Custom, Excise & Service Tax Tribunal
M/S. Jain Irrigation Systems Limited vs Commissioner Of Central Excise, Nashik on 4 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/3505,3506/05 [Arising out of Order-in- Original No. 20/CEX/2005 dtd. 26/7/2005 passed by the Commissioner of Central Excise & Customs, Nashik] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. Raju, 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 :
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?
=======================================================
M/s. Jain Irrigation Systems Limited
Shri. D.I. Desarda
:
Appellant
VS
Commissioner of Central Excise, Nashik
:
Respondent
Appearance
Shri. T. Chandran Nair, Advocate for the Appellant
Shri. V.K. Shashtri, Asstt.Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Honble Mr. Raju, Member (Technical)
Date of hearing: 4/1/2016
Date of decision 4/1/2016
ORDER NO.
Per : Ramesh Nair
These two appeals are directed against Order-in- Original No. 20/CEX/2005 dtd. 26/7/2005 passed by the Commissioner of Central Excise & Customs, Nashik, wherein Ld. Commissioner confirmed demand of Rs. 38,61,804/-, imposed penalty of equal amount and also imposed penalty of Rs. 50,000/- on Shri. D.I. Desarda, Vice President(Excise) of M/s. Jain Irrigation Systems Ltd. and penalty of Rs. 10,00,000/- on M/s. GCL Equipments & Machines (P) Ltd. Thane.
2. The fact of the case is that the appellant is 100% Export Oriented Unit situated at Bambhori, Dist: Jalgaon and engaged in manufacture of extruded, moulded and fabricated plastic goods, moulded products, foam sheets and other applications, valves, fittings, pipes etc. moulded fabricated and assembled plastic sheets, metallised acrylic, mirror sheets and hollow profiles, sheets, polycarbonate domes convex/concave, mirror etc falling under Chapter 39/84 of the First Schedule to the Central Excise Tariff Act, 1985. Appellant supplied goods without payment of duty under Notification No. 43/2001-CE(NT) dated 26/6/2001 following provisions of Central Excise(Removal of goods at concessional rate of duty for manufacture of Excisable goods) Rules, 2001. It was contended in the show cause notice that the said Rules are applicable to a manufacturer who intends to avail benefit of notification issued under sub-section (1) of Section 5A of Central Excise Act, 1944 when used for the purpose specified in that notification. The proviso to section 5A stipulates that unless specifically provided in such notification, no exemption therein shall apply to excisable goods, which are produced or manufactured
(i) in a free trade zone or a special economic zone and brought to any other place in India or
(ii) by a 100% EOU Export Oriented Undertaking and brought to any other place in India.
M/s. GCL Equipments and Machines Pvt Ltd, Thane who is the supporting manufacturer of L.L. Overseas Business Corpn, Maral Naka, Andheri(E), Mumbai- 59 is registered under Central Excise Act, 1944 had procured imported inputs from M/s. Jain Irrigation Systems 100% EOU, Bambhori, Jalgaon without payment of duty on execution of bond by way of following the provisions and procedure laid down under Notification No. 43/2001-C.E.(NT) dated 26/6/2001 read with Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001. In the adjudication, Ld. Commissioner confirmed demand on the ground that the appellant being 100% EOU can clear the goods only for export or deemed export. In the present case the buyer i.e. M/s. GCL Equipments and Machines Pvt. Ltd. is not an exporter therefore appellant has wrongly cleared the goods under Notification No. 43/2001-C.E.(NT) dated 26/6/2001. Aggrieved by the impugned order the appellant filed these appeals.
3. Shri. T. Chandran, Nair, Ld. Counsel for the Appellant submits that as regard the restriction provided under Section 5A of Central Excise Act for removal of goods under exemption notification issued under Section 5A, the appellant have not availed any exemption notification under Section 5A. The appellant have cleared the goods under bond in terms of Notification No. 43/2001-CE(NT) dated 26/6/2001 following the provisions of Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001. It is his submission that there is no bar or restriction for supply of goods under the aforesaid provisions to 100%EOU. He further submits that though the appellant have supplied the goods under bond which was executed by the buyer of the goods under which it was undertaken that the goods so supplied by the appellant shall be used in the manufacture of export goods and for this reason the removal of goods without payment of duty is permitted in law. In support of his submission, he placed reliance on the following judgments:
(a) Narasus Exports Vs. Commissioner of Central Excise, Salem[ Final Order No. 41588/2015 dated 29/7/2015 issued on 24/11/2015.
