Custom, Excise & Service Tax Tribunal
Maheswari Solvent Extraction Ltd vs Commissioner Of Central Excise, Nagpur on 4 October, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPLICATION Nos. E/S/1346/09 & E/S/391/10 in APPEAL Nos. E/905/09 & E/311/10 (Arising out of Orders-in-Appeal No. SN/130/NGP/2009 dated 6.5.2009 and No. SN/293/NGP/2009 dated 25.11.2009 both passed by Commissioner of Central Excise & Customs (Appeals), Nagpur) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. M. Veeraiyan, 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 : No 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?
====================================================== Maheswari Solvent Extraction Ltd. Appellant Vs. Commissioner of Central Excise, Nagpur Respondent Appearance: Shri V. Rama Rao, Advocate with Shri Vijay Rode, Advocate, for appellant Shri S.M. Vaidya, Authorised Representative (JDR), for respondent CORAM: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. M. Veeraiyan, Member (Technical) Date of Hearing: 4.10.2010 Date of Decision: 4.10.2010 ORDER NO................................. Per: P.G. Chacko
There are two applications before us, each praying for waiver of pre-deposit and stay of recovery in respect of certain dues adjudged against the assessee. On a perusal of the records, we note that five show-cause notices were issued to the assessee, out of which two were adjudicated upon in favour of the assessee and the remaining three came to be subsequently adjudicated upon against them. In the first matter, the department preferred an appeal to the Commissioner (Appeals) against the order of adjudication and that appeal came to be allowed with the result that there is a demand of duty of Rs.7,58,969/- on the assessee for the period from December 2006 to May 2007 in respect of "gums" and "recovered oil". In the second matter, the assessee preferred an appeal to the Commissioner (Appeals) against the order of adjudication. They also applied for waiver of pre-deposit, but this application was rejected and the party was directed to pre-deposit the entire dues. No such deposit was made. In the result, the assessee's appeal came to be dismissed on the sole ground of non-compliance with Section 35F of the Central Excise Act, with the result that the decision of the original authority for recovery of duty of over Rs.12 lakhs as also penalty from the assessee stood sustained. In the present applications, the assessee seeks waiver and stay in respect of the adjudged dues.
2. The records further indicate that the assessee was engaged, during the period of dispute, in the manufacture of "refined rice bran oil". During the course of this process, gums together with certain impurities emerged at some stage. "Recovered oil" emerged at the final stage of manufacture of "refined rice bran oil". The assessee did not pay duty of excise on either of these commodities, which were sold to detergent manufacturers at certain prices. Apparently, the assessee claimed the benefit of Notification No.89/1995-CE dated 18.5.1995 in respect of both gums and recovered oil. The case of the Revenue is that these commodities are classifiable under SH 1522 00 20 and SH 1522 00 90, both of which attract CE duty @ 16% and, therefore, the benefit of the above Notification cannot be claimed.
3. After hearing both sides, we note that, in relation to the set of three show-cause notices, the impugned order is not on merits and, in this matter, the question is whether the assessee should be directed to pre-deposit any amount under Section 35F of the Central Excise Act before the lower appellate authority. In relation to the set of two show-cause notices, the decision of the lower appellate authority is on merits. The appellate authority has set aside the order of adjudication and allowed the Revenue's appeal. However, it has neither determined any penalty to be imposed on the assessee nor has required the lower authority to do so. We further note that both gums and recovered oil were cleared in large quantities by the assessee to manufacturers of detergents. Admittedly, these items were used as inputs by the buyers in the manufacture of soaps/detergents. Though the learned counsel has claimed support from certain decisions relating to excisability of soap stock vide CCE, Hyderabad vs. Priyanka Refineries Ltd. 2010 (249) ELT 70 (Tri.-Bang.), he has not cited any case law relating to any of the commodities in question. What was held in the case of Priyanka Refineries Ltd. case was that soap stock was a waste and hence not classifiable under Heading 15.22 of the CETA schedule. According to the learned counsel, there is a parallel between the instant case and the case of Priyanka Refineries. Prima facie, this argument is not acceptable inasmuch as, in the present case, it has never been the case of the assessee that gums and recovered oil were not excisable. The assessee always maintained both the commodities to be excisable and, on this basis, they claimed the benefit of an Exemption Notification. Therefore, prima facie, the assessee cannot claim support from the case law cited by the learned counsel. We have also found a factual distinction between gums and recovered oil. Gums were generated in the course of neutralisation of the product from the refinery storage tank, whereas recovered oil was obtained as a by-product along with refined rice bran oil (final product) resulting from distillation of the product from deodoriser. "Recovered oil" was also, admittedly, used by the assessee's customers in the manufacture of soaps/detergent powders. In the impugned order, the learned Commissioner (Appeals) apparently did not attempt any factual distinction between gums and recovered oil. Moreover, we have not come across any cogent discussion on the classification of these items under the residuary sub-headings of Heading 15.22 of the CETA schedule. As we have already noted, the learned Commissioner (Appeals) also did not quantify the dues to be paid by the assessee, though he set aside the order of adjudication and allowed the Revenue's appeal. For all these reasons, we are of the view that the matter should go back to the learned Commissioner (Appeals). Therefore, we set aside the order impugned in appeal No. E/905/09 and allow the appeal by way of remand, with a request to the learned Commissioner (Appeals) to take fresh decision on all the issues and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.
4. In appeal No. E/311/10, as we have already indicated, the challenge is against the appellate Commissioner's order dismissing the assessee's appeal on the sole ground of non-compliance with Section 35F of the Central Excise Act. We have already indicated enough reasons to take the view that the appellant has not made out good case for waiver of pre-deposit. The lower appellate authority asked for pre-deposit of the entire dues, which, in our view, was not fair or reasonable. In our considered view, the appellant should pre-deposit an amount of Rs.3,00,000/- (Rupees three lakhs only) towards the demand of duty before the lower appellate authority under Section 35F of the Central Excise Act within a period of six weeks from the date of receipt of a certified copy of this order, to enable that authority to dispose of their appeal on merits. We make it clear that the assessee should not be asked to deposit any further amount for purposes of Section 35F ibid. Therefore, we set aside the impugned order and allow this appeal also by way of remand, with a request to the learned Commissioner (Appeals) to pass a speaking order on merits in accordance with law, subject, of course, to compliance with Section 35F as above. Again, in this matter as well, a reasonable opportunity of being heard shall be given to the assessee. The appeals and the stay applications are accordingly disposed of.
(Pronounced in Court) (M. Veeraiyan) Member (Technical) (P.G. Chacko) Member (Judicial) tvu 1 5