Custom, Excise & Service Tax Tribunal
Cce, Madurai vs M/S. Sagar Chlorate Pvt. Ltd on 26 September, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/1187/2001
(Arising out of Order-in-Appeal No. 102/2001 (MDU) (GVN) dated 20.09.2001 passed by the Commissioner of Customs & Central Excise (Appeals), Trichy)
For approval and signature
Honble Shri P. G.CHACKO, Member (Judicial)
Honble Shri P.KARTHIKEYAN, Member (Technical)
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CCE, Madurai : Appellant
Vs.
M/s. Sagar Chlorate Pvt. Ltd. : Respondents
Appearance Shri N.J. Kumaresh, SDR for the appellants Shri S. Ranganathan, Adv.,for the respondent CORAM Shri P.G. CHACKO, Member (Judicial) Shri P. KARTHIKEYAN, Member (Technical) Date of hearing: 26.09.08 Date of decision:26.09.08 FINAL ORDER No.________/2008 Per P. KARTHIKEYAN This is an appeal filed by the Revenue. In the impugned order, the Commissioner (Appeals) vacated the demand of duty to the tune of Rs. 14.90 lakhs along with interest raised against M/s. Sagar Chlorate Pvt. Ltd. (SCPL) and equal amount of penalty imposed on them. The respondents owned an SSI unit manufacturing Potassium Chlorate in Salvarpatti village located in Madurai Central Excise Commissionerate. During the period 1.4.97 to 5.9.97 they availed SSI exemption under Notification No. 16/97-CE dated 01.04.97 in respect of the Salvarpatti unit. The respondents also ran a unit at Kanjikode in Kerala from where they had cleared Potassium Chlorate on payment of tariff rate without availing exemption under Notification No. 16/97 (supra). Pursuant to a visit to the Salvarpatti unit by the central excise officers, the departmental authorities ascertained the particulars of clearances from both the Salvarpatti and Kanjikode units and arrived at a tentative decision that SCPL had availed SSI benefit in respect of one unit and opted not to avail the same benefit in respect of its another unit against the terms of the Notification No. 16/97 CE. Accordingly, a Show Cause Notice was issued invoking larger period and the Additional Commissioner of Central Excise, Madurai passed an order demanding duty of Rs. 14.90 lakhs, applicable interest thereon and imposing equal amount of penalty.
2. In the impugned order, the Commissioner (A) found that the respondents had furnished the required information in the classification list filed with the department. There was no requirement that a manufacturer should disclose the details of all the units from where it manufactured and cleared the goods specified in the subject SSI Notification during the material period. That requirement was enacted only in SSI Notification No. 8/99 dated 28.02.99. The Commissioner (A) did not find any act of omission or commission on the part of the respondents which led to an inference of suppression of facts enabling the authorities to invoke larger period under Section 11A of the Act to demand duty. The Commissioner (A) accepted the argument of the respondents relying on case law that suppression would not invite action under the proviso to Section 11A in the absence of deliberate attempt to evade duty and that mere inaction or failure or omission would not constitute an offence for the purpose of duty recovery under the proviso to Section 11A. The Commissioner observed that as per para 2 (v) of Notification No. 16/97, when a manufacturer cleared specified goods from more than one unit, then the slab-wise exemption shall be available for clearances for all the units together and not separately for each unit. As per the notification, a manufacturer had the option not to avail the SSI benefit and to pay duty at the tariff rate. Therefore the finding that the option exercised for payment of duty at tariff rate for one unit applied also to another unit of the manufacturer was incorrect. He found that the para 2 (v) attracted only to goods where slab-wise exemption or duty relief was claimed by a manufacturer separately for more than one unit owned by him. After examining the details of clearances by the two units, the Commissioner found that even on applying the slab wise exemption prescribed in the Notification No. 16/97, taking into account the clearances made from both the units put together, the appellant had paid an amount of Rs.4,76,549.47 as against a liability of Rs.4,30,095/-. Accordingly, he allowed the appeal filed by the respondents.
3. In the appeal filed by the revenue, following grounds have been taken. It is submitted that the SSI exemption availed in respect of Salvarpatti unit was based on the condition that total clearances in the previous year from all the units owned by the SSI manufacturer had not exceeded Rs. 3 Crores. The assessee had not disclosed the existence of another factory owned by it which availed the benefit of SSI Notification No. 16/97. The assessee was aware of the condition as regards the value of clearances from both the units in the previous year and had suppressed the same from the department. Boards Circular F.No. 172/06/96-CX dated 6.2.96 had clarified that assessees availing exemption under Notification No. 1/93 (which was predecessor to Notification No. 16/97 and had contained parallel provisions) could not avail concessional rate in respect of one unit while paying normal rate in respect of another unit. The Commissioner (A)s observation that the assessee had the option to pay normal rate at one unit and concessional rate at the other was incorrect. The Commissioner (A) had suo motu allowed concessional rate in respect of the Salvarpatti unit while upholding its option to pay tariff rate during the same financial year for its Kanjikode unit. This was inconsistent with the terms of the notification. The revenue therefore sought to vacate the impugned order.
