Custom, Excise & Service Tax Tribunal
M/S.Supereme Lamps vs Cce, Meerut-I on 3 September, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.3
Appeal No.E/133 & 4372 /2004-Ex
(Arising out of OIA No.244/CE/MRT-I/2003 dated 25.9.2003 and OIA No.90-CE/APPL/MRT-I/2004 dated 27.2.2004 passed by CCE (Appeals), Meerut-I)
Date of Hearing/Decision: 03.09.2013
For approval and signature:
Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr.Manmohan Singh, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
N0
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
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
M/s.Supereme Lamps Appellant
M/s.Keesara Plastics Pvt.Ltd.
Vs
CCE, Meerut-I Respondent
Present for the Appellant: Shri B.L.Narsimhan, Advocate, Present for the Respondent: Shri Sanjay Jain, DR Coram: Honble Mrs.Archana Wadhwa, Member (Judicial) Honble Mr.Manmohan Singh, Member (Technical) FINAL ORDER NO.57659-57660/2013 PER: ARCHANA WADHWA Both the appeals are being disposed of by a common order as they arise out of the same impugned proceedings confirming the demand of duty of Rs.2,78,244/- against M/s.Supreme Lamps and imposing penalty of identical amount under section 11AC. In addition a penalty of Rs.50,000/- stands imposed upon M/s.Keesara Plastics Pvt.Ltd.
2. As per facts on records, M/s.Supreme Lamps are engaged in the manufacture of electrical bulbs under the brand name of M/s.Kesara Plastics Pvt.Ltd. The said electrical bulbs were being supplied to brand name owner who was further using the same in the manufacture of torch. In terms of paragraph 5 of SSI exemption No.16/97-CE and 8/98-CE, the goods manufactured under the brand name of other persons were not entitled to the SSI exemption notification. However, the said branded goods used as original equipment in the manufacture of said final product, the same earns exemption subject to following the procedure laid down in Chapter X of Central Excise Rules, 1944. Though the electrical bulbs manufactured by the appellant were being used by brand name owner for further manufacture of torch, the appellant was not following the procedure laid down in Chapter X of Central Excise Rules, 1944.
3. In view of above, the Revenue entertained view that the appellant is not entitled to the benefit of notification and accordingly initiated the proceedings against them for recovery of dues by way of issue of show cause notice dated 10.2.2000. The said SCN raised the demand for the period March, 1998 to September, 1999. The said demand stands confirmed by the original adjudicating authority and the same was upheld by the Commissioner (Appeals).
4. The appellant filed appeal before the Tribunal came up for disposal, the Bench observed that there were conflicting decisions on the point of following the chapter X procedure. Some of the decisions held that non following the chapter X procedure would not result in denial of benefit of substantive benefit of exemption. Whereas other decision was to the effect that following chapter X procedure is compulsory to avail benefit of any exemption. Accordingly, the matter was referred to the larger bench.
5. The larger bench decided the issue vide its order dated 26.7.2013 and by taking note of the latest decision in the case of CCE, New Delhi vs. Hari Chand Shri Gopal-2010 (260) ELT 3 (SC) answered the issue in favour of the Revenue. However, the appeal stands remitted to the original bench for determination of other subsisting issue if any.
6. Accordingly the appeal stands heard by us.
7. Ld.Advocate appearing for the appellant submits that the demand is barred by limitation having issued beyond normal period of limitation of six months during the intervening period. He submits that during the period 1998-99 to which the demand pertaining, there were enormous decisions of the Tribunal and various High Courts as also Supreme Court laying down that non following chapter X procedure cannot result in denial of substantive benefit, if the same are otherwise available. He submits that inasmuch as para 5 of the notification granted the exemption benefit to the branded goods used by the brand name owner in the manufacture of further manufacture of final product, they entertained a bonafide belief that no duty is required to be paid by them on the said branded goods. For the above proposition, He has relied upon the various decisions.
