Custom, Excise & Service Tax Tribunal
M/S. Indian Seamless Steel & Alloys Ltd vs Commissioner Of Central Excise, Pune I on 19 October, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/3435/01 (Arising out of Order-in-Original No. 19/CEX/2001 dated 07.09.2001 passed by Commissioner of Central Excise, Pune I) For approval and signature: Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. M Veeraiyan, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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M/s. Indian Seamless Steel & Alloys Ltd., Appellant
Vs.
Commissioner of Central Excise, Pune I Respondent
Appearance:
Shri M.S. Murthy, Advocate for appellant
Shri W.L. Hangshing, JCDR for Respondent
CORAM:
Honble Mr. P.G. Chacko, Member (Judicial)
Honble Mr. M Veeraiyan, Member (Technical)
Date of Hearing: 19.10.10
Date of Decision: 19.10.10
ORDER NO
Per : P.G. Chacko
This appeal filed by the assessee is against the Commissioners order demanding duty of Rs.38,33,869/- for the period from 19.11.1995 to 11.04.2000 with interest on duty @ 24% per annum and also imposing a penalty of Rs.5 lakhs. The impugned order was passed in adjudication of a show-cause notice issued on 24.11.2000 which invoked the proviso to Section 11A(1) of the Central Excise Act on the ground that the assessee had wilfully suppressed the material facts with intention to evade payment of Central Excise duty.
2. The brief facts of the case are as follows. The appellant was engaged in the manufacture of bars/billets falling under Chapter 72 of the CETA Schedule during the material period. During the said period, some of the excisable goods which had been cleared on payment of duty were returned by the customers under Rule 173H of the Central Excise Rules, 1944 and, upon receipt of such goods, the appellant gave D-3 intimation to the Department and, subsequently, cleared fresh goods without payment of duty after undertaking certain processes including melting in furnace. These clearances were made in terms of Rule 173H ibid. Later on, after investigations, the department issued a show-cause notice, wherein it was alleged that the processes undertaken by the appellant on the goods returned by their customers amounted to fresh manufacture and therefore, they ought to have pay duty on the goods so manufactured. It was also alleged that the factum of manufacture of fresh goods was suppressed by the appellant with intention to evade payment of duty. These and other allegations in the show-cause notice were based mainly on statements of the functionaries of the appellant-company and also of some buyers. The show-cause notice also proposed to impose penalty on the appellant under Section 11AC of the Central Excise Act. In their reply to this notice, the appellant contested the demand of duty on merits and also on the ground of limitation. It was in adjudication of this dispute that the learned Commissioner passed the impugned order.
3. After examining the records and hearing both sides, we note that the appellant has not been able to successfully contest the demand of duty on merits. The learned Counsel has made an endeavour to show that the duty-paid goods returned by the customers were re-melted in the furnace and identical goods manufactured out of this process were cleared without payment of duty as permitted under Rule 173H. The learned Counsel has claimed support from a decision of the Tribunal, to his plea that melting of the returned goods with fresh material can also be accepted as coming within the scope of Rule 173H. He has also relied on certain other decisions of this Tribunal in support of his argument that Rule 173H would not be inapplicable by mere reason of the fact that the entire process of manufacture is repeated on the defective goods returned by the customer. The decisions cited by the learned Counsel are CCE Indore vs. HIM Technoforge Ltd. 2009 (248) ELT 587 (Tri. Del); CCE & Cus. Pune vs. Sterlite Industries (I) Ltd. 1999 9107) ELT 73 (Tri.); and Lustre Print Media Ltd. vs. Collector of Central Excise, Meerut 2000 (119) ELT 662 (Tri.). These decisions have been relied on in the context of the plea made by the Counsel that the process undertaken by the appellant on the goods returned by their customers did not amount to manufacture. The learned Counsel has also referred to a letter dated 18.4.1995 submitted by the appellant to the Central Excise Superintendent, copy of which is available on record, which indicates that the letter was received by an Inspector of Central Excise on 18.4.1995 itself. Referring to the contents of this letter, the learned Counsel submits that the modus operandi in relation to the duty-paid goods returned by the customers under Rule 173H was clearly explained to the Department and, therefore, the Department had full information of all material facts. Nothing was concealed from the Department. Therefore the allegation of suppression of facts (with intention to evade payment of duty) is not sustainable and, consequently, the entire demand of duty is time-barred. It is, further, pointed out that the learned Commissioner himself has found that there is no reason to invoke Section 11AC of the Central Excise Act to impose a penalty on the appellant. If that be so, Counsel argues, there was no reason to invoke the extended period of limitation prescribed under the proviso to Section 11A(1) of the Act. Contextually, it is also submitted that this plea by the assessee was not considered by the Commissioner.
