Custom, Excise & Service Tax Tribunal
M/S. Radiant Industries vs Commissioner Of Central Excise, ... on 28 March, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1423,1424,1425/2009-Mum. (Arising out of Order-in-Original No.06-07/klg/Th-II/2009 dated 31/8/2009 passed by the Commissioner of Central Excise, Thane-II ) For approval and signature: Honble Mr. S.S. Kang, Vice President Honble Mr. Sahab Singh, 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. Radiant Industries
Shri Khubilal Jain
Shri Dinesh G. Sanghvi
:
Appellant
VS
Commissioner of Central Excise, Thane-II
:
Respondent
Appearance
Shri S.P. Mathew, Advocate for Appellant
Shri P.N. Das, Commissioner (A.R) for respondent
CORAM:
Mr. S.S. Kang, Vice President
Mr. Sahab Singh, Member (Technical)
Date of hearing : 28/03/2012
Date of Pronouncement :
ORDER NO.
Per : Sahab Singh
These three appeals have been filed by M/s. Radiant Industries (hereinafter referred to as Appellant No.1) Shri Khubilal Jain and Dinesh Sanghvi against the Order-in-Original No.06/07/KLG/TH-II/2009 dt. 31.8.2009.
2. The brief facts of the case are that Central Excise Officers of Thane-II Commissionerate visited the factory and it was found that finished goods namely Copper Patta of various sizes weighing 2763.300 kgs., Copper Patti of various seizes weighing 683.800 kgs., Copper rods of various sizes weighing 1210.700 kgs. and the copper scrap weighing 198 kgs. all items totally valued at Rs.19,32,420/- as detailed in Annexure A to the panchanama dt. 9.9.2006 and 10.9.2006 were lying unaccounted in the premises of the said factory. Further, it was also noticed by the officers that unaccounted raw material i.e. Copper Flats of various sizes totally weighing 11830.100 kgs., Copper wire in the loose condition weighing 240.00 kgs. and Copper Flat in loose condition weighing 556.300 kgs. totally valued at Rs. 45,45,504/- as detailed in the panchanama was lying in the factory. The aforesaid unaccounted finished goods totally weighing at 4855.800 kgs. and valued at 19,32,420/- and raw material totally weighing at 12,626.400 kgs. valued at Rs.45,45,504/- were detained by the officers under the panchanama dt. 9.9.2006 and 10.9.2006 and handed over to Shri Harikesh Doodhnath, Watchmen/incharge of Appellant No.1 under supratnama dt. 10.9.2006 . These goods were later placed under seizure vide panchanama dt. 13.10.2006. During the visit records including the private records maintained in factory premises were also resumed under panchanama dt. 10.9.2006. During the investigation the statements of Shri Harikesh Doodhnath Ram, incharge of Appellant No. 1. Dinesh G. Sanghvi, Manager of Appellant No.1 Shri Khubilal Jain partner of the Appellant No.1 and Shri Arvind Khubilal Jain and Shri Bhavin Khubilal Jain and other partners of the Appellant No.1. Shri Abdul Wahid Khan, Proprietor of M/s. Palghar Golden Roadlines. Shri Thomas K. David, Manager of M/s. Andhra Bombay Carriers, Bhiwandi, Shri K.R. Ganesh, partner of M/s. Andhra Bombay Carriers. Shri Lal Singh Ahada partner of M/s. Siddhivinayak Transport, Palghar were recorded under Section 14 of the Central Excise Act 1944. In addition statement of Shri Pawan Kumar Mehta. Proprietor of M/s. Rajratan Metal, Secunderabad, Shri Jainender Jain, Proprietor of M/s. S.S. Enterprises, Secunderabad, Shri Manohar Phulchandji Mal, Proprietor of M/s. Mahalaxmi Metals and Shri Rishi M Jain Jain Authorized Representative of M/s. Niel Metals, Shri Manoj Kumr Jain, Manager of Manoj Metal Corporation and Shri Sardarmal Roopchandji Jain, Proprietor of Manoj Metal Corporation were recorded under Section 14 of Central Excise Act, 1944 regarding purchases made by them from Maharashtra. On the basis of the scrutiny of documents recovered from the factory as well as on the basis of the various statements of various persons working in the factory as well as of the persons who transported to the goods and including some of the purchasers, Department took a view that appellant was manufacturing the excisable goods and clearing the same clandestinely without payment of duty without obtaining Central Excise licence. Accordingly, the show cause notice dt. 8.3.2007 was issued to Appellant No.1. proposing confiscation of the finished excisable goods valued at Rs. 19,32,420/- and raw materials total valued at Rs. 45,45,504/- seized under panchanama dt.13.10.2006. It was also proposed to impose penalty on all the appellants. Thereafter another show cause notice dt. 27.1.2009 was issued to the appellant for demanding Central Excise duty totally amounting to Rs.1,11,54,688/- on the goods allegedly cleared clandestinely during the period 11.4.2005 to 7.9.2006 and invoking the penal provisions against all the appellants. The show cause notices were adjudicated by the Commissioner vide the impugned order under which the finished goods and raw materials seized under panchanama dt. 13.10.2006 were confiscated, duty of Rs.1,11,54,688/- was confirmed on the clandestinely cleared goods along with interest and the penalties were imposed on the appellants. Against the impugned order the appellants are in appeal before this Tribunal.
