Custom, Excise & Service Tax Tribunal
Solid Containers Limited vs Commissioner Of Central Excise, ... on 22 April, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO.E/1298/07 (Arising out of Order-in-Appeal No. CPA/07/Th-I/07 dated 27.6.2007 passed by the Commissioner (Appeals) Central Excise, Mumbai Zone-I For approval and signature: Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. S.K. Gaule, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
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 :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
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Solid Containers Limited
:
Appellant
VS
Commissioner of Central Excise, Thane-I
Respondent
Appearance
Shri J.H. Motwani, Advocate for Appellant
Dr. T. Tiju, SDR Authorized Representative
CORAM:
Mr. P.G.Chacko, Member (Judicial)
Mr. S.K Gaule, Member (Technical)
Date of decision 22/04/2010
ORDER NO.
Per : P.G. Chacko
In this appeal filed by the assessee, the main question relates to a demand of duty on the assessee in respect of printed boxes (made out of duty- paid mill board pasted with duty-paid kraft paper), which were manufactured and cleared by them during the period from April 1983 to October 1985. The lower authorities have demanded total amount of duty of Rs.14,34,187/- for the said period and have imposed equal amount of penalty on the assessee. The assessee had filed classification list No. 53/83 effective from 18.4.1983 describing the goods as Printed Boxes made out of duty-paid mill board pasted with duty-paid kraft paper on which proforma credit has not been availed, and classifying the same under Tariff Item No.17(3) of the Old Central Excise Tariff Act. This classification list also claimed the benefit of exemption from payment of duty on the printed boxes under Notification No.279/82-CE dated 22.11.1982 (Serial No. 1). The classification list was approved by the Assistant Collector. However, the Assistant Collector, by order-in-original dated 18.6.1984, revoked the approval of the classification list and held that the assessee was not eligible for exemption under the above notification and hence liable to pay duty at appropriate rate. In an appeal filed by the assessee against this action of the Assistant Collector, the learned Collector of Central Excise (Appeals) found that the lower authority had reviewed its earlier decision on the classification list, without jurisdiction. On this basis, the Collector (Appeals) remanded the case to the Assistant Collector for initiating proceedings for review under Section 35E of the Central Excises & Salt Act. Accordingly, an application was made under sub-section (2) of Section 35E by the Assistant Collector as authorized by the Collector of Central Excise, Thane. The Collector of Central Excise (Appeals), Bombay, considered the appeal and disposed of it by order dt. 31.7.1985, wherein the appeal was rejected as time-barred. The appellate authority found that the review made by the Collector was beyond the prescribed period of one year and consequently the appeal filed by the Assistant Collector pursuant to such review became time- barred. Against the order dated 31.7.1985 of the Collector (Appeals), the department filed an appeal with this Tribunal and that appeal came to be rejected on merits vide final order No. 234-235/93 dated 14.3.1993. The Tribunal in the said final order clearly held that the benefit of Notification No.279/82 was available to the assessee by virtue of the approval given to their classification list by the Assistant Collector. No appeal was filed by the Revenue against the said final order of the Tribunal.
2. A series of show-cause notices came to be issued covering the period April 1983 to October 1985, seeking to recover duty on the printed boxes manufactured and cleared by them during the said period. These show-cause notices maintained that the benefit of the above notification was not admissible to the noticee. These notices also proposed to impose penalty on them under Rule 173Q of the Central Excise Rules 1944. The demand of duty and the proposal for penalty were contested. In adjudication of the dispute, the Assistant Commissioner held against the assessee and his order was upheld by the Commissioner (Appeals) in an appeal filed by the party. Hence the present appeal of the assessee.
