Customs, Excise and Gold Tribunal - Tamil Nadu
Master Recording Co. vs C.C.E., Chennai 1 on 29 May, 2001
ORDER
Shri S.L. Peeran
1.
1. The impugned order is challenged by which duty demand of Rs. 5,15,529/- has been confirmed under Rule 9(2) read with sub-section (1) of Section 11A of the CE Act, 1944. A penalty of Rs. 50,000/- has also been imposed on the appellants under Rule 173Q of the CE Rules, under the same order.
2. The appellants are manufacturers of sound recorded magnetic tape in pan cake form falling under Chapter sub heading 8524.21 of the CET. The department initiated proceedings on the ground that they are engaged in the manufacture or sound recorded (audio) cassettes (I) by recording the sound on the unrecorded audio cassettes and (ii) recording the sound on the unrecorded audio magnetic tapes in the form of pan cakes to pan cakes and then converting recorded audio pancake into sound recorded cassettes by feeding the said recorded tape into C-D (blank cassettes shell). The appellants contended that such activity does not amount to manufacture and no duty can be demanded. Besides, they contended that they are entitled to benefit of Notification No. 87/89 dated 1.3.89 which was in force up to 28.2.93 and further continued by another Notification No. 57/93 dated 20.3.93. The period in dispute is 91-92 and 92-93. However, the then Collector (now Commissioner) over ruled their contention that there is no manufacturing activity and held that the recording done by the appellants on the magnetic tape in the pan cake form constitute manufacture and they are liable to duty. He has examined the Notification No. 74/90 dated 20.3.90 and held that the same is not applicable to the case in question.
3. Learned Counsel for the appellants contends that the order is vitiated for the reason that the lower authority did not consider the Notification which were in force as cited supra and went on to determine a wrong Notification in the matter. He contends that the lower authority did not consider the plea that process undertaken by the appellants did not amount to manufacture in view of the judgement of the Hon'ble Supreme Court in the case of Prabhat Sound Studio reported in 1996 (88) ELT 635 (sc). He has further pointed out that a corrigendum was issued by the Commissioner dated 21.6.96 by which he noted that the Notification NO. 74/90 dated 20.3.90 referred to in the order can be read as 87/89 dated 1.3.89. The learned Counsel submits that such corrigendum is not legal and proper for the reason that Notification NO. 87/89 dated 1.3.89 was never considered and what was considered was only Notification No. 74/90 dated 20.3.90 and therefore, it cannot be considered as corrigendum and as such the impugned order vitiates on this ground itself. He further pointed out that Notification No. 87/89 dated 1.3.89 clearly applies to the facts of the case. He further contends that the demands are barred by time as the appellants were under the bona fide belief that the process undertaken by them did not amount to manufacture and therefore, the longer period cannot be invoked. In support of his submission he submits that there are a large number of judgment in favour of the appellants. He further contends that the issue has not been properly gone into by the Commissioner and hence the order is required to be set aside and the appeal allowed.
4. Shri K. Kannan, learned DR defended the order and submitted that although Notification 74/90 dated 20.3.90 was considered it has got pari materia applicability to Notification No. 87/89 dated 1.3.89. Therefore, the corrigendum, issued can be said to be in order. He further submitted that the demands are not barred by time as the appellants have cleared the goods without payment of duty.
5. In counter the learned Counsel submitted that the Notification itself shows that both the Notification are independently worded. Corrigendum issued is not sustainable as the Notification are not pari materia.
6. On consideration of the submissions made, and on perusal of the records, we find lot of force in the contention of the learned Counsel for the appellants. The Commissioner has committed an error in applying a wrong Notification No. 74/90 dated 20.3.90 instead of Notification No. 87/83 dated 1.3.87 which was in force during the period in question. The plea taken by the learned DR that corrigendum issued is sustainable does not have force for the reason that both the Notifications are independently worded and a corrigendum cannot rectify an independent Notification. By a corrigendum, only certain clarifications or typographical errors can be rectified and a different Notification cannot be replaced. In view of this, the whole order gets vitiated. Therefore, the order is set aside and the matter remanded to the Commissioner to reconsider the plea that Notification No. 83/87 applies to the facts of the present case and the Commissioner has to decide the case on merits. We are not recording any finding on merits. The aspect pertaining to time bar shall also be re-considered by him after granting opportunity of hearing to the appellants in terms of law. Thus the appeal is allowed by remand for de novo consideration.
(Dictated and pronounced in open Court)