(b) Commr. of Cus. Visakhapatnam Vs. Alsa Marine & Harvests Ltd[2015(319) ELT 237(S.C.)]
(c) Winsome Yarns Ltd. Vs. Commissioner of C. Ex. Chandigarh[2009(243) ELT 639(Tri. Del.)]
4. Shri. V.K. Shashtri, Ld. Asstt.Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.
5. We have carefully considered the submissions made by both sides.
6. We find that the appellant have cleared the goods under statutory provisions of Notification No. 43/2001 CE(NT) dated 26/6/2001 read with the provisions of Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001. We agree with the Ld. Counsel that no restriction or prohibition is provided in the law for application of such provisions to 100% EOU. Under the above said provisions clearances are allowed without payment of duty only for the reason that the buyer undertakes to use the said duty free goods for manufacture of goods which would be exported. The contention of the show cause notice, objections of the Adjudicating authority that the restrictions provided under Section 5A, we are of the view that the appellant have not cleared the goods under any notification which was issued under Section 5A. The Notification No. 43/2001-CE(NT) and the provisions of Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001 prescribed the procedure for clearance of the goods without payment of duty and the said notification was not under Section 5A, therefore contention of the Adjudicating authority is misleading. This issue has been considered by this Tribunal as well as by the Honble High Court and removal of goods under Rule, 19(2) has been allowed. The relevant operative paras of such judgments are reproduced below:
Alsa Marine & Harvests Ltd(supra)
2.?From the aforesaid, it cannot be denied that the respondent, which is an E.O.U., had fulfilled its legal obligation of exporting the manufactured goods as per Notification (General Exemption No. 127). We have gone through the said notification. It lays down three conditions and on fulfillment thereof, an E.O.U. becomes entitled to the exemption. These are as under :-
(1)?the importer has been granted necessary licence for the import of the goods for the said purpose;
(2)?the import carries out the manufacturing operation in the customs bond and subject to such other conditions, as may be specified by the Assistant Collector of Customs in this behalf;
(3)?the importer exports out of India hundred per cent or such other percentage, as may be fixed by the said Board, of Articles manufactured wholly or partly from the goods for the period stipulated by the Board or such extended period as may be specified by the said Board;
3.?As mentioned above, it could not be denied by the appellant that the respondent-undertaking had exported out of India 100 per cent of articles manufactured by it. The only argument which is sought to be raised is that the unit at Bhimli (Visakhapatnam) which was given the status of E.O.U. has not fulfilled this obligation and in fact, goods were sent to Chennai unit and it is from Chennai unit that the export was effected. We hardly see it to be a ground to deny the exemption. As mentioned above, it is the respondent, namely, M/s. Alsa Marine & Harvests Ltd., which is an E.O.U. and it is this undertaking which has fulfilled its obligation under the aforesaid notification. Whether it is done from Bhimli (Visakhapatnam) or Chennai unit, would be totally irrelevant and immaterial. We, thus, do not find any error in the order passed by the CESTAT.
Winsome Yarns Ltd.(supra)
6.?We have carefully considered the submissions from both sides. There is no dispute before us that the clearances made by the appellants is beyond the limit prescribed by the Development Commissioner. In respect of such clearances duty shall be payable, if they are made to general category of buyers. In the present case, the appellant have chosen to supply to special category of buyers covered under Rule 19(2) of the Central Excise Rules, 2002. We agree with the submission of the learned Advocate that Rule 19 does not exclude the clearances from 100% E.O.U. from its purview. The decisions of the Tribunal in the case of Kurt-O-John Shoe Components (I) Ltd. and Paras Fab International (supra) support the contention of the learned Advocate.
7.?In the light of the above, we set aside the order of the lower authorities and allow the appeal with consequential relief.
In view of our above discussion and issue involved in the present case is settled by the judgments cited above, we are of the considered view that the demand confirmed by the Adjudicating authority is not sustainable. We, therefore set aside the impugned order and allow the appeals of the appellants.
(Operative part pronounced in court) Raju Member (Technical) Ramesh Nair Member (Judicial) sk 8 E/3505,3506/05