Custom, Excise & Service Tax Tribunal
M/S. Keltech Energies Ltd vs The Commissioner Of Central Excise on 10 October, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Division Bench
Court - I
Date of Hearing: 10.10.2011
Date of decision: 10.10.2011
Application No. E/St/453/2010
Appeal No. E/799/2010
(Arising out of Order-in-Appeal No. 34/2010 dated 15.01.2010 passed by the Commissioner of Central Excise, Mangalore)
For approval and signature:
Honble Mr. P.G. Chacko, Member (Judicial)
Honble Mr. M. Veeraiyan, 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?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Keltech Energies Ltd. ..Appellant(s)
Vs.
The Commissioner of Central Excise
Mangalore Respondent(s)
Appearance Mr. A.S. Monnappa, Advocate, for the appellant Mr. M.M. Ravi Rajendran, DR, for the Revenue Coram:
Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. M. Veeraiyan, Member (Technical) STAY ORDER No.________________2011 FINAL ORDER No.________________2011 Per: P.G. Chacko After examining the records and hearing both sides, we are of the view that the appeal itself can be finally disposed of at this stage. Accordingly after dispensing with pre-deposit, we take up the appeal.
2. The appellant is engaged in the manufacture of industrial explosives. They used to draw samples from the production batches for quality control testing to ascertain whether the product has deteriorated or was defective. During the period from April 2004 to July 2008, they tested such samples in their laboratory within the factory premises. In a show-cause notice dated 13.10.2008 the department demanded duty, education cess etc. on the samples drawn and tested in the laboratory during the above period. The department also proposed a penalty on the party under Section 11AC of the Central Excise Act. The adjudicating authority confirmed the demand of duty against them and imposed equal amount of penalty on them. An appeal filed against the order in original was rejected by the Commissioner (Appeals). Hence the present appeal of the assessee.
3. It is submitted by the learned counsel for the appellant that the question of dutiability of such samples has already been settled against the Revenue by the Tribunal in the case of CCE, Nagpur Vs. Economic Explosives Ltd. 2007 (218) E.L.T 535 (Tri.-Mum.). It is pointed out that an appeal filed by the department against the Tribunals order in the case of Economic Explosives Ltd. (supra) was rejected by the Honble Bombay High Court vide 2009 (242) E.L.T. A86 (Bom.). Learned counsel submits that Rule 141 of the Explosives Rules 1983 framed under the Explosives Act imposed a ban on sale/delivery to any person of any explosive that had deteriorated or was defective. This is the reason why samples used to be drawn and tested in the in-house laboratory. It is submitted that, only a sample passed the test, the random batch of production was entered in RG-1 and cleared from the factory.
4. We have heard learned DR also who has reiterated the findings of the original authority and first appellate authorities.
5. After considering the submissions, we are convinced that the dutiability of the samples in question needs to be settled against the Revenue in view of the Tribunals decision in the case of Economic Explosives Ltd. (supra) as affirmed by the Honble Bombay High Court. In that case it was held by the Honble High Court that as the goods were removed for in-house testing and proper accounts were maintained no payment of duty was necessary. The Honble High Court upheld the Tribunals order wherein it had been held that excise duty was not to be paid in respect of samples used for testing in in-house laboratory where separate records of the samples drawn for quality control testing was maintained by the assessee. In the present case, it is not the case of the Revenue that the assessee did not maintain such records for samples drawn for quality control testing. It is not in dispute that the samples were drawn pre RG-1 stage and the same were tested in quality control laboratory within the factory premises. Such samples are not exigible to duty of excise as held by this Tribunal in the cited cases.
6. The impugned order is set aside and the appeal is allowed. Stay application also stands disposed of.
(Pronounced & dictated in open Court)
(M. VEERAIYAN) (P.G. CHACKO)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
iss