Customs, Excise and Gold Tribunal - Mumbai
Nagreeka Exports Ltd. vs Commissioner Of Central Excise on 1 April, 2003
Equivalent citations: 2003(159)ELT891(TRI-MUMBAI)
ORDER C. Satapathy, Member (T)
1. Shri M.H. Patil, learned Advocate appearing for the appellants states that in the impugned order, the Commissioner (Appeals) has confirmed the demand of Rs. 8,49,693/- while waiving the penalty of Rs. 3 lakhs. The period of dispute is from March, 2000 to November, 2000. He states that the appellants are entitled to claim benefit of Notification No. 8/97, dt. 1-3-1997 for exemption from basic excise duty as well as benefit of Notification No. 55/91, dt. 25-7-1991 for exemption from the Additional Duties of Excise (Textiles and Textile Articles). He fairly concedes that the decision of the Punjab and Haryana High Court in the case of Vardhman Polytex Limited v. U.O.I - 2001 (135) E.L.T. 17 is against the appellants. However, he states that this decision has been appealed against to the Supreme Court. He further submits that the demand has been issued in pursuance of Board's Circular No. 554/50/2000-CX., dt. 19-10-2000 which is applicable only prospectively and not before its issue. He also submits that the impugned order does not take account of the value as the cum-duty price and that the Show Cause Notice has been issued by the Dy. Commissioner whereas only the Jt. Commissioner is authorized to issue the same as per Board's Circular No. 299/15/97-CX., dt. 27-2-1997. He also contends that the impugned order goes beyond the Show Cause Notice and hence the same cannot be sustained. He relies on the following case laws in support of his submission :-
(1) H.M. Bags Manufacturer v. CCE. - 1997 (94) E.L.T. 3 (S.C)
(2) Krishna Fruit Products Ltd. v. C.C.E., Guntur - 1998 (104) E.L.T. 636 (Tri.)
(3) C.C.E., Delhi v. Maruti Udyog Ltd. - 2002 (141) E.L.T. 3 (S.C.)
2. Shri M.K. Gupta, learned Jt. C.D.R. appearing for Revenue states that as far as the main issue in this case is concerned, the same is covered by the decision of Tribunal in the case of Parasrampuria International v. C.C.E., Indore - [2003 (152) E.L.T. (142) (T) = 2002 (52) RLT 545]. He further states that the issue of cum-duty price has not been taken up at the earlier stages and hence the same cannot be raised at this stage. Moreover, Section 14 does not have a concept of cum-duty price and therefore, transaction value is to be adopted. In this connection, he cites the following case laws :-
(1) Bhupindra Steels (P) Ltd. v. C.C.E. - 2002 (145) E.L.T. 284 (S.C.)
(2) Asian Peroxide Ltd. v. C.C.E., Guntur [2002 (146) E.L.T. 194 (T) = 2002 (53) RLT 302 (CEGAT-Bang)].
3. As regards the plea made by the appellants regarding jurisdiction of the Dy. Commissioner, he contends that such jurisdiction is available under the statute enacted by the Parliament which is not affected by instructions issued by the Board. He, therefore, submits that the appeal should be dismissed.
4. The learned Advocate for the appellants in his rejoinder states that issue of cum-duty-price is a point of law and hence the same can be raised at any stage. He cites the following case laws in this regard.
(1) 1998 (104) E.L.T. 678 (2) 1999 (108) E.L.T. 82 (3) 1991 (51) E.L.T. 631.
As regards the jurisdiction issue, he relies on the decision of Supreme Court in the case of Dhiren Chemicals - 2002 (139) E.L.T. 3 (S.C.) in support of his contention.
5. After hearing rival submissions and perusal of case records as well as cited case laws, we find that several important issues have been raised in this appeal. We deal with these issues one by one. The learned Advocate has raised the issue of jurisdiction and has questioned the competence of the Dy. Commissioner to issue the demand notice and adjudicate the same, since the amount involved is Rs. 8,49,693/-. He has cited Board's Circular No. 299/15/97-CX., dt. 27-2-1997 in this regard. The said circular states that Board has decided to review the powers of adjudication with the objective that cases are decided expeditiously and there is even distribution of work load. It also notes that the powers of adjudication without limit under Clause (a) of Section 33 of the Central Excise Act, 1944 has been delegated to Dy. Commissioner by CBR Notification No. 12-C.Ex., dt. 17-5-1947 and that Section 11A empowers any Central Excise Officer to issue notice and determine duty due. Thereafter, it proceeds to lay down limit of Rs. 10 lakhs for adjudication by the Additional/Dy. Commissioners and limit of Rs. 2 lakhs for adjudication by the Assistant Commissioners in terms of amount of duty involved. It is the contention of the learned Advocate that the Dy. Commissioners have been subsequently designated as Joint Commissioners and Assistant Commissioners have been designated as Dy. Commissioners and therefore, in this case, the Dy. Commissioner did not have the power to issue the demand notice and adjudicate the same which should have been done by the Joint Commissioner. He also cites the decision of the Apex Court in the case of Dhiren Chemicals to argue that the field officers are bound by the instructions issued by the Board.
