Custom, Excise & Service Tax Tribunal
Tata Metaliks Ltd vs Commissioner Of Central Excise, Pune Ii on 12 January, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPLICATION NO. E/Stay/889/09 IN APPEAL NO. E/617/09 Mum
(Arising out of Order-in-Original No. I/CEX/2009 dated 20.02.2009 passed by the Commissioner of Central Excise, Pune II)
For approval and signature:
Honble Shri. B.S.V. Murthy, Member (Technical)
and
Honble Shri Ashok Jindal, Member (Judicial)
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?
Tata Metaliks Ltd.
:
Appellant
Versus
Commissioner of Central Excise, Pune II
Respondent
Appearance Shri S. Sarkar, Consultant for Appellant Shri K. Lal, SDR for Respondents CORAM:
Shri. B.S.V. Murthy, Member (Technical) Shri. Ashok Jindal, Member (Judicial) Date of Hearing : 12.01.2010 Date of Decision : 12.01.2010 ORDER NO.
Per : B.S.V. Murthy The appellants are engaged in the manufacture of Pig Iron. For the purpose of manufacturing of Pig Iron, they purchase Iron Ore and Metallurgical Coke. For the purpose of using these as basic inputs they are screening the raw materials and during the process of screening, iron ore fines and coke breeze are generated. Both these products are cleared without payment of duty. Department has taken a stand that since the process of screening of Iron Ore and Coke resulting in Iron Ore Fines and Coke Breeze amounts to manufacture and the resultant product namely Iron Ore Fines and Coke Breeze are cleared without payment of duty, it results in situation whereby the appellants are clearing both exempted and dutiable products. Since the appellants do not maintain separate accounts in respect of inputs used in the manufacture of final products and exempted goods, the appellants are required to pay 10% of value of Iron Ore Fines and Coke Breeze as per provisions of Rule 6(3)(b) of CCR 2004.
2. After issue of show cause notice and adjudication process, impugned order has been passed whereby demand for payment of 10% of the value of Iron Ore Fines and Cook Breeze for Rs.1,08,89,012/- had been confirmed against the appellant under the Rule 6 (3)(b) of Cenvat Credit Rules, 2004 with interest as applicable. The demand has been confirmed for the period from April 2005 upto June 2008 by invoking extended period under Section 11AB of Central Excise Act, 1944. Penalty of equal amount demanded has also been imposed under Section 11AC of Central Excise Act, 1944.
3. Heard both sides.
4. Learned Advocate for the appellants submits that both Iron Ore Fines and Cook Breeze arising out of Iron Ore and metallurgical coke are nothing but waste, refuse and not final products. He relies upon several decisions of the Tribunal in support of his contention that Iron Ore Fines and Cook Breeze are nothing but waste material. Following cases are relied upon by the learned Advocate:-
(a) CCE, Raigad vs. Vikram Ispat Ltd. 2007 (211) ELT 60 (Tri. Mum).
(b) Aparat Iron & Steel Pvt. Ltd. vs. CCE, Goa 2007 (208) ELT 255 (Tri.- Mum).
5. Further he also submits that Cenvat Credit cannot be denied by invoking Rule 6 of the Cenvat Credit Rules on the ground that waste has been cleared without payment of duty. He submits that in the case of Rallis India Ltd.. vs. UOI 2009 (233) ELT 301 (Bom), the Honble Bombay High Court held that manufacturer need not maintain separate accounts if some by-products or waste is generated during the manufacturing process and the same is cleared without payment of duty and duty cannot be demanded under provisions of Rule 57CC of erstwhile Central Excise Rules, 1944.
6. Further he also submits that the decision of the Tribunal in the case of Narmada Gelatines Ltd. vs. CCE, Bhopal 2009 (233) ELT 332 (Tri. Del.) wherein the Tribunal has followed the ratio laid down by the Honble Bombay High Court and in this case a portion of period related to the period when the Rule 57CC no longer was available and the demand had been made under the provisions of new Rule 6 of Cenvat Credit Rules, 2002 which has been carried in Cenvat Credit Rules, 2004 also. Further he also relies upon the Central Excise Manual issued by CBEC. He submits that in para 3.7 in Chapter V, the CBEC had stated that Cenvat cannot be denied on the inputs on the ground that portion of the same are contained in by-products or waste which arise during the course of manufacture of final product even though there is no corresponding Rule 57D of erstwhile Central Excise Rules in the new Cenvat credit rules. However, he fairly agrees that the decision of the Honble Bombay High Court in Rallis India Ltd. case, the decision of the Tribunal for Narmada Gelatines Ltd. case and relevant portion of CBEC Manual which are cited before us were not cited before the learned Commissioner when he passed the impugned order.
