Customs, Excise and Gold Tribunal - Delhi
S.S. Bedi & Sons vs Commissioner Of Central Excise, New ... on 3 April, 2002
Equivalent citations: 2002ECR165(TRI.-DELHI), 2002(144)ELT147(TRI-DEL)
ORDER V.K.Agrawal, Member (T)
1. In this appeal, filed by M/s. S.S. Bedi & Sons, the issue involved is whether Central Excise duty is payable on Lay Flat Tubing.
2. Shri S.C. Kamra, learned Advocate, submitted that the Appellants manufacture poly-bags which are exempted from payment of duty under Notification No. 4/97-CE., dated 1-3-1997; that they obtained Lay Flat Tubing as an intermediate product in the manufacture of poly-bags from plastic granules; that the impugned goods were exempted from payment of excise duty right from 1994-95 till today except for the financial year 1997-98; that the Additional Commissioner under the Adjudication Order No. 170/99, dated 7-10-1999 has demanded the duty in respect of Lay Flat Tubing cleared during the period from 1-4-1997 to 31-12-1997 and imposed penalty of Rs. 50/966/- equivalent to the amount of duty under Rule 173Q of the Central Excise Rules, read with Section 11AC of the Central Excise Act; that the Commissioner (Appeals) under the impugned Order has confirmed the demand and the penalty. He, further, submitted that the entire demand is time-barred as the show cause notice was issued on 7-4-1999 i.e. beyond the normal time limit of 6 months; that there was no allegation of fraud, collusion, wilful mis-statement, or suppression of facts in the show cause notice; that in absence of specific allegation of suppression of fact etc. the extended period of time limit cannot be invoked as held by the Supreme Court in the case of CCE v. H.M.M. Ltd. 1995 (76) E.L.T. 497 (S.C.). He also mentioned that it is settled law that the plea of limitation, being a legal plea, can be raised before the Appellate Tribunal. Reliance has been placed on the decision in the case of CCE v. Hiper, 1989 (41) E.L.T. 332 (Tribunal) and CCE v. Pioma Industries & Imperial Soda Factory, 1997 (91) E.L.T. 527 (S.C.). He also referred to the following decisions :-
(i) CCE v. Texnwco Ltd. - 1992 (61) E.L.T. 477 (T) (ii) Bombay Tubes & Containers v. CCE, Bombay - 1996 (88) E.L.T. 491 (T) (iii) Kanoria Chemicals v. CCE - 1999 (112) E.L.T. 294 (T)
3. The learned Advocate, further, contended that the impugned goods are not excisable goods since intermediate products are used captively in the factory of manufacture; that in the absence of marketability of the product it cannot be subjected to excise duty; that it is well settled that the goods must be known in the market and unless the test of marketability is satisfied duty cannot be levied as held in the case of U.O.I. v. Delhi Cloth & General Mills Co. Ltd. 1977 (1) E.L.T. (J1199). He also mentioned that the Adjudicating Authority has not established that the impugned goods are marketable products as known in the market and as such duty cannot be levied. He also contended that the value of the product has been wrongly worked out in the Adjudication Order, that as per the show cause notice the total clearance value of the finished goods (poly-bags) exceeded the admitted value of clearance of Rs. 40 lakhs by Rs. 6,98,853.50 which worked out to be 14.87% of the value of the clearances; that the show cause notice allows abatement of 14.87% from the aggregate value of clearances towards cutting, printing, and packing charges incurred in the manufacture of poly-bags; that after allowing such abatement the aggregate value of clearance of the impugned goods should have been Rs. 40 lakhs; that the excise duty would be leviable on Rs. 10 lakhs (Rs. 40 lakhs minus Rs. 30 lakhs initial exemption limit); that thus the duty has been calculated and demanded wrongly. He also mentioned in this regard that the percentage of the impugned goods was only 30 to 40 per cent of the total cost of poly bags and as such the total value of Lay Flat Tubing would be between Rs. 12 to 16 lakhs much below the exemption limit and as such no duty is payable by them. Finally he submitted that a penalty equivalent to the amount of duty cannot be imposed as the entire demand is time barred; that in any case there was no mens rea on the part of the Appellants in not paying the duty as the impugned goods were exempted prior to the material period as well as after the material period; that they were, therefore, under the bona fide belief that no duty was payable; that in any case it has been held by the Tribunal in the case of Escorts J.C.B. Ltd. v. CCE., 2000 (118) E.L.T. 650 (T) that Section 11AC prescribes the maximum limit and it is not mandatory that in all cases maximum penalty should be imposed.
