Customs, Excise and Gold Tribunal - Calcutta
M/S Boc India Ltd. vs Cce, Mumbai-Ii on 30 July, 2001
Equivalent citations: 2001(78)ECC168, 2000ECR121(TRI.KOLKATA)
ORDER
Smt. Archana Wadhwa
1. The Commissioner vide his impugned order has confirmed the demand of duty of Rs.2,02,438/-(rupees two lack two thousand four hundred and thirty eight) and has confirmed an equivalent amount of personal penalty under the provisions of rule 571(4) and has confirmed the interest under the provisions of rule 571(5) of Central Excise Rules, 1944.
2. I have heard Shri B.J.Mookherjee, ld.adv. appearing for the appellant and Shri A.K.Chattopadhyay, ld.JDR for the Revenue.
3. The appellants were purchasing liquid Oxygen in tankers. On receipt of the said liquid Oxygen in their premises as an input, a sample was being drawn from the tankers and undergone laboratory test. Thereafter the said Oxygen was cleared from their factory for medicinal purposes without disturbing the entire contents of the tankers.
4. On receipt of the liquid Oxygen, the appellants claimed the modvat credit of 20% duty paid on the said liquid Oxygen by their manufacturers. However, at the time of clearance of the said liquid Oxygen, they paid duty @5% in terms of notfn.no.114/94-CE dt.3.6.94.
5. On the above facts, Revenue, after questioning the appellants' representative, entertained a view that inasmuch as no manufacturing activity was undertaken at the appellant' premises for converting liquid Oxygen into medicinal Oxygen, they were required to clear the liquid Oxygen by debiting back the same quantum of credit, which they had originally availed in terms of the provisions of rule 57F(1)(II). The appellants' contention is that by testing the liquid Oxygen, they had undertaken the manufacturing activities. They had also filed a classification list to that effect which was duly approved by the proper officers. The credit was also being taken by them after making due declaration of that effect.
6. After issuance of the show cause notice and after following the due procedure, the Commissioner of Central Excise did not find favour with the appellants' submissions and confirmed the demand of duty along with imposition of personal penalty.
7. Shri B.J.Mookherjee, ld.adv. appearing for the appellant does not contest the decision of the Commissioner of merits and admits that the process of testing undertaken by them cannot be considered to be a process of manufacture so as to convert the liquid Oxygen into medicinal Oxygen. As such he agrees that the entire credit availed by them originally at the time of receipt of liquid Oxygen should have ben debited at the time of clearance of the same liquid Oxygen, as if the inputs were being cleared by them. However, he submits that the period involved in he present appeal is from October 1994 to December 1994 and from July 1995 to August 1995. The show cause notice was issued on 5.12.97 thus after a period of six months from the relevant date. Thus submits the ld.adv. that the entire demand of duty is bared by limitation. He submits that a classification list was filed by them and it was mentioned in the said classification list that they would be availing the modvat credit of duty on the inputs. In these circumstances there cannot be any suppression of facts or misstatement on their part so as to invoke the longer period of limitation. They were also maintaining RG-23A part-I and Part-II and submitting the copies of the same of their jurisdictional central excise authorities. For his above argument he draws my attention to the Tribunal's decision in the case of Genuine Engg. (P) Ltd. v. CCE, Jaipur-1997(20)RLT 875(CEGAT-NZB) laying down that extended time limit is not invocable where the appellant had informed the department about taking of credit on the inputs. He also refers to the Hon'ble Gujarat High Court's decision in the case of Prolit Engg. Co. v. UOI-1995(75)ELT 257(Gujarat). He emphasizes on the ratio laid down by the said decision that non-disclosure of information which is not required to be disclosed or recorded does not amount to suppression or concealment and extended period of limitation cannot be invoked. He submits that the reasoning of the adjudicating authority that the appellant did not disclose the process of manufacture and thus suppressed the information from the Revenue is not justified in view of the above law laid down by the Hon'ble Gujarat High Court.
8. As regards the imposition of personal penalty and confirmation of interest under the provisions of rule 57I(4) and 57I(5). He said that the said rules came into existence w.e.f. 23.7.96 and cannot have retrospective effect. Inasmuch as the period involved in the present appeal is prior to July 1996, imposition of penalty under the said rules and confirmation of interest against them is not justified.
9. Countering the arguments Shri A.K.Chattopadhyay, ld.JDR appearing for the Revenue submits that testing of a product by itself cannot be held to be a process of manufacture as held by t he Tribunal in the case of Bajaj Auto Ltd. -1999(105)ELT 361(T) Fycat Engg.-2000 (122) ELT 168(T). As regards the invocation of longer period he submits that though the appellant had filed a classification list showing the manufacture of medicinal Oxygen, but in fact they never had the facility to manufacture the said medicinal Oxygen. He submits that all these factors came into light on examination of Shri P.Venkatesh, who deposed that no facility for manufacturing medical grade liquid Oxygen existed in their factory. He further disclosed that question of converting liquid Oxygen into medical grade Oxygen would arise only when the laboratory test is negative and in such a case, the liquid Oxygen is shifted to a place where the arrangement for undergoing necessary process exists. He submits that the filling of the classification list and getting it approved as if the appellants were engaged in the manufacture of medical grade liquid Oxygen, whereas no such facility existed, reflects upon the mala fides of the appellants. In these circumstances invocation of longer period is justified.
10. As regards the penalty shri Chattopadhyay submits that though he agrees that the same is not applicable under the provisions of rule 57I(4) nevertheless the penalty can still be imposable upon the appellants under the genuine provisions of rule 173Q.
11. After considering the submissions made from both the sides I find that the appellants have not contested the case on merits. As regards limitation, I find that though the classification list was approved and RT-12 returns were assessed, it is only on examination of the appellants' representative that the factual position came to light. The appellants have undertaken the processing of testing of small portion of the liquid Oxygen taken out of the tankers and after testing, cleared the tankers as such. They were very well aware that such a process of drawing a small portion and getting it tested would not amount to manufacture of medical grade liquid Oxygen. Inspite of that the appellant filed a classification lit and got it approved as if they were engaged in the manufacture of medical grade Oxygen, whereas the fact was otherwise. They never disclosed the processes undertaken by them for so called manufacture of medical grade Oxygen. Their representative Shri P.Venkatesh has clearly admitted that hey were not having any facility of converting liquid Oxygen into medical grade liquid Oxygen and if the samples tested negative they would have sent the tankers to other place for conversion. All these facts justified invocation of longer period of limitation. Accordingly I do not find any merits in the said plea of the appellant and confirm the demand of duty against them.
12. As regards the imposition of penalty I agree with the appellants that the same could not have been imposed to the extent of 100% under the provisions of rule 57I(4) and for the similar reasons interest could not have been confirmed against them under the provisions of rule 57I(5) of the Rules. However, there seems to be force in the ld.JDR's contention that penalty can always be imposed under the provisions of rule 173Q. As such taking tin to account he overall facts and circumstances of the case I reduce the quantum o personal penalty from Rs.2,04,438/- (rupees two lack four thousand four hundred and thirty eight) to Rs.75,000/-(rupees seventy five thousand). The confirmation of interest against the appellant is however set aside.
But for the above modification in the quantum of penalty the appeal is otherwise rejected.
Dictated in the court.