Custom, Excise & Service Tax Tribunal
M/S. Ultra Tech Cement Ltd vs Commissioner Of Central Excise, Nagpur on 16 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1622/2010 (Arising out of Order-in-Appeal No. SR/179/NGP/2010 dated. 10.06.2010 passed by the Commissioner of Customs & Central Excise (Appeals) Nagpur. ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
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?
======================================================
M/s. Ultra Tech Cement Ltd.
:
Appellant
VS
Commissioner of Central Excise, Nagpur
:
Respondent
Appearance
Shri Rajesh Ostwal, Advocate for Appellant
Shri R.K. Maji, Asstt. Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 16/02/2016
Date of decision: 16/02/2016
ORDER NO.
This appeal is directed against Order-in-Appeal No. SR/179/NGP/2010 dated. 10.06.2010 passed by the Commissioner of Customs & Central Excise (Appeals) Nagpur, wherein the Ld. Commissioner upholding the Order-in-Original No.05/CE/JC/DC/2010 dt. 18.2.2010 rejected the appeal filed by the appellant.
2. The issue involved in the present case is that whether the capital goods, if removed, without installation and without putting to use, as waste and scrap will attract duty equal to the amount of credit taken or the duty on the transaction value of the machine sold as waste and scrap.
3. Shri Rajesh Ostwal, Ld. Counsel for the appellant submits that the demand of equal amount of Cenvat Credit availed on the capital goods was confirmed and upheld by the Ld. Commissioner (Appeals) on the ground that as per Rule 57S(2) (b) when capital goods are removed without being used, from the factory for home consumption the duty payable shall not be less than the amount of credit that has been allowed in respect of such capital goods under Rule 57Q. He submits that there are three types of clearances provided under Sub-Rule 2(a), (b) & (c). As per Sub-Rule 2(c) where capital goods are sold as waste and scrap, the manufacturer is required to pay duty leviable on such waste and scrap. He submits that in the present case there is no dispute, the unused capital goods was sold as waste and scrap. For the purpose of Clause (c) of Sub-Rule (2) of Rule 57S there is no condition that the capital goods if sold as waste and scrap should be first installed and used, therefore even though the capital goods is removed without being used but as waste and scrap, the duty payable should be on the transaction value of the waste and scrap so sold. In support of his arguments he placed reliance on the following judgments.
(i) Motor Industries Co. Ltd. Vs. Commissioner of C.Ex. Bangalore 2004 (167) E.L.T. 242 (Tri.Bang.)
(ii) Hind Spinners Industries Growth Centre Vs. Commr. of C.Ex., Indore 1997 (96) E.L.T. 651 (Tribunal)
(iii) Ballarpur Industries Ltd. Vs. Commissioner of C. Ex. & Cus., Nagpur 2003 (156) E.L.T. 423 (Tri.-Mumbai) The present case was made out under the provision of Modvat Rules under erstwhile Central Excise Rules, 1944, whereas the adjudication was done after introduction of new Cenvat credit Rules 2002. As per saving cause provided under Section 38A and Explanation given there under it only applies to Cenvat Credit and not on the provision of penalty, therefore penalty which was imposed under Rule 57U(6) is not applicable. In this regard, he placed reliance on the following judgments:
(i) Chemo Pulp Tissues Vs. Commissioner of C.Ex., Meerut 2000 (119) E.L.T. 715 (Tribunal-LB)
(ii) Commissioner of Central Excise, Coimbatore Vs. Ranga Vilas GS & W. Mills 2002 (149) E.L.T. 742 (Tri.-Chennai)
(iii) Shaw Wallace Co. Ltd. Vs. Commissioner of Central Excise, Kanpur 2003 (156) 406 (Tri.-Del.).
4. On the other hand, Shri R.K. Maji, Ld. Assistant Commissioner (A.R) appearing on behalf of the Revenue reiterates the findings of the impugned order.
5. I have carefully considered the submissions made by both the sides. The fact is not under dispute that the appellant have availed the Modvat Credit on capital goods which was neither installed in the factory of the appellant nor used for the manufacture of final product. The capital goods were without putting into use cleared showing as waste and scrap. The provision for duty liability on removal of capital goods is provided under Rule 57S of erstwhile Central Excise Rules 1944 which is reproduced below:
Rule 57S. Manner of utilisation of the capital goods and the credit allowed in respect of duty paid thereon. - (1) The capital goods in respect of which credit of specified duty has been allowed under rule 57Q may be -
(i) used in the factory of the manufacturer of the final products; or
(ii) removed, after intimating the Assistant Commissioner of Central Excise, having jurisdiction over the factory and after obtaining dated acknowledgement of the same, from the factory for home consumption or for export, on payment of appropriate duty of excise leviable thereon or for export under bond, as if such capital goods have been manufactured in the said factory.
