Custom, Excise & Service Tax Tribunal
Hindustan Petroleum Corporation Ltd vs Commissioner Of Central Excise, Mumbai on 24 February, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.E/1052/2007 (Arising out of Order-in-Original No.03/MS(03)/COMMR/RGD/07-08 dated 11/04/2007 dated passed by Commissioner of Central Excise, Raigad Commissionerate, Navi Mumbai) For approval and signature: Honble Mr. M.Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, 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 : No 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?
====================================================== Hindustan Petroleum Corporation Ltd., Appellant Vs. Commissioner of Central Excise, Mumbai Respondent Appearance:
Shri.Bharat Raichandani, Advocate for appellant Shri.R.K. Mahajan, Jt. CDR, for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical) Date of Hearing : 24/02/2011 Date of Decision : 24/02/2011 ORDER NO Per: M.V. Ravindran
1. This appeal is directed against the order-in-original No.03/MS(03)/COMMR/RGD/07-08 dated 11/04/2007.
2. The relevant fact that arises for consideration is the appellant herein used to clear Naptha under CT-2 certificate to M/s.Rashtriya Chemical Fertilizers Ltd., (RCF). During the period 28/02/99 to 05/05/99, said clearances were done under CT-2 certificate No.1/98-99 dated 17/07/98, which was issued by the office of the Superintendent in terms of Notification No.5/98-CE dated 02/06/98. Revenue authorities were of the view that since the said notification was rescinded with effect from 28/02/99 and the certificate having been issued under the said notification, the clearances effected by the appellants are liable to duty. Show-cause notice was issued for demand of Central Excise duty along with proposition for imposition of penalty and recovery of interest. The appellants contested the show-cause notice before the adjudicating authority. The adjudicating authority after following the due course of law confirmed the demand imposed penalties and also ordered for interest. Aggrieved by such an order, the appellants are before us.
3. The Ld. Counsel, would draw our attention to the show-cause notice and the allegation in the show-cause notice. He would then draw our attention to the adjudicating authoritys order. It is his submission that the allegation in the show-cause notice are of a specific nature i.e. the appellants are ineligible for benefit of exemption due to rescinding of notification No.5/98-CE, while the adjudicating authority has gone beyond the show-cause notice for confirming the demand. It is his submission that notification No.5/98 though rescinded, the Central Government issued another notification No.5/99-CE, which continued the same exemption. It is his submission that if at all any infractions is there, it is in only of technical nature. He would submit that decision of the Honble Supreme Court in the case of CC Vs. Toyo Engineering India Ltd., 2006 (201) ELT 513 (SC) would squarely cover the issue as regards the confirmation of demand traverses beyond the allegations in the show-cause notice. It is his submission that even if any duty is payable, the said duty liability arises on M/s.RCF, who had procured the goods from them under CT-2 certificate. For this proposition he would rely upon the judgement and the order of the Tribunal in the case of IBB Co. Ltd., Vs. CC 1999 (110) ELT 960 (Tri).
4. The Ld. JCDR would reiterate the findings of the adjudicating authority.
5. We have considered the submissions made at length by both sides and perused the records.
6. The issue involved in this case is whether the adjudicating authority has traversed beyond the allegations made in the show-cause notice, for confirmation of demand. The second issue that arise for consideration is whether the appellant herein is liable to discharge the duty liability on the goods cleared by them by availing benefit of exemption notification, which mandates following the procedure as laid down under Chapter X procedure.
7. We find that the show-cause notice issued to the assessee/appellants allegations read as under:-
The assessee have cleared goods 31676.274 MT of Naptha falling under Chapter 27 to M/s.RCF , Alibag during the period from 28/02/99 to 05/05/99 against CT-2 certificate No.1/98-99 dated 17/07/98 was issued by this office in terms of notification No.5/98-CE dated 2/06/98. Since the said notification was rescinded by Notification No.14/99-CE dated 28/02/99 the Notification No.5/98-CE dated 2/6/98 is rescinded by notification No.14/99-CE dated 28/2/99 the CT-2 certificate automatically become invalid.
8. As against the above said allegations, the adjudicating authority has, while confirming the demand has recorded the following findings:-
As far as the first condition is concerned, I find it necessary to mention the details of the case booked by the Directorate General of Central Excise Intelligence (DGCEI), Zonal Unit, Mumbai against M/s.RCF Ltd., Thal, consignee of assessee. The gist of the case is that M/s.RCF Ltd., had been procuring the Naptha at Nil rte of duty under the pretext that the said is required for manufacture of fertilizers and ammonia During the investigation by the DGCEI it was revealed that M/s.RCF had claimed the above referred exemption incorrectly to the extent of steam generated by burning Naptha and consumed in Turbo Generator for generation of electricity, chemical group plant for manufacturing organic chemicals and in the heavy water plant. It was also noticed by the DGCEI that M/s.RCF has suppressed and mis-declared to the department while filing an application for CT-2 certificate that the Naptha procured under exemption would be used only in the manufacture of Fertilizer and ammonia. The show cause notice issued to the assessee by the DGCEI was adjudicated by the Commissioner, Central Excise, Mumbai-VII Commissionerate and on appeal by the party the Tribunal has remanded the case for re-quantification, if any and to decide the case on merit.
9. It can be seen from the above reproduced finding that the adjudicating authority has traversed beyond the show-cause notice for the confirmation of demand. We find strong force in the contention raised by the Ld. Counsel. The apex Courts judgement in the case of Toyo Engineering India Ltd., squarely covers the issue of this point, in favour of the assessee. We also find that the apex Court in the case of Ballarpur Industries Ltd., 2007 (215) ELT 489 (SC) has again reiterated the said ratio.
10. On merits, we find that there is no dispute that the appellants had cleared Naptha from their premises based upon the CT-2 certificate issued by the Range Superintendent of RCF. It is seen from the said notification that exemption can be availed by the procurer of the raw material provided he follows the procedures laid down under Chapter X of the Central Excise Rules, 1944. On bare perusal of the said Chapter X procedure, we find that if any liability to duty, due to the shortage or wrong consumption or wrong availment of the benefit of notification arises, the consignee (in this case RCF) is liable to discharge the duty liability. As already re-produced herein above, the adjudicating authority has clearly recorded that M/s.RCF has already been issued the show-cause notice for demand of differential duty. If that be so, the duty cannot be demanded again from the appellant herein.
11. Accordingly, in view of the foregoing, we find that the impugned order is not correct and is liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed.
(Pronounced in Court) (P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial) pj 1 2