Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Crescent Catalyst & Chemicals on 1 September, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPLICATION NO. E/CO/3/06 IN APPEAL NO. E/3430/05-MUM (Arising out of Order-in-Original No. 28/SK-28/2004/Thane-I dated 31st December 2004 passed by the Commissioner of Central Excise, Thane-I.) For approval and signature: Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, 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? ==================================================== Commissioner of Central Excise, Thane-I Appellant Vs M/s Crescent Catalyst & Chemicals M/s Lubrizol (I) Ltd Shri Ajit V Mehta Respondents Appearance: Shri Ajay Kumar, Joint Commissioner (AR) for Appellant Shri H G Dharmadhikari, Advocate Shri Vinay S Sejpal, Advocate for Respondents CORAM: HONBLE SHRI M V RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C J MATHEW, MEMBER (TECHNICAL) Date of Hearing: 01.09.2016 Date of Decision: 30.12.2016 ORDER NO. Per: C J Mathew:
Revenue is in appeal against order-in-original no. 28/SK-28/2004/Thane-I dated 31st December 2004 of Commissioner of Central Excise, Thane-I who, on remand from the Tribunal upon appeal against the predecessor order, dropped proceedings against M/s Crescent Catalyst & Chemicals, M/s Lubrizol (I) Ltd and Shri Ajit V Mehta, Director in the former company.
2. The dispute pertains to valuation of the chemicals, calcium sulfonate and anti-oxidant additive, manufactured by M/s Crescent Catalyst & Chemicals out of waste filter cake, supplied by M/s Lubrizol India Ltd without any charge, and cleared to M/s Lubrizol India Ltd at the rate of Rs 34.50 per kg quoted in the tender awarded to the former and on which duty liability was discharged. M/s Lubrizol India Ltd had been clearing the waste filter cake without discharge of duty liability by claiming it to be a non-excisable item but subsequently, upon advice from central excise authorities, commenced paying duty on an assessable value of Rs 200 per tonne. The case of Revenue is that the price adopted by M/s Crescent Catalyst & Chemicals did not represent the true value of the output as the cost of waste filter cakes supplied by M/s Lubrizol India Ltd had not been included in the computation of the assessable value. Because this value could not be determined, the best judgement rule in Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 1975 was invoked and the differential duty for the period May 1996 to March 2001 was computed as Rs 47,28,551 for recovery under section 11A of Central Excise Act, 1944 from M/s Crescent Catalyst & Chemicals along with interest and penalty imposed under rule 173Q of Central Excise Rules, 1944/section 11AC of Central Excise Act, 1944. Penal provisions were also sought to be invoked against Shri Ajit V Mehta and M/s Lubrizol India Ltd all in notice dated 1st June 2001.
3. Another proceeding, not connected with the present one before us, had been initiated against M/s Lubrizol India Ltd for charging duty on waste filter cake which, having been confirmed by Commissioner of Central Excise, Mumbai-VI in order dated 30th May 2000, was remanded back by the Tribunal on 13th December 2001. The remanded matter was dropped by Commissioner of Central Excise, Belapur, and though on ground of limitation, with the additional finding that waste filter cake was not excisable.
4. Noting that the order of the other Commissioner of Central Excise had decided upon the excisability of waste filter cake, the impugned order found that the remand order of the Tribunal had not considered the irrelevance of classification of the input to the issue of valuation of the output calcium sulfonate and anti-oxidant additive but went on to hold that the recovery of short levy on output, being exempted under notification no. 115/75-CE dated 30th April 1975 extended to solvent extraction industry, would not sustain.
5. Revenue challenges this order on the ground that the dropping is based on erroneous findings. Learned Authorized Representative argued each of the grounds of appeal and cited numerous decisions of High Courts and of this Tribunal to sustain these grounds. Learned Counsel for appellant were equally vehement in contesting the appeal and furnished as many decisions in support of their contention. Considering the sole ground on which the adjudicating Commissioner dropped the proceedings and the incorrect construction placed upon those findings by the authority competent to review the impugned order leading to this appeal, we do not find it necessary to refer to those submissions in detail.
6. It is contended that the adjudicating authority had wrongly attributed a finality to the order of the Commissioner of Central Excise, Belapur on the excisability of waste filter cakes which had been reviewed by Central Board of Excise & Customs on 9th February 2005. While that may be so, Learned Counsel points out that order-in-original no. 5/LTU/MUM/AJV/JC/2012-13 dated 19th February 2013 of Joint Commissioner of Central Excise, LTU, Mumbai in the matter of Lubrizol India Ltd has elaborated on the disposal of the appeal of Revenue on the very same matter referred by the reviewing committee as having attained a finality; in this order, it is categorically stated that the appeal before the Honble Supreme Court was dismissed for delay and that a subsequent decision of the Tribunal, viz., Final Order no. A/328/10/EB/C-II dated 1st October 2010 on appeal of Revenue against order of Commissioner of Central Excise, Belapur had been accepted by the department. Consequently, the alleged erroneous assumption in the order impugned before us is no longer relevant. It may, therefore, be safely said that waste filter cakes are not excisable. Though this had been so stated by the adjudicating Commissioner, a closer perusal of the particular portion of the impugned order would show that the adjudicating authority did not find the finality of classification to be relevant for a decision on his part. In asserting thus, the adjudicating Commissioner may have been at variance with the observations of the Tribunal in remanding the matter but such an assertion is not liable to be held to the detriment of the impugned order in the absence of a challenge to the order on the specific ground of deviation from the terms of remand. The review committee has not considered that angle and it is not meet for us to do so without a specific challenge by either side to the impugned order on that ground. Needless to say, the ground raised by Revenue is superfluous given the finality to the issue and the lack of reliance in arriving at the finding in the order impugned before us.