(2) In a case, -
(a) where capital goods are removed without being used from the factory for home consumption, on payment of duty, or for export on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such capital goods under rule 57Q;
(b) where capital goods are removed after being used in the factory for home consumption on payment of duty of excise or for export under rebate on payment of duty of excise, such duty of excise shall be calculated by allowing deduction of 2.5 per cent of credit taken for each quarter of a year of use or fraction thereof, from the date of availing credit under rule 57Q; and
(c) where capital goods are sold as waste and scrap, the manufacturer shall pay the duty leviable on such waste and scrap. From the above Sub-Rule (2) in Clause (a) it is clearly provided that if the capital goods are removed without being used the excise duty payable shall in no case be less than the amount of credit that has been allowed. The claim of the appellant is that as per Clause (c) they are required to pay duty on the sale of waste and scrap when capital goods are sold as waste and scrap. In the present case, even though the appellant cleared the capital goods declaring it as waste and scrap but the fact remains that the said capital goods was removed without being used. From the Sub-Rule (2) it is clear that there are three stages of removal of capital goods (i) where capital goods are removed without being used, (ii) where capital goods are removed after being used and (iii) where capital goods are sold as waste and scrap. Therefore, intention of the legislature is very clear that when the removal of capital goods is without being used is different from the capital goods sold as waste and scrap that means the term sale of capital goods as waste and scrap is obviously after being used when the capital goods get defective or unusable and if such capital goods is sold as waste and scrap than the excise duty shall be payable on the transaction value of the waste and scrap. It is to be kept in mind even after use for some time if the capital goods is sold then also the excisable duty is payable in terms of Clause (b) after allowing the deduction of 2.5% of credit taken for each quarter. Therefore when the capital goods is not installed or has not been used its clearance will clearly fall under the Clause (a) of Sub-rule (2) and not under Clause (c). I am therefore of the view, that the appellant is required to pay excise duty on the capital goods cleared without being used in terms of Clause (a) of Sub-rule (2) of Rule 57S of the Central Excise Rules, 1944. Accordingly, equal amount of Cenvat Credit which has been availed shall be payable by the appellant. As regard, the judgements relied upon by the Ld. Counsel , I find that in case of Motor Industries Co. Ltd. (supra) the capital goods was destroyed in fire and thereafter it was cleared as waste and scrap. The Tribunal has given the observation that Rule 57S(2) (c) not made any distinction between the capital goods becoming waste and scrap by use over time and that so by fire accident during its economic life. The Tribunal has in another words held that the capital goods can become waste and scrap either by use over time or by fire accident. However, in the present case, the capital goods cleared by the appellant as waste and scrap does not fall under either of two categories, therefore the fact of this judgment is entirely different from the facts of the present case. In the case of Hind Spinners Industries Growth Centre (supra) the stage of availing modvat credit in respect of capital goods that whether credit can be taken and utilized before installation of machine or thereafter. This case is not on the issue of removal of capital goods either as such or as waste and scrap or after partially being used. Therefore, the facts are different. Similarly in the case of Ballarpur Industries Ltd. (supra) is also on the issue whether credit can be taken on receipt of the capital goods which is yet to be installed. All these judgments are on different facts hence, the same are distinguished. As regard the submission on penalty, I find that the Ld. Counsel has based his argument on Explanation to Section 38A related to saving clause which is reproduced below:
38A . Effect of amendments, etc., of rules, notifications or orders.Where any rule, notification or order made or issued under this Act or any notification or order issued under such rule, is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendment, repeal, supersession or rescinding shall not
(a) revive anything not in force or existing at the time at which the amendment, repeal, supersession or rescinding takes effect; or
(b) affect the previous operation of any rule, notification or order so amended, repealed, superseded or rescinded or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule, notification or order so amended, repealed, superseded or rescinded; or
(d) affect any penalty forfeiture or punishment incurred in respect of any offence committed under on in violation of any rule, notification or order so amended, repealed, superseded or rescinded; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid. and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded.
