Customs, Excise and Gold Tribunal - Tamil Nadu
M/S. Coats Viyella India Ltd. vs Commissioner Of Central Excise Madurai on 4 July, 2001
ORDER Hri S.L. Peeran, Member (T)
1. This appeal arises from Order-in-Original No. 6/97 dates 12.2.97 by which the Commissioner of Central Excise, Madurai has confirmed the duty demand as short levy of Rs. 9,09,917/- by invoking larger period in terms of proviso to Sec. 11A (1) of the Central Excise Act and also has imposed penalty of Rs. 90,000/- under Rule 173Q of C.E. Rules, 1944.
2. The allegation against the appellants is that they had received from M/s. SNG Engineering Works, Koratty (2) Uma Industries, Koratty (3) Indian Engineering Works incomplete/unfinished winding machines. The same were installed by the appellants and brought into existence a fully complete winding machine which was marketable and they had shifted the same to their sister unit being immovable goods. They had not informed the department and they had not paid duty and therefore proceedings were initiated and after observing the principles of natural justice the Commissioner noting the Tribunal judgment rendered in the case of ENGINEERING AND COMMERCIAL AGENCIES LTD Vs CCE, Madras (1996 (82) ELT 295), as well as in the case of WANDLESIDE NATIONAL CONDUCTORS LTD Vs CCE Pune - 1996 (84) ELT 419 held that fabrication of parts and assembly of entire parts bring into existence as winding machine was amounted to a new product and new goods had arisen and hence they were required to discharge duty. On that premise, he has invoked larger period and has imposed penalty.
3. Arguing for the appellants, Learned representative of the company points out to para-4 of the grounds of appeal wherein they have taken fresh grounds which, according to the representative, is a legal ground. He submits that supplier of the parts was the manufacturer as the contract was very clear that they were to manufacture, supply, and erect the machines in their factory with the help of their own workers. He submits that they had not done any activity for completing the work of manufacture and all war done by their contractors in terms of the contract. He has produced before us a copy of invoice dated 25.2.93 issued by M/s. Reshmi Industries and also copy of the order they have placed on the appellants on 28/5/92. He submits that these documents are correlatable and these documents had been seized by the department Ld representative clearly admits that these grounds had not been taken up by them in their reply. However, the show cause notice had proceeded on these lines and therefore the Commissioner ought to have adjudicated in that line. He submits that the point now raised that they are not the manufacturer is a legal point which has been raised in the grounds of appeal and the Tribunal can grant them permission to adduce the same in terms of law. He submits that an identical order placed in respect of another sister unit was also the subject matter of adjuciation. The Joint Commissioner of Central Excise, Madurai vide his order-in-original No. 27/99 dt 28.10.99 examined this plea that the processes carried out at their factory did not result in a process of manufacture and no new goods had arisen. He submits that they had taken this as a ground before the Commissioner and the Commissioner had overruled this plea in the impugned order and there are two contradictory orders. The order-in-original No.27/99 dt 28.10.99 now cited has been accepted by the department and no appeal has been filed. He submits that the same Commissionerate had initiated proceedings in respect of their unit at Tuticorin and by his Order-in-Original No.3/97 dated 17.1.97 has although held the process of assembly amounted to process of manufacture, but, however, on the grounds of limitation, he has accepted the appellants' plea that it is time barred as department was fully aware of the fact that they had not committed any wilful suppression of such information from the department, as they had addressed a letter in Feb'93 to establish their bonafide belief.
4. Learned representative submits that now the Commissioner has given an order that there is suppression which is contra to the Order-in-Original No. 3/97 dated 17.1.97 on same facts. He submits that the findings recorded by the same Commissioner in Order-in-Original No. 3/97 dt 17.1.97 on time bar should have been accepted and applied while he passed the impugned order on 12.2.97. Therefore, he points out that both on merits and on limitation, the Ld.Commissioner has committed an error and hence their appeal is required to be allowed.
5. Ld.SDR vehemently opposed the prayer made by the representative of the appellants with regard to raising the new plea about the manufacture of the goods having been pleaded by the supplier and not by them. He took us through various paras of the impugned order to show that appellants also carried out the activity of assembly and it was not the supplier who had done. He points out to para-12 of the order wherein the Commissioner has recorded that appellant had also assembled the unit in their premises and it was the appellant who brought into existence the cone winding machine which achieved the functional utility only at the point of time only it came into existence on the appellants completing the work.
6. Ld.SDR also pointed out that as the findings have been clearly recorded on manufacture, there is no question of holding that appellants are not the manufacturers but the suppliers are the manufacturers. He submits that the order of Jt. Commissioner in OIO is not binding as the present proceedings are independent. As regards the plea that the Commissioner's OIO No.3/97 dt 17.1.97 was pertaining to different unit of the appellants and therefore the facts of that unit cannot be applied to the facts of this unit. The present unit did not give any information about the said assembly and hence invocation of larger period is correct.
7. In counter, Ld.representative points out to OIO no.3/97 dated 17.1.97 wherein the same Commissioner has given a categorical finding that appellants were under bonafide belief that such activity did not result in manufacture and duty was not payable. Therefore, there cannot be two contradictory orders passed by the Commissioner who has heard both the matters together while passing different orders on two different dated.
8. On careful consideration of the submissions made before us, we are of the considered opinion that the point pertaining to manufacturer although raised for the first time before the Tribunal in the grounds of appeal is permissible in law as it is a question of law. The aspect as to whether the appellant is the manufacturer or the supplier is the manufacturer is the question of law which has to be examined by the original authority in the light of the documents now displayed. Appellant's plea that the Bench should pass final order on the basis of documents is not acceptable for the reason that these documents are xerox copies and the veracity of these documents is required to be tested by the original authority. However, while accepting the plea that the question of manufacturer has to be first addressed to, therefore, we are of the considered opinion that the original authority on de novo is also required to consider this point on the aspect who the manufacture is?
9. The second point raised by the Ld.representative that the same Commissioner while deciding the aspect of limitation in respect of Tuticorin unit has clearly given a finding that appellants were under bonafide belief and they had not wilfully suppressed any information and they were not liable to pay duty for larger period. This finding has been recorded on 17.1.97 in OIO No.3/97 by the same Commissioner and the impugned order has taken different view with regard to present unit. As the adjudicating authority was same, the Ld.Commissioner should have taken a broad view about the aspect of appellants holding bonafide belief. Appellant is the owner for all the sister unit. Therefore, once the one unit holds a belief, it is deemed to be held by all the assessee's unit. In that view of the matter, we are of the considered opinion that matter has to go back to the original authority for de novo consideration both on the aspect of manufacture person who is the manufacturer, limitation. On de novo the Commissioner shall take all the points into consideration raised by the appellants and also look into the order passed by the Jt. Commissioner in OIO No.27/99 dt 28.10.99 besides findings recorded by the same Commissioner in OIO No. 3/97 dt 17.1.97 with regard to limitation, the appellants shall be given full opportunity to defend their case. Thus the appeal is allowed by way of remand to the Commissioner of Central Excise, Madurai.
(Pronounced & Dictated in open court)