corpn. Case has also held that the product which has shelf life of 8 to 10 hours is enough to consider the same as marketable product. Similarly, in Dharmapal Satyapal case, the Apex Court held that test of marketability is that the product which is made liable to duty must be marketable in condition in which it emerges. Marketable sale being means saleable. The test of classification is, Are the goods known in the market? This test had been laid down by the Apex Court in a number of judgements including Moti Laminates Pvt. Ltd. vs. C.C.E. reported in 1995 (76) ELT 241, Union of India vs. Delhi Cloth General Mills reported in 1997 (92) ELT 315, C.C.E., Baroda reported in2003 (152) ELT 262.
14. As regards the Boards Circular relating to Agarbathi mix used in the manufacture of Agarbathi has absolutely no application to the matter in hand. In any case, any Circular contrary to the decision of the Apex Court or High Courts or the Tribunal cannot be relied upon. Besides, merely because, the product is captively consumed that does not result in any product becoming non-marketable.
15. For the reasons stated above therefore, we do not find that the finding of the Commissioner (Appeals) in relation to the first point for consideration can be sustained. The same is liable to be set aside and the finding of the adjudicating authority in this regard to be confirmed.
16. As regards the availability of exemption in respect of NCCD, as rightly submitted by the Departmental Representative, the Tribunal in Paras Petrofils Ltd. had clearly held that in the absence of inclusion of NCCD under the relevant notification, the question of grant of exemption in relation to the said duty during the relevant period does not arise. Indeed, undisputedly, in terms of Notification No.52/2002 which came into force with effect from 17.10.2002, the exemption was granted in supercession of the Notification 121/94. There is no dispute that under the Notification 121/94, no exemption in relation to NCCD was available. Undisputedly, the NCCD was levied under the provisions of Finance Act, 2001. The terms Excise duty as understood in terms of the provisions comprised under Central Excise Act, particularly in Section 3 read with definition clause would restrict to the duty leviable under the said Act or any other Act even such duty may be part of the revenue or part of the indirect tax. Even though the NCCD is stated to be treated as excise duty in terms of Finance Act, 2001, it would not qualify to be excise duty under the said Act.
17. Besides, the question of grant of exemption depends upon the phraseology used in the manufacture dealing with the subject of exemption. The Tribunal or any authority under the said Act cannot extend the abridged and scope of exemption under any exemption Notification. This has been clearly explained in the decision of the Tribunal in the matter of Kharti Kimam P. Co. Ltd.
18. The finding about the availability of NCCD exemption, therefore, cannot be sustained.
19. As regards the last point for consideration, the Departmental Representative is justified in contending that each and every situation cannot be termed as revenue neutral situation. It would depend upon the facts and circumstances of each case. He is also justified in contending that failure on the part of an assessee to clear the duty at the time it becomes due and payable , results not only in the loss relating to principal amount of duty but also to interest which accrue on such duty amount. Being so, if the duty was required to be cleared on 1st January 2008 on account of litigation, the matter was delayed merely because, on that day, the appellant had some credit available in his account if it is sought to be utilised in 2010 certainly, such situation cannot be said to be relief for revenue neutral situation.
20. The decisions which have been cited on behalf of the assesses in relation to the principal of revenue neutrality, are pertaining to non-requirement of imposition of penalty.
21. As far as the decision in the matter of Dharampal Satyapal by the Tribunal is concerned, the same is entirely based on the decision of the Tribunal in Essar reported in 2009 (235) ELT 877. Undoubtedly, in the said decision, it was observed that whatever duty was payabe on unbranded pan masala as available as modvat credit to the appellant to be utilised for payment of NCCD on the brandeed pan masala, it was seen that the appellant had duty more than the duty on the branded pan masala then the duty required to be paid on the unbranded product , the order however, does not disclose the basis on which the said finding was arrived at. There are no analysis of the material framed to the said finding. Being so, we have no advantageous based on which the said finding has been arrived at in order that the judgment or order to constitute binding judicial pronouncement, the same shall disclose the facts, points which are canvassed in relation to such facts and analysis and the materials with reference to such points and the conclusions arrived thereupon. Only upon such exercise being reflected from an order, the same assumes character about the binding nature of judicial pronouncements and not otherwise. The law in this regard is well settled by the decision of the Apex Court in the case of Union of India vs. Dharmapal Satyapal as reported in 1996 (6) SCC 44.
22. For the reasons stated above, the findings arrived at by the Commissioner (Appeals) cannot be sustained. Therefore, the impugned order is liable to be set aside.
23. Hence, the appeal is allowed. The impugned order is set aside and the order passed by the adjudicating authority is hereby confirmed with consequential relief.
(Pronounced in open Court on 23.11. .2010) (Justice R.M.S. Khandeparkar) President (Rakesh Kumar) Technical Member scd/ 8