From the above Explanation it is very clear that any act or omission shall not be punishable if the said act or omission would not have been punishable in the old provision. In the present case, under modvat provisions provided under erstwhile Central Excise Rules 1944, the act of wrong availment of modvat credit was very much punishable and penal provisions was existing. Therefore, the Explanation is of no help to the appellant as regard imposition of penalty. In this regard the judgment relied upon in the case of Chemo Pulp Tissues, Ranga Vilas GS & W. Mills, Shaw Wallace Co. Ltd. the offence involved in those cases was not punishable before the retrospective amendment therefore the fact of those cases are different from the facts of the present case. Hence, the ratio of those judgments are not applicable in this case. On perusal of the impugned order, I find that the Ld. Commissioner by careful application of mind, after interpreting the provisions of Rule 57S(2) held that the removal of capital goods in the present case is covered under Sub-rule (2) (a). The finding portion of the impugned order is reproduced below:
6.2. From the above it is clear that the capital goods in question were declared scrap and cleared by the appellant only because of the fact that they were not fit for use in the factory of the appellant for technical reason that they had lost the shelf life.
6.3. Records reveal that the appellant had purchased said Castables ACCMON-45 from M/s. Associated Cement Co. Katni. The goods were packed in bags each containing 50kg and subsequently cleared the goods as such to the original manufacturer. From this it emerges that the goods in question were not put to use by them and were termed as scrap for technical reasons and loss of shelf, as stated by the appellant.
6.4. It thus emerges that the appellant had removed the said capital goods on which they had availed modvat credit in terms of the Rule 57Q of the erstwhile Central Excise Rules, 1944 as such i.e. without being put to use in their factory. As per erstwhile Rule 57S (2);
2) In a case, -
(a) where capital goods are removed without being used from the factory for home consumption, on payment of duty, or for export on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such capital goods under rule 57Q;
(b).
(c)..
(emphasis added) In as much as the appellant had removed the above said Capital goods without putting them to use to the original manufacturer, they were required the pay duty on the above said capital goods in terms of the Rule 57S(2) (a) of the erstwhile Central Excise Rules, 1944.
6.5. The appellant have contended that they had filed the classification declaration under Rule 173B ibid declaring the scrap of Castables, classifying the same under Chapter sub heading No. 3816.00 and removed the same by following he proper procedure laid down under Central Excise Law. However, on perusal of the records, it transpires that the appellants in their classification declaration had classified Waste Scrap o LC-45 Castables under Chapter sub heading No. 3816.00 and not as Rejected Castables ACCMON-45.
6.6. Further, the classification declaration filed by the appellant, on 06.05.1998 i.e. after removal of said Castables ACCMON-45, was on the basis of generic description and use of the Castables under Chapter heading No. 3816.00 of the CETA, 1985. From the above it is clear that the said goods cleared by the appellant are not waste scrap of Castables as declared by the appellant in their classification declaration filed under Rule 173B of the erstwhile Central Excise Rules, 1944. Further, the citations relied by the Appellants pertain to issue of classification and are not relevant in the present circumstances.
6.7. In view of the above facts on record to establish that the appellants had removed the above said Capital goods, without putting them to sue in the factory, to the original manufacturer, they were required the pay duty on the above said capital goods in terms of the Rule 57S (2) (a) of the erstwhile Central Excise Rules, 1944 and the demand was rightly confirmed by the lower authority. Hence, I do not fin any infirmity in the impugned Order-in-Original.
6.8. As regard the imposition of penalty on the appellant, I find that the fact of removal of the Rejected Castables ACCMON-45 without putting them to use in the factory came to knowledge of the department only when the appellant unit was audited. Hence, it was rightly held by the lower authority that there was a deliberate intention to evade payment of Central Excise duty as contravention of the provision of Rule 57S(2) (a) of the erstwhile Central Excise Rules, 1944 on the part of the appellants by suppression of these facts. The penalties under Rule 57U of the erstwhile Central Excise Rules, 1944 read with Section 38A of the Central Excise Act, 1944 are therefore rightly imposable on breach of the relevant statutory provisions by the appellant. From the above unambiguous finding of the impugned order, I do not find any infirmity in the said order. As per the above discussion and the findings of the impugned order, I am of view that the impugned order is sustainable. Hence the appeal is dismissed.
(Pronounced in court) (Ramesh Nair) Member (Judicial) SM.
11Appeal No. E/1622/2010