8. Countering the arguments, the ld.DR appearing of the Revenue submits that the appellant in their declaration filed with the Revenue have not disclosed the fact that they were manufacturing branded goods. They never got registration with the department. As such, the Revenue was not aware of the fact of manufacture of electrical bulbs under the brand name of other persons. In this scenario, ld.DR submit that the department was justified in invoking longer period of limitation.
9. For resolving the dispute, we would first like to refer to some of the judgments which were prevailing during the relevant period. Though, there are a number of decisions of the Tribunal but for the limited purpose to decide the limitation issue, we may only refer to Honble Supreme Court decision. In the case of Thermax Pvt.Ltd. vs.CC-1992 (61) ELT 352 (SC), it stands held that Revenues stand that the benefit of notification would not be available to the assessee if the chapter X procedure is not followed, was not in accordance with Boards Circular. Honble Supreme Court endorsed the view of the Board as expressed in their letter F.No.332/65/86-TRU, dated 27.7.1987 that the benefit is not deniable if the chapter X procedure is not complied. Similar view was expressed in another decision of the Supreme Court in the case of CCE, Jaipur vs. J.K.Synthetics-2000 (120) ELT 54 (SC) as also in the case of Mangalore Chemicals & Fertilizers Ltd. vs. Deputy Commissioner-1991 (55) ELT 437 (SC).
10. The above view held field for number of years when the correctness of the same was doubted in the case of CCE. New Delhi vs. Hari Chand Shri Gopal etc.-2005 (188) ELT 353 (SC) and the matter was referred to 5 Member Bench of Supreme Court. Accordingly, it was decided in that case, that observance of chapter X procedure is mandatory as reported in 2010 (260) ELT 3 (SC).
11. As is clear from the above, the law during the relevant period was in favour of the Revenue and now question to be decided is as to whether in such scenario can it be held that there was suppression on the part of the assessee with intent to evade duty, which is pre-requisite for invoking longer period of limitation. For the said purpose, we may refer to Delhi High Courts decision in the case of CCE vs.Wonderax Laboratories,IPL-2010 (255) ELT 60 (Del.). It stand held by Honble Delhi High Court, that when there was conflicting views among different benches of the Tribunal, which was resolved much later, then during the relevant period, the assessee is held to be justified in proceeding on the basis that it was exempted from excise duty. The issue involved in the present appeal was also relatable to SSI exemption of Notification No.1/93 in respect of branded goods. The said decision of Honble Delhi High Court stands upheld by Honble Supreme Court when the appeal filed by Revenue was rejected as reported in 2010 (255) ELT A16 (SC). Honble Gujarat High Courts decision in the case of CCE & C, Vapi s. Charak Pharma Pvt.Ltd. -2012 (278) ELT 319 (Guj.) has held that extended period is not be invoked. In the case of Mentha & Allied Products Ltd. vs. CCE, Meerut-2004 (167) ELT 494 (SC), it was held when different view was expressed on different stages by Tribunal and High Court and when Honble Supreme Court is also not clear as to whether the law is absolutely clear on the matter or not, in such situation, penalty cannot be imposed and extended period cannot be justified.
12. Similarly, in the case of Jaiprakash Industries Ltd. vs. CCE-2002 (146) ELT 481 (SC),it was observed that when there are divergent views of High Courts, benefit of doubt as to non dutiability of the goods, can be entertained by the assessee, the extended period of limitation cannot be invoked by the Revenue.
13. In view of foregoing discussion, we find that there was sufficient reason for the appellant to exercise bonafide belief as regard availability of exemption notification. The contention of the ld.DR that the fact of using brand name was not intimated to the Revenue, cannot be appreciated, inasmuch as such non intimation was also on bonafide belief, which stands formed by the assessee, based upon the various decisions of higher courts which is in their favour. Ld.Advocate fairly agrees that a part of the demand would fall within the limitation period. Inasmuch as demand beyond, six months would be barred by limitation, we direct the lower authorities to quantify the quantum of demand which would fall within the limitation period. For the same reason, we find no justification to impose penalty upon the appellant. The same is set aside.
14 Both the appeals are disposed of in the above manners.
(Pronounced in the open court)
(MANMOHAN SINGH) (ARCHANA WADHWA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
mk
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