6. We find that the said Circular of 27-2-1997 clearly recognizes the competence of the Dy. Commissioner to issue notice, determine the duty due and adjudicate the cases of confiscation and penalty without any limit under the statutory provisions contained in the Central Excise Act, 1944 and delegations made thereunder in 1947. There does not appear to be any dispute in this regard. Section 37A of the Act provides that the Central Government, by notification in the Official Gazette and subject to specified conditions, may delegate powers of the Board, Commissioner, Dy. Commissioner and Assistant Commissioner to authorized subordinate authorities. There is, however, no provision under the Act to do the reverse i.e. curtail or limit the powers given to the various authorities under the statute. Section 37B, which provides for issue of instructions by the Board to Central Excise Officers for the purpose of ensuring uniformity in the classification and levy of duty on goods, cannot also be construed by any stretch of imagination to empower the Board to limit or curtail the power of adjudication by various authorities under the Act. Therefore, we are of the opinion that the Apex Court decision in the case of Dhiren Chemicals is not applicable to this case nor it authorizes the Board to curtail or limit the powers of adjudication conferred on various authorities under the statute in the absence of any specific provision to this effect in the Act. In fact, the power of delegation under Section 37A is also not given to the Board but to the Central Government. When the legislature has not specifically vested any authorities (not even the Central Government) to curtail or limit the powers of adjudication, it is surprising that the Board is issuing general instructions limiting the statutory powers. Such curtailment is clearly illegal and unauthorized.
7. We, therefore, hold that the Dy. Commissioner has full jurisdiction under the statute to issue the demand notice and adjudicate the same, whereas the Circular dt. 27-2-1997 has been issued by the Board without jurisdiction and the same cannot be taken cognizance of by this Tribunal. The appellants cannot in any case take shelter under such illegal instructions when that would have the effect of denying the state its legitimate revenue demanded and adjudicated by officials duly vested with statutory powers.
8. As regards merits of the case, the issue has been dealt with great clarity in the cited decision of the Punjab and Haryana High Court in the case of Vardhman Polytex Limited v. U.O.I. We extract below the relevant portion of the said decision :-
"The amendment made in the second notification dated 1-3-1997 is intended to bring about parity between two types of manufacturers in respect of the goods sold in India. In our opinion the expression "any other law for the time being in force" used in notification 11/2000-C.E. is of wide amplitude and, therefore, it would take within its fold the 1978 Act and the logical consequence of issuance of notification dated 1-3-2000 is that the petitioners are liable to pay BED alongwith AED in respect of clearances made in DTA."
In view of this decision, the appellants are liable to pay the basic excise duty plus the additional excise duty under Notification No. 8/97-C.E., dt. 1-3-1997 as amended by Notification No. 11/2000-C.E., dt. 1-3-2000. This amount is payable under proviso to Section 3 of the Central Excise Act, 1944. We would like to add that Notification No. 55/91-C.E., dt. 25-7-1991 obviates the need to pay the additional duty again under the 1978 Act in addition to the composite duty under the proviso to Section 3(1) of the 1944 Act. We also note that the learned Advocate has fairly conceded that the aforesaid decision of the Punjab and Haryana High Court is clearly against the appellants.
9. As regards the contention that the Board's Circular dt. 19-10-2000 should be applied prospectively, we note that the Punjab and Haryana High Court has already observed in this context that the said Circular was issued as an abundant caution and the same has to be treated as a mere clarification of the existing position. As such, we are unable to accept the contention of the appellants that the Circular has to be given only prospective effect. As such, the duty is payable by the appellants for the period from March, 2000 to November 2000 in view of the fact that the amending Notification No. 11/2000 was issued on 1-3-2000.
10. As regards the contention that the impugned order goes beyond the Show Cause Notice, we do not find any substance in the same. The notice clearly demands the duty invoking Notification No. 1/2000, dt. 1-3-2000 and the same has been adjudicated by the Original authority.
11. As regards the issue relating to valuation for the purpose of charging duty, the learned Jt. C.D.R. has raised a question that this point was not raised at the earlier stages during adjudication and appeal proceedings. However, as contended by the learned Advocate, this being a legal issue having a bearing on the determination of the amount of duty payable by the appellants, we are of the opinion that the same needs to be given due consideration. The appellants have stated that the price which has been realised by them on DTA sale should be taken as cum-duty-price and the assessable value and the duty amount has to be worked out from the same. The learned Jt. C.D.R. contends that in view of the specific provision contained in the proviso to Section 3(1) of the Central Excise Act, 1944, valuation for DTA sale has to be done in accordance with Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 1988 under which there is no concept of cum-duty price and that the transaction value has to be applied. In this connection he cites the decision of the Tribunal in the case of Asian Peroxide [2002 (146) E.L.T. 194 (Tri.) = 2002 (53) RLT 302]. In this connection, we note that Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 1988, prescribe a number of methods of valuation, the transaction value method being the first one. The transaction value, under Rule 4 of the Customs Valuation Rules, 1988 means the price actually paid or payable for the goods when sold for export to India. In the case of DTA sale, there is no sale for export to India and as such, the application of the transaction value method for DTA sale is a legal impossibility, which does not appear to have been considered in the case of Asian Peroxide or in the Board's Circulars mentioned therein. It is also not correct to contend that the concept of cum-duty-price is not recognized under the Customs Valuation Rules. In fact, Interpretative Note to Rule 4 contained in the Schedule to the Customs Valuation Rules makes it clear that value shall not include duties and taxes. By implication, if duties and taxes have not been realized separately, the sale price has to be treated as cum-duty price and duties and taxes have to be deducted to arrive at the assessable value. We are, therefore, of the opinion that the matter needs to be remanded to the Dy. Commissioner for considering the total amount received by the appellants from DTA sale as the cum-duty-price and to recalculate the assessable value and duty payable by them on such value.
12. Accordingly, the demand confirmed by the lower authorities is set aside and the matter is remanded to the original authority for the limited purpose of re-calculating the duty demand as indicated above. The appellants will be entitled to consequential relief, if any.