3. After examining the records and hearing both sides, we have found no justification for demand of duty from the assessee for the period during which classification list No. 53/83 ibid was in force inasmuch as this classification list was duly approved by the Assistant Collector and such approval was ultimately sustained by this Tribunal. As we have already noted, the Tribunals decision attained finality in the absence of departmental appeal. However, for the rest of the period of dispute, the assessee cannot claim a good case. For this period, one has got to examine the question whether the assessee can claim the benefit of the Notification on its terms. We have perused this notification and find that mill board boxes and mill board cartons were exempted from payment of duty, if made wholly out of mill board as per serial number (1) of the table annexed to the notification Explanation to the notification defined mill board as follows:
mill board means any unbleached homogenous board, having a thickness exceeding 0.50 millimetre and made out of mixed waste papers with or without screenings and mechanical pulp but without any colouring matter being added thereto;
The proviso to the above explanation indicated that such board shall not be specially compressed and shall not have any paper pasted on either surface. Admittedly, mill board used in the above boxes was having kraft paper pasted thereon. Consequently, the item in question did not qualify for the benefit of exemption in terms of serial number (1) of the table annexed to the notification. In this scenario, the amount of duty to be recovered from the assessee needs to be requantified by the original authority.
4. A penalty was imposed on the assessee under Section 11AC of the Central Excise Act read with Rule 173 Q of the Central Excise Rules 1944 and Rule 25 of the Central Excise Rules 2002. As rightly submitted by the learned counsel, Section 11AC was not invoked in any of the show-cause notices. There is a demand of interest on duty under Section 11AA/11AB of the Act also on the assessee. In this connection, the learned counsel has submitted that the above provisions were not invoked in the show-cause notice and, further, that any of these provisions is not applicable to this case. In this connection, the learned counsel has referred to Commissioner of C. Ex. Vs. Spic Pharmaceuticals Division 2006 (206) E.L.T.443 (Tri.-Chennai), wherein it was held as follows :-
After consulting the provisions of Section 11AA. I accept this contention. Sub-section (2) of section 11AA reads as under:-
The provisions of sub-section (1) shall not apply to cases where the duty becomes payable on and after the date on which the Finance Bill, 2001 receives the ascent of the president.
The order-in-original was passed on 1.t.2002. In other words, the assessees liability was determined on that date. The appellant has invoked sub-section (1) of Section 11AA for demanding interest from the respondent. But the provisions of the sub-section are not applicable to the present case in which duty [by way of denial of MODVAT credit] became payable only on 1.5.2002 [i.e. after the Finance Bill, 2001 received the assent of the President]. The demand on interest fails.
The learned counsel has also, broadly, pointed out that any demand or proposal beyond the scope of the show-cause notice will not be sustainable. In this connection, he has relied on Commissioner of C. Ex. Nagpur Vs. Ballarpur Industries Ltd. 2007 (215) E.L.T. 489 (S.C.), wherein it was held that it would not be open to the Commissioner to invoke the rule which was not invoked in the relevant show-cause notice. We have heard the learned SDR on the issues relating to interest and penalty also.
5. Having considered the submissions, we find that the penal provision which was not invoked in show-cause notice was not to be pressed into service by the lower authorities. Section 11AC was, therefore, illegally invoked. This provision was, even otherwise, not applicable inasmuch as the entire period of dispute was prior to the date on which Section 11AC came into force. It is, also, settled law that there can be no composite penalty under different penal provisions. The lower authorities chose to impose a composite penalty under Section 11AC, Rule 173Q (1944) and Rule 25(2002), which exercise is not permissible in law. In relation to the proposal to levy interest on duty, it can be justifiably argued that it is open to a quasi-judicial authority to demand interest on duty from an assessee even though any provision for levy of interest has not been specifically invoked in the relevant show-cause notice. There are judgments of the apex court to this effect. The present case, however, stands on a different footing. The lower authorities have ordered for levy of interest under Sections 11AA & 11AB. On the one hand, Section 11AB came into force long after the period of dispute and, on the other, Section 11AA is not applicable to this case inasmuch as the duty amount was determined after the Finance Bill 2001 received presidential assent vide Spic Pharmaceuticals Division (supra).
6. In the result, the order for levy of interest and imposition of penalty are set aside and the original authority is directed to requantify the amount to be recovered from the assessee in terms of this order. Needless to say that reasonable opportunity of being heard shall be given to the assessee. The appeal is accordingly disposed of.
(Dictated in court) (.K.Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) Sm 6