Custom, Excise & Service Tax Tribunal
) Shiva Kashi Metals & Ferro Alloys vs Commissioner Of Central Excise, ... on 15 December, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
1-2) Appeal Nos.E/70741 & 70742/13
(Arising out of Order-in-Original No.CCE/BBSR-I/08/2013 dated 23.03.2013 passed by the Commissioner of Central Excise, Customs & Service Tax, BBSR-I.)
1) Shiva Kashi Metals & Ferro Alloys
2) Shri Ajodhya Gupta
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise, Customs & Service Tax, BBSR-I
Respondent (s)
Appearance:
Shri B.N.Chattopadhyay, Consultant for the Appellant (s) Shri K.Choudhary, Supdt.(AR) for the Revenue CORAM:
HONBLE SHRI JUSTICE (DR.) SATISH CHANDRA, PRESIDENT HONBLE SHRI ASHOK K. ARYA, MEMBER(TECHNICAL) Date of Hearing :- 15.12.2016 Date of Pronouncement :- 16.12.2016 ORDER NO.FO/A/76297-76298/2016 Per Shri Ashok K. Arya.
The Appellants are in Appeal against Order-in-Original No.CCE/BBSR-I/08/2013 dated 23.03.2013 passed by the Commissioner of Central Excise, Customs & Service Tax, BBSR-I, whereunder duty along with interest has been confirmed and equivalent penalty has been imposed on the main Appellant namely M/s. Shiva Kashi Metals & Ferro Alloys, Cuttock.
2. The main issue in the subject Appeals is whether activities carried out by the main Appellant amounts to manufacture or not.
2.1 Briefly stated the facts of the case are that assessee Appellant procured/purchased High Carbon Ferro Chrome (HCFC) Slag. They subjected the same to crushing, grinding, gravity separation by jigging in water and the process repeated till the metals with required purity is obtained. The assessee Appellant contends that the metal has already been manufactured in the furnace and they are simply separating metals from the Slag where it is embedded. The assessee states that they did not manufacture High Carbon Ferro Chrome (HCFC) Slag in their factory. The raw material used was metal embedded Slag and finished product is also metal - High Carbon Ferro Chrome (HCFC) and thus no new or distinct commodity comes into existence after processing of the raw material. The period of dispute is 12.06.2009 to 12.10.2010. But the Revenue did not accept the plea of the Appellant and by the impugned order levied the duty along with interest and penalties. Being aggrieved, the Appellant-assessee knocked the door of the Tribunal.
3. The Appellants have been represented by Shri B.N.Chattopadhyay, ld.Consultant and Revenue has been represented by Shri K.Choudhary, Supdt.(AR).
4. Ld.Consultant based on the Appeal Memorandum and the synopsis inter alia submits as under :-
(i) The dispute in the present case is whether the activities of separation of High Carbon Ferro Chrome (HCFC) from Slag amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944. The activities with regard to separation of Ferro Chrome from Slag has been mentioned in the Show Cause Notice as under:-
The said recovery process of High Carbon Ferro Chrome from Ferro Chrome Slag and Chips is as follows. Initially the slag is crushed in the crushing machine and then the material is screened by the screening machine in order to get various sizes. Then the metal is recovered in gravity separation process and put in to jigging tubes in the water. The metal being heavier in gravity settled downs and the slag form a layer on the top. The slag is then removed. This manufacturing process is repeated till the required purity of metal is attained. The prime metal i.e. H.C.F.C. recovered is dried and after drying the metal is packed in to bags and sold as H.C.F.C.
(ii) The main contention in the present proceeding is that whether the processes of separation of Ferro Chrome from Slag amounts to manufacture. The appellant states that Ferro Chrome has already been manufactured and it is contained in the slag. The appellant did not manufacture any Ferro Chrome in their godown. They only undertook the process of separation of Ferro Chrome from Slag. Such process cannot be treated to be manufacture in as much as no Ferro Chrome had been manufactured by the appellant.
(iii) The appellant submits that prior to 1.3.2011 Note 4 of Chapter 26 was not there. Chapter Note 4 states that in relation to products of the Chapter, process of converting ores into concentrates amounts to manufacture. The period is prior to introduction of Chapter Note 4 of Chapter 26 of CETA.
(iv) The Appellant submits that since the process undertaken by them are not manufacturing process and no new product comes in, they cannot be treated as manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944.
(v) The Appellant relies on a number of decisions of the Honble Supreme Court and different Benches of the Honble Tribunal given below:-
(a) Hyderabad Industries Ltd. v. UOI [1995 (78) ELT 641(SC)]
(b) Indian Rare Earths Ltd. v. CCE, BBSR-I [2002 (139) ELT 352 (Tri.-Kolkata)]
(c) CCE, BBSR-I v. Indian Rare Earths Ltd.
[2009 (241) ELT A70(SC)]
(d) CC & CE, JSR & BBSR-II v. Steel Authority of India Ltd.
[2003 (154) ELT 65 (Tri-Kolkata)]
(e) CC & CE, JSR & BBSR-II v. Steel Authority of India Ltd.