2. The learned Advocate appearing for the appellants submitted that the findings of the Commissioner in para 80 of the impugned order are factually incorrect and erroneous as neither of the witnesses named in the above para have stated that appellants were engaged in drawing of copper flats and rods into copper patta/patti and wires. Infact these witnesses have stated that the copper patta/patti (copper flats) were received as raw material and after drawing them the finished goods cleared were copper patta/patti. Moreover, even the investigating officers also considered both raw material and finished product as copper patta/pattis only. Similarly, the transporter also in the statements have referred to raw material and finished goods as copper patta/patti. Therefore, the contention of the Department that appellants were engaged in drawing of patta/patties and wires is not sustainable. He further contended that the Commissioner has taken a view that copper patta/patties are different and distinct commodities from the copper flats, which is erroneous and unsustainable inasmuch as there was no such allegation in the show cause notice and the Commissioner has gone beyond the show cause notice while adjudicating the case and appellants were not able to meet this allegation which is made for the first time in the order-in-original. He also relied upon the decision of CCE Chandigarh Vs. Steel Strips Ltd. reported in 1995 (77) ELT 248 (S.C.) in support of his contention the drawing of flat into patta/patti does not amount to manufacture. He further continued to argue that Commissioners findings in para 81 of the order are also erroneous in which the Commissioner has held that appellants have manufactured wire by drawing from the copper rods. On the other hand, the Panchanama dt. 10.9.2006 have shown the seizure of copper rods and has shown as finished goods and even the show cause notice copper rods in para 2 have mentioned as finished goods and not the raw material. While ordering the confiscation in para 93 of the order-in-original the copper rods are again considered to be finished goods. He also submitted that in the entire show-cause notice there is no allegation that appellants were manufacturing wire by drawing it from the copper rods. He submitted that it is for the department to establish that the activity undertaken by the appellants amounted to manufacture. There is no such allegation even in both the show cause notices. He also relied upon the definition mentioned in the Section Notes and Chapter Notes of Chapter 74 of the Central Excise Tariff and submitted that by process of drawing of copper flats into patta/pattis no new commodity comes into existence. While drawing patta/pattis from the copper flats only the thickness and width changes and product continues to fall under same sub-headings of Chapter 74 of the Central Excise Act. Therefore, by no stretch of imagination drawing of patta/patti from copper flats amounts to manufacture. He also submitted that goods other than patta/patti are covered under SSI exemption notification The counsel also contended that they are also engaged in the trading activity and the copper rods and wires were the trading items and not manufactured by them.
3. The learned Commissioner (A.R.) appearing for the Revenue reiterated the findings of the adjudicating authority and submitted that on the basis of the statement of Shri Harikesh Doodhnath Ram and Shri Dinesh G. Sanghvi it was held by the Commissioner that the appellant was engaged in drawing of copper flats and rods into copper patta-patti and wires and he referred to the para 82 of the adjudication order wherein the Commissioner has discussed the activity of drawing into copper patta-patti and wires as manufacturing activity and it was held by the Commissioner that patta-patti and wires are distinct commodity which is capable of being sold in the market and therefore the activity carried out by the appellant amounts to manufacture. Since the goods were manufactured by them it was legal obligation on them to get registered with the Central Excise Department and follow the Central Excise procedure. Regarding the contention of the appellant that they were engaged in the trading activity, he submitted that this contention has been discussed by the Commissioner in para 83 of the order and has been held unacceptable in view of the absence of any documentary evidence. Therefore, since the appellants were manufacturing the goods without obtaining Central Excise licence and clearing the same clandestinely without payment of duty, the Commissioner has rightly confirmed the demand and imposed the penalty on the appellant.
4. After hearing both the sides, we find that in this case two show-cause notices have been issued. One show cause notice is in respect of the seized finished goods as well as raw material and the second show cause notice is for demanding duty on the goods allegedly cleared clandestinely by the appellant No.1. The issue involved in the appeal is whether the appellants are engaged in drawing of copper flats and rods into the copper patta/pattis and wires and whether the appellants are entitled for any concession on account of trading activity in respect of some items.