4. Heard both Sides.
5. The Commissioner has found that the appellant had not wilfully suppressed the fact of its Kanjikode unit paying normal rate of duty while availing concessional rate under the SSI notification in respect of its Salvarpatti unit. The Revenue has not adduced any evidence to disprove this finding. As no suppression of facts by the respondents with intention to evade payment of duty existed or established larger period could not be invoked.
6. We find that the Commissioner had, after analysing the relevant provisions found that the respondent was not under any obligation during the material period to disclose if it owned another unit and if so whether it had availed the concessional rate or opted to pay the normal rate. Therefore the assessee did not suppress any information from the department in the classification declaration filed. Paras 1 and 2 of the Notification reads as follows.
In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 7/97-Central Excise dated the 1st March, 1997, hereby exempts clearances, specified in column (2) of the Table below, for home consumption, of the 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 duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as is in excess of the amount calculated at the rate specified in column (3) of the said Table against such clearances.
TABLE S.No. Clearances Rate (1) (2) (3)
1. First clearances upto an aggregate value not exceeding rupees thirty lakhs made on or after 1st day of April in a financial year.
Nil
2. Clearances of aggregate value not exceeding rupees twenty lakhs immediately following the clearances specified against S. No. 1 above.
Three per cent, ad valorem
3. Clearances of aggregate value not exceeding rupees fifty lakhs immediately following the clearances specified against S.No. 2 above.
Five per cent, ad valorem
2. The exemption contained in this notification shall apply only subject to the following conditions, namely :-
(i) A manufacturer has the option to not avail the exemption under this notification and to pay the appropriate duty of excise leviable, under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) read with any notification issued under sub-section (1) of Section 5A of the said Central Excise Act, but for the exemption contained in paragraph 1. Such option shall be exercised before effecting the first clearance in a financial year and, if exercised, shall subject to (ii) below, be effective from the date of first clearance in a financial year and cannot be withdrawn in the same financial year under any circumstances.
(ii) For the financial year 1997-98 -
(a) in respect of units for which the date of first clearance happens to be a date on or before the 1st day of May, 1997, the option shall be exercised on or before 1st day of May, 1997 and shall be effective from the date of exercise of such option;
(b) in respect of units for which the date of first clearance happens to be a date beyond the 1st day of May, 1997, option shall be exercised on or before the date of first clearances and shall be effective from the date of first clearance;
(iii) The manufacturer does not avail of the credit of duty under rule 57A of the Central Excise Rules, 1944, paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearances of which does not exceed rupees one hundred lakhs in the relevant financial year. The manufacturer also does not utilise the credit of duty under rule 57Q 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 in the relevant financial year.
(iv) The aggregate value of clearances of all excisable goods for home consumption (including clearances for export to Bhutan or Nepal) by a manufacturer from one or more factories, or from a factory by one or more manufacturers, has not exceeded rupees three hundred lakhs in the preceding financial year.
(v) Where a manufacturer clears the specified goods from one or more factories, the exemption in his case shall apply for the total 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 for the total value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer. As per para 2(i) of the notification, an assessee has the option not to avail the exemption contained in the notification. As per para 2(v) of the notification , where a manufacturer cleared specified goods from one or more factories, the exemption shall apply to the aggregate value of clearances mentioned against each of the Sl.Nos. in the Table to the notification prescribing concessional rates for different slabs and not separately for each factory. There is no dispute about the correctness of the finding of the Commissioner that even when considered against this condition of the notification, the respondent had paid excess amount than what it was required to pay. Therefore, we find that there was no short levy of duty in respect of clearances from the Salvarpatti unit of the respondent. The notification does not lay down that in cases where an assessee opted to pay tariff rate in respect of one unit, the same shall be applicable also for clearances from any other unit. Appeal does not canvas the case of short levy on any other ground. Therefore, there was no short levy of duty in respect of clearances from the Salvarpatti unit. Moreover, any demand for differential duty from the said unit was barred by limitation as the larger period had been invoked without establishing existence of circumstances such as suppression of fact with intent to evade payment of duty. In the circumstances, we do not find any reason to interfere with the impugned order. Accordingly, the impugned order is sustained and the appeal filed by the revenue is dismissed.
(Operative part of the Order pronounced in Open Court on 26.09.08) (P.KARTHIKEYAN) (P.G. CHACKO) MEMBER (T) MEMBER (J) BB ??
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