7. The sole ground on which the adjudicating authority has dropped proceedings is the eligibility to exemption available to solvent extraction industry in notification no. 115/75-CE dated 30th April 1975. Revenue, and its Learned Authorised Representative, contends that M/s Crescent Catalyst & Chemicals had been paying duty after classifying their product and they could have challenged the duty liability instead of paying the duty. It is further submitted, by relying on the decision of the Honble High Court of Madhya Pradesh in M/s Design Auto Systems Ltd v. Commissioner of Central Excise & Customs, Indore [2004 (170) ELT 269 (MP)] that appellant is not eligible for benefit of an exemption that has not been claimed by them for years. Relying on the decision of the Honble Supreme Court in re M/s Flock (India) Pvt Ltd [2000 (120) ELT 285 (SC)], Revenue contends that eligibility to exemption cannot be claimed subsequent to payment of duty without challenging the assessment. Finally, reliance was placed on the decision of the Tribunal in Commissioner of Customs, New Delhi v. M/s Perfect Latex Pvt Ltd [2004 (173) ELT 314 (Tri-Del)] to argue that the adjudicating authority had erred in travelling beyond the show cause notice to consider eligibility for exemption under notification no. 115/75-CE dated 30th April 1975.
8. Undoubtedly, the respondent has been paying duty without questioning the leviability of their output. Had they now sought a re-visit or had the adjudicating authority revisited this accepted position in the impugned proceedings, the thunderous protest of Revenue would have been justifiable. We do not find any contention of respondent seeking a reversal of that tax liability. In that context, neither the decision in re M/s Design Auto Systems Ltd and nor the one in re M/s Flock (India) Pvt Ltd assume any significance. We find that Revenue has misconstrued the context and intent of the adjudicating authority in placing his order on this foundation.
9. The adjudicating authority was called upon to decide on the allegation of short-levy. Such short-levy presumes that there is a portion of the duty liability that is yet to be recovered. In such a proceedings, it is open to the noticee to claim that there is no short-recovery by alluding to an excess recovery on the same goods. Such a claim does not adjudicate upon the duty already levied but is limited to protesting the allegation of short-recovery. That is all that has happened here and it is to that fact that the adjudicating authority has drawn attention. When the duty already collected is in excess of that leviable, there is no basis for the taxman to allege further short-recovery. The adjudicating authority does not, in doing so, set aside the duty already paid.
10. The reference to the decision in re Perfect Latex Pvt Ltd to allege illegality of action on the part of adjudicating Commissioner is indicative of a less than wholesome comprehension of the role of a tax administrator and an uninformed reading of the cited decision. Restraint on travelling beyond the show cause notice is a fundamental principle of natural justice and will determine legality of action only to the extent of detriment to noticee. The might of the State does not warrant recourse to the principles of natural justice as a bulwark for its cause. In the cited decision, the adjudicating authority had travelled beyond the show cause notice to demand duty on capital goods lying in an authorized premises and, notwithstanding the magnanimity of that authority in allowing depreciation for computing the assessable value, that act was held to be invalid because the notice did not propose such action. It is a far cry from the situation before us.
11. Just as no law, instruction or judgement can prevent a tax collector from levying a tax in accordance with law, no law, instruction or judgement can be allowed to impede a tax collector from fulfilling his constitutional obligation to collect only such tax as is authorized by law. In the present situation, the collection of the duty thus far has been without authority of law; lack of procedural wherewithal may prevent rectification of that illegality but a judicial mind should confine that illegality to the past without compounding that illegality for all time to come. Subjecting that decision to review and appeal with the sole purpose of perpetuating that illegality bespeaks impropriety. We find that the impugned order cannot be held to have travelled beyond the notice or has conferred a benefit on an assessee sans a procedure in law.
12. As the duty was not leviable, a demand for further recovery of a duty not leviable is without authority of law and must fail. The appeal of Revenue is dismissed. We would also urge the Central Board of Excise & Customs to undertake a capacity building programme to enable a responsible discharge of the power of review by the authorities subordinate to it so that the ends of law legality and propriety of adjudication and appellate orders are met and is not mere knee-jerk reaction to orders that are perceived as detrimental to Revenue. The interests of the State are not furthered by excess collection of revenue but by proper collection of tax as authorised by law. Unless that distinction is clearly and unambiguously instilled in the minds of tax officers, it is the State that will be reviled and the citizenry that will strain against the yoke of unjust levies.
(Pronounced in Court on 30.12.2016) (M V Ravindran) (C J Mathew) Member (Judicial) Member (Technical) Sp E/3430/05 2