5. We find that the copper rods and copper wires are classifiable under heading 7407 and 7408 of the Central Excise Tariff. We find that Note 10 of Section 15 of the First Schedule to Central Excise Act reads as under:-
10 in relation to the products of this Section, the process of drawing or redrawing a rod, wire or any other similar articles, into wire shall amount to manufacture.
From the definition of this Chapter Note 10 we find that drawing of copper rods into copper wires is a manufacturing process and the duty is liable to be paid on the wires manufactured by the assessee. After going through the show cause notice relating to seizure and the panchanama dt. 9.9.2006, it is seen that in Annexure B to the panchanama, description of goods is mentioned as under:-
INPUT (RAW MATERIAL) copper wire in loose conditions 240.000 FINISHED GOODS : COPPER RODS Total - 1210.700 From the description of the goods mentioned in the panchanama it is found that copper wire is shown as a raw materials whereas copper rods are shown as finished products. In the another show-cause notice dt. 27.1.2009 duty has been demanded on the goods already cleared by the appellant wherein the description of the goods in two invoices in Annexure A-1 in three invoices annexure A-2 is shown copper wire and strips. We find that the Commissioner in the order-in-original in para 81 has held that copper rods are drawn into the copper wires. We also find that as per the Chapter Note 10 of the Section 15 of the Central Excise Tariff this activity amounts to manufacture. However, the Panchanama in respect of the goods seized has mentioned the seizure of copper rods as finished goods whereas the copper wire are shown as inputs which is in contradiction of the finding that the appellants are engaged in the manufacture of wires from rods. This aspect needs re-verification at the Commissioner level.
6. The another aspect is whether drawing of copper flats into patta/patti amounts to manufacture or not. The Commissioner in para 80 & 82 has held that copper patta/patties are distinct commodity from the copper flat and, therefore, drawing of flat into patta/patti is a manufacturing activity.
7. We find that in Chapter 74 of Note 1 (g) reads as under:
(g) Plates, sheets, strip and foil Flat-surfaced products (other than the unwrought products of heading 7403), coiled or not, of solid rectangular (other than square) cross-section with or without rounded corners (including modified rectangles of which two opposite sides are convex arcs, the other two sides being straight, of equal length and parallel) of a uniform thickness, which are :
(i) of a rectangular (including square) shape with a thickness not exceeding one-tenth of the width,
(ii) of a shape other than rectangular or square, of any size, provided that they do not assume the character of articles or products of other headings.
Headings 7409 and 7410 apply, inter alia, to plates, sheets, strip and foil with patterns (for example, grooves, ribs, chequers, tears buttons, lozenges) and to such products which have been perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles or products of other headings.
From the above definition the flat products having a thickness not exceeding one-tenth of width of a rectangular including square crosssection will fall under the category of plates, sheets, strips and foil classifiable under heading 74.09 if the thickness exceeds 0.15 mm. We also note that the last line of the chapter note says provided that they do not thereby assume the character of articles or products of other headings We find that when the flat is drawn into patta/patti (which is a local name) the product does not assume the character of articles or product of other headings as the patta/patti continue to fall under heading 7409 (under which the flats before drawing are classifiable). Though, the patta/patti have been given the name distinct from the flat whether they assume the character of articles of other heading is not clearly coming from the findings of the Commissioner. We are therefore of the view that in respect of drawing of flats into patta/patti, the Commissioner should give his finding whether the products assume the character of articles of other headings. If so what would be their different heading number.
8. The appellant have taken a plea that they are also engaged the trading activity therefore the wires and rods and strips are their traded articles and these items are not manufactured by them. We find that Commissioner in his order-in-original in para -83 have categorically stated that the appellants have not produced even a single document to substantiate this claim of trading activity. We agree with the Commissioner that in absence of any documentary evidence to prove that appellants were engaged in the trading activity no relief can be granted to the appellant on the ground of trading activity. We, therefore, uphold this finding of the Commissioner that in absence of any documentary evidence their arguments of trading activity fails.
9. In view of the above, we find that there are contradictions in the order in respect of copper rods and wires which have shown as finished products and raw material respectively in the panchanama whereas in the order-in-original, the wires have been shown the finished products manufactured out of the copper rods. Similarly, it is to be examined whether the copper patta/patti, which has been obtained by drawing the copper flats is manufactured product in the light of Chapter Note 1(g) of the Chapter 74 of the Central Excise Tariff. We, therefore, set aside the order-in-original and remand the case to the original authority for de novo adjudication after giving opportunity of hearing to the appellants for deciding the matter afresh in view of our observations. We are not expressing any opinion on merit.
10. Appeals are disposed of in above terms by way of remand.
(Pronounced in court on ) (S.S. Kang) Vice President (Sahab Singh) Member (Technical) Sm ??
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