4. The learned JCDR has reiterated the findings of the adjudicating authority. He has particularly pointed out that the crucial facts were admitted by the appellant. It is submitted that Shri R.P.Zanpure, Asst.Manager (Works & Accounts) and Shri U.S.Pole, Manager (Materials & Quality) of the appellant-company clearly admitted in their statements under Section 14 of the Central Excise Act that, in some cases, replacement of goods returned by the customers had been sent without payment of duty and, in other cases, fresh goods of the same quantity as that of the returned goods had been sent to the original party, again, without payment of duty. It is submitted that these confessional statements were never retracted. The learned JCDR further submits that the above facts, admitted by the appellants, has been further established by the adjudicating authority by showing that newly manufactured goods bearing new Heat Nos. were cleared without payment of duty. The point sought to be made is that there was no nexus between newly manufactured goods which were cleared without payment of duty and the original duty-paid goods returned by the customers. The learned JCDR has, however, acknowledged the fact that the assessees plea of limitation was not considered by the learned Commissioner.
5. After considering the submissions, we find that the crucial facts relating to re-manufacture of goods followed by clearance without payment of duty by the appellant claiming undue benefit of Rule 173H were admitted by the appellant as seen from the statement of their functionaries and, therefore, the Revenues case for recovery of duty on re-manufactured goods cleared during the period of dispute stands established. It was clearly admitted that, in some cases, replacements were done for the goods returned by the customers and, that too, without payment of duty even after giving D-3 intimation to the Department. It was also admitted that, in some cases, fresh material of the same quantity as that of the goods returned by the customers was sent to the same party where the rejected material was declared as completely rejected and of no use. These are admissions which were never retracted. The Revenues case is that the appellant re-manufactured goods out of the materials returned by buyers by subjecting the same to the entire process of manufacture, and cleared the same without payment of duty by claiming undue benefit of Rule 173H. The appellant, therefore, cannot contest the demand of duty on merits.
6. We have found on record that the assessee was consistently contesting the demand on the ground of limitation as well. Obviously, this plea was not considered by the learned Commissioner. The learned Counsel has relied on a letter dated 18.4.1995 to show that the relevant facts were disclosed to the Department through that letter and, therefore, nothing was suppressed with intention to evade payment of duty. But this letter was not referred to by the appellant at any stage during the course of investigation or adjudication. It has been cited before the Tribunal for the first time. However, as the plea of limitation was not considered by the learned Commissioner, it is open to him to examine this document in the context of considering the said plea. The learned Counsel has also submitted that, where Section 11AC was not applicable, the proviso to Section 11A(1) of the Act was also not applicable. Again, it is open to the learned Commissioner to consider this plea.
7. The learned Counsel has pointed out that interest on duty has been demanded from 1995 under Section 11AB of the Central Excise Act though this provision of law was not in existence prior to 28.9.1996. The learned Commissioner may consider this plea as well.
8. In the result, while upholding the demand of duty on merits, we set aside the same on other grounds and request the learned Commissioner to consider the afore-said contentions (including the plea of limitation) of the assessee and pass fresh order after giving them a reasonable opportunity of being heard. The appeal stands disposed of.
(Pronounced in Court) (M Veeraiyan) Member (Technical) (P.G. Chacko) Member (Judicial) nsk 1 7