4. Countering the arguments Shri Jagdish Singh, learned DR, submitted that the Appellants have neither filed any reply to the show cause notice nor attended the personal hearings, fixed from time to time; that the Adjudicating Authority had recorded a specific finding that the Appellants had wilfully suppressed the facts with the intention to evade payment of excise duty, and therefore, provisions of Section 11A are applicable for invoking the extended period of 5 years for the purpose of demanding excise duty; that in spite of such specific finding in the Adjudication Order the Appellants did not challenge the inviolability of extended period of limitation in their appeal before the Commissioner (Appeals); that accordingly they cannot, at second appeal stage, raise the plea of time limit by pleading legal plea; that the decision in the case of Hiper (supra) is not applicable as the facts are different since in the said matter the plea of time limit was raised before the lower Appellate Authority; that the decision in the case of Pioma Industries is also not applicable as the issue involved therein was service of the order under Section 35A(5) of the Central Excise Act. The learned DR. further submitted that there was no need for the Adjudicating Authority to establish that the impugned goods were marketable since no such plea was taken by the Appellant before him. Even before the Commissioner (Appeals) they had only pleaded that the intermediate goods produced and used for captive consumption is not liable to duty, if not marketable; that they have not given any reason for treating the impugned goods as not marketable. He also submitted that except making a bald statement that the percentage of the value of the impugned goods in the final product poly-bag is 30 to 40 per cent they had not adduced any evidence in support of such contention. He finally submitted that the penalty is imposable as they had manufactured excisable goods and removed the same without observing Central Excise Procedure and without payment of duty.
5. We have considered the submissions of both the sides. We agree with the submissions made by the learned DR that as the Appellants did not choose to challenge the findings of the Adjudicating Authority regarding invocation of extended period of limitation before the lower appellate authority they cannot challenge the demand as time barred now. Once the specific finding has been given by the Adjudicating Authority it has to be challenged in the appeal petition. The decision in the case of Pioma Industries is not relevant to the fact of the present matter being different. The learned DR has rightly distinguished the decision in the case of CCE v. Hiper (supra). We also agree with the learned DR that there was no occasion for the Adjudicating Authority to adduce any evidence about the marketability of the impugned product as the Appellants neither filed any reply nor attended any of the personal hearings fixed by the Adjudicating Authority. In appeal they have merely stated that the impugned goods being an intermediate product is not marketable. It is settled law that it is not essential that a product should actu ally be brought to the market for being bought and sold. It is sufficient that the product should be capable of being marketed. There is nothing brought on record by the Appellants to indicate that the impugned product is not capable of being marketed. There is not even any whisper that it has no shelf life or it cannot be transported. In absence of any such averment the product is held to be marketable. Similarly in absence of any certificate from the Chartered Accountant/Cost Accountant, we are unable to accept the submission of the Appellants that Lay Flat Tubing contributes only 30 to 40 per cent of the total cost of poly bags. However, we agree with the learned Advocate that duty of excise cannot be confirmed on the entire value of Rs. 16,98,853/-
as an abatement of 14.87 per cent was allowed in the show cause notice itself on account of cutting, printing and packing charges. The duty is thus payable after allowing the said abatement. A penalty is also imposable on the Appellant as they had cleared the excisable goods without payment of duty. How ever, taking into consideration the facts and circumstances of the case we re duce the penalty to Rs. 10,000/- only. The appeal is disposed of in these terms.