[2012 (283) ELT A112(SC)]
(f) Rina Metal Syndicate v. CCE, Rajkot [2001 (130) ELT 885 (Tri.-Del.)]
(g) Kerala Minerals & Metals Ltd. v. CCE, Kochi [2007 (214) ELT 556 (Tri.-Bang.)]
5. The ld.AR for the Revenue reiterates the findings given in the impugned order and in support relied on the following decisions:-
(a) S.N.Sunderson (Minerals) Ltd. v. Supdt.(Prev.), Central Ex. [2002 (143) ELT 483 (SC)]
(b) S.N.Sunderson (Minerals) Ltd. v. Supdt.(Prev.), Central Ex.
(1995 (75) ELT 273 (M.P.)]
6. After carefully considering the facts on record and the submissions of both sides and the case laws cited, it appears that the assessee Appellant is engaged in purchase of High Carbon Ferro Chrome (HCFC) Slag and making use of physical processes like grinding, crushing, washing, separation and finally bringing out High Carbon Ferro Chrome (HCFC). The assessees contention is that there is no manufacturing involved and the activities undertaken by them are not covered under the definition of Section 2(f) of Central Excise Act, 1944; therefore no Central Excise duty can be charged on their activities, when they bring out HCFC from High Carbon Ferro Chrome (HCFC) Slag.
6.1 Department is treating the whole activity of the assessee Appellant as manufacturing and has made out a case for charging Central Excise duty on the assessees operations and clearance of High Carbon Ferro Chrome (HCFC). The Revenue has also charged the Appellants with clandestine manufacture and removal of the impugned goods namely High Carbon Ferro Chrome (HCFC).
6.2 There is further contention by the assessee that the Revenue has added Note 4 to Chapter 26 of Central Excise Tariff which is reproduced below:-
CHAPTER 26 Ores, Slag and Ash Notes:
1. .
2. .
3.
4. In relation to products of this chapter, the process of converting ores into concentrates shall amount to manufacture.
The assessees contention is that the Chapter Note was added later i.e. on 01.03.2011 and period involved in their case is prior to 01.03.2011 which is 12.6.2009 to 12.10.2010.
7. The main point here is that the raw material namely High Carbon Ferro Chrome (HCFC) Slag is classifiable under different Chapter and whereas High Carbon Ferro Chrome (HCFC), which is the outcome product of the assessee Appellant is in different Chapter Heading of Central Excise Tariff. The issue is whether by the processes undertaken by the assessee, a new identifiable, marketable product comes into existence. When the HCFC Slag is an altogether different product, which is subjected to different processes like crushing, grinding, watering etc. and resultant product is only High Carbon Ferro Chrome (HCFC), which has got separate existence in relation to its raw material namely High Carbon Ferro Chrome (HCFC) and is an identifiable product, having independent marketability, then the yardstick of definition of manufacturing given in Section 2(f) of the Central Excise Act, 1944 is satisfied. If it is so, the existence or non-existence of Note 4 to Chapter 26 of Central Excise Tariff will not make any difference to the liability of the Central Excise duty for the present facts. In other words there would be liability on the assessee Appellant to pay Central Excise duty on their product, HCFC, which is certainly a different identifiable and marketable product. Further following the decision of Honble M.P.High Court in the case of S.N.Sunderson (Minerals) Ltd. (supra) which on manufacturing has been endorsed by the Honble Supreme Court in the case of S.N.Sunderson (Minerals) Ltd. (supra), the duty liability on the assessee Appellant is hereby confirmed.
7.1 The case laws cited by the assessee Appellant in support of their claim that their activities do not amount to manufacture are not applicable to the present facts.
7.2 From the facts on record, it is clear that subject process has not been free from doubt regarding its coverage under the definition of manufacturing under Section 2(f) of the Central Excise Act, 1944. Considering this fact of doubt the Revenue cannot charge the Appellants with the liability of Central Excise duty for the period beyond 1(one) year from the date of show cause notice. In other words, the Revenue cannot invoke extended period clause for charging duty from the assessee Appellant beyond the period of 1(one) year from the date of show cause notice. Consequently the liability of duty along with interest against the assessee Appellant is confirmed only for 1(one) year. However, as mentioned above that matter was not free from doubt, the non-payment of duty of Central Excise by the assessee is a bona fide mistake and there cannot be imposition of any penalty on the Noticees in this regard. Therefore all the penalties imposed on the Noticee Appellants are hereby set aside.
8. In the light of above findings, the matter is remanded to the original authority namely Commissioner of Central Excise, Customs & Service Tax, BBSR-I for quantifying the liability of duty of Central Excise against the Appellant assessee for the period of 1(one) year, which is to be determined within a period of 4(four) months from the receipt of this order but after providing opportunity of being heard to the Appellant.
9. In the result the Appeal is partly allowed by way of remand as stated above.
(Pronounced in the open court on 16.12.2016.)
SD/ SD/
(ASHOK K. ARYA) (JUSTICE DR. SATISH CHANDRA)
MEMBER(TECHNICAL) PRESIDENT
sm
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Appeal Nos.E/70741 & 70742/13