7. The learned DR on the other hand submits that the learned Advocate for the appellants has extensively argued on merit. However, it is his submission that mere fact that the appellants had merit in his case does not mean that there is no need to pre-deposit under Section 35F of Central Excise Act, 1944. He took us through the provisions of Section 35F of Central Excise Act, 1944 and also the decision of the Honble Supreme Court in the case of Benara Valves Ltd. vs. CCE 2008 (12) S.T.R. 104 (S.C.) and Bhavya Apparels Pvt. Ltd. vs. Union of India 2007 (216) ELT 347 (S.C.) in support of his contention. According to him undue hard ship has to be established before the Tribunal and it is to be proved on case to case basis. He also submits that the appellants have not established undue hardship in this case. He also relies upon the decision in the case of CCE, Bangalore III vs. McDOWELL & CO. ltd. 2005 (186) ELT 145 (Kar.) in support of his contention that the Tribunal has to consider all the issues in detail and justify grant of stay by passing reasoned order to show undue hardship. He submits that in this case no undue hardship has been established. Further, on merit also he submits that the appellant has no case. For this purpose he relied upon the order of the Commissioner where he has stated that the CBEC Circular F.No.528/50/2003-Cus (TU) dated 27th June, 2003, according to which conversion of Metallurgical Coke into Coke Breeze amounts to manufacture. Further he also submits that the process undertaken by the appellant results in a product with distinct name, character and use which is totally different from the raw materials which are used. Therefore he submits that the ingredients of manufacture are existing in this case. He reiterates the observation of the Commissioner that the appellant had not shown, the clearance of these products without payment of duty, in Returns filed by them and only because of investigation this could be detected. He also submitted that the Superintendent who had written a letter to the appellants in this case advising them to pay duty amount with interest so that the matter could be treated as finally closed under Section 11A(2B) of Central Excise Act, 1944 but he has no authority to do so and this could not come in the way of subsequent issue of show cause notice and adjudication process. Therefore, the reliance of the appellant on this letter for the submission that extended period cannot be invoked as futile.
8. We have considered the submissions made by both sides.
9. We have heard both sides extensively on law, facts as well as circumstances of the case. Since the matter was heard extensively, we consider, instead of deciding the stay application, it would be appropriate to take the matter for final decision. While the learned DR on behalf of the Revenue quoted two decisions of Honble Supreme Court and also read the relevant paragraphs to show the meaning of undue hardship, Section 35F and implication of prima facie case etc., we note in addition to all these observations and various aspects of law and prima facie case etc., Honble Supreme Court had also made very important observations which we cannot ignore under any circumstances. We consider it appropriate to re-produce this observation before we proceed further. The observations found in the decision of the Honble Supreme Court in Benara Valves Ltd. case are that Merely because this Court has indicated the principles that does not give a license to the forum / authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens faith in the impartiality of public administration, interim relief can be given. Therefore, we cannot agree with the learned DR that the explanation of prima facie case is not sufficient for the purpose of grant of stay. However, we agree that each case has to be decided on the facts and circumstances and there cannot be general principle applicable to all the cases especially in view of the fact that the Honble Supreme Court has also laid down the same principles. Coming to the case of McDowell & Co. Ltd. cited by the learned DR that case was totally different and the Honble Karnataka High Court was commenting on the decision of the Tribunal because the Tribunal had given relief on the 2nd occasion when there was no change in the situation. Further, the Honble High Court has observed that the order passed is a non-speaking order.
10. Coming to the present case we find that the decisions of the Tribunal in the case of Vikram Ispat Ltd., Aparant Iron & Steel Pvt. Ltd. and Narmada Gelatines Ltd. are all squarely applicable to the facts of the case. In all these these cases the Tribunal was considering whether just because by-product or waste arising during the course of manufacture were cleared without payment of duty, department will be right in invoking the provisions of Rule 6(3)(b) of Central Excise Rules to demand 10% of the value. The decisions of the Tribunal in the case of Vikram Ispat Ltd. and Aparant Iron & Steel Pvt. Ltd. are relating to the products which are the same as one manufactured by the appellants. The decision of the Tribunal in the case of Narmada Gelatines Ltd. follows the decision of the Honble Bombay High Court whereby it has been held that by-product or waste arising during the course of manufacture are cleared without payment of duty, provisions of erstwhile Central Excise Rules, 1944 corresponding Rule 6(3) (b) of Cenvat Credit Rules, 2002 are not attracted. However, we find that none of the decisions was cited before the learned Commissioner nor were considered by him while passing the order. Further guidelines issued by the Board in CBEC Manual 3.7 have also not been considered by the Commissioner. Therefore, we would like the learned Commissioner to consider all these different decisions cited before us and the instructions issued by CBEC on the subject and submissions which may be put forth by the appellants when the matter is taken up for fresh adjudication. Therefore, we consider it appropriate to remand the matter to the original adjudicating authority.
11. Further we also like to say, in view of the instructions in the CBEC Manual and the decisions cited by the learned Advocate before us that the matter is one that involves interpretation of law and interpretation of facts and application of the same in the light of various decisions. Therefore it cannot be said that the appellants had intention to evade duty by suppressing the facts or mis-declaration. Therefore, on this ground we hold that the extended period cannot be invoked in this case and penalty is also not imposable. The matter is remanded to the original adjudicating authority for final decision on merits.
(Pronounced in open Court) (Ashok Jindal) Member (Judicial) (B.S.V. Murthy) Member (Technical) nsk 8