Custom, Excise & Service Tax Tribunal
Aloke Steel Industries Pvt Ltd vs Ranchi Commissionerate on 17 December, 2019
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Excise Appeal No.79415 of 2018
(Arising out of Order-in-Appeal No.414/RAN/2018 dated 26.09.2018 passed by
Commissioner of CGST & Central Excise(Appeal), Ranchi.)
M/s. Alok Steel Industries Private Limited
(Near P.B. Bank, Main Road, Ramgarh Cantt-829122,
Dist-Ramgarh, Jharkhand)
...Appellant
VERSUS
Commissioner of CGST & Central Excise, Ranchi
Commissionerate
.....Respondent
(Grand Emerald (2nd and 3rd Floor), Ashok Nagar, Kadru-Argora, Main Road, Ranchi-834002.) WITH Excise Appeal No.79425 of 2018 (Arising out of Order-in-Appeal No.413/RAN/2018 dated 26.09.2018 passed by Commissioner of CGST & Central Excise(Appeal), Ranchi.) M/s. Jharkhand Ispat Private Limited (Vill & PO, Hesla, Argada, Ramgarh Cantt-829122, Dist-Ramgarh, Jharkhand) ...Appellant VERSUS Commissioner of CGST & Central Excise, Ranchi Commissionerate .....Respondent (Grand Emerald (2nd and 3rd Floor), Ashok Nagar, Kadru-Argora, Main Road, Ranchi-834002.) AND Excise Appeal No.79711 of 2018 (Arising out of Order-in-Appeal No.412/RAN/2018 dated 26.09.2018 passed by Commissioner of CGST & Central Excise(Appeal), Ranchi.) M/s. Maa Chhinnmastika Cement & Ispat Private Limited (Hehal, Barakakana, Ramgarh-829103, Dist-Ramgarh, Jharkhand) ...Appellant 2 Excise Appeal Nos.79415, 79425 & 79711 of 2018 VERSUS Commissioner of CGST & Central Excise, Ranchi Commissionerate .....Respondent nd rd (Grand Emerald (2 and 3 Floor), Ashok Nagar, Kadru-Argora, Main Road, Ranchi-834002.) APPEARANCE Shri Rajeev Agarwal, Chartered Accountant for the Appellant (s) Shri H.S.Abedin, Authorized Representative for the Respondent (s) CORAM: HON'BLE SHRI P. K.CHOUDHARY, MEMBER(JUDICIAL) HON'BLE SHRI BIJAY KUMAR, MEMBER(TECHNICAL) FINAL ORDER NO. 76894-76896/2019 DATE OF HEARING : 24 October 2019 DATE OF DECISION : 17 December 2019 P.K.CHOUDHARY :
These appeals have been filed by the appellant assessees against Order-in-Appeal dated 26.09.2018 passed by the Ld. Commissioner (Appeals), Ranchi, which are on identical issues pertaining to the period from April 2011 to December 2016 and hence, taken up together for disposal by this common order.
2. The facts of the case in brief are that the appellants are engaged in the manufacture of sponge iron on which central excise duty is being paid. In the course of said manufacture, 'dolochar' (also known as 'coal char') is produced which is a waste item on which demand was raised by Central Excise Department. Show Cause Notices (SCN) were issued to classify the said goods under heading 2619 which provides for "slag, dross, scaling and other waste from the manufacture of iron and steel". In the course of adjudication, the Ld. Addl. Commissioner while taking a view that dolochar is not classifiable under the aforesaid chapter heading, dropped the demand proposed in the SCN. Subsequently, in the first appeal filed by Revenue, the Ld. Commissioner (Appeals) observed that dolochar is a manufactured 3 Excise Appeal Nos.79415, 79425 & 79711 of 2018 product classifiable under chapter heading 2619 and is marketable since the assessee has fetched consideration on which the central excise duty demand has been raised. On the basis of said observations, he allowed the appeal of the Revenue and confirmed the duty demand by invoking extended period of limitation, demanded interest and imposed penalty equivalent to the duty amount. The appellants have, however, reversed CENVAT credit in terms of Rule 6(3) of the CENVAT Credit Rules, 2004, pursuant to the amendment in the definition of term 'exempted goods' vide Notf. 6/2015-CE(NT), in terms of which the said exempted goods would also include non excisable goods.
3. Sri Rajeev Agarwal, learned Chartered Accountant, appeared for the appellant and Sri H S Abedin, learned Authorized Representative, appeared for the Revenue.
4(i). The learned Chartered Accountant appearing for the appellant submitted that the manufacturing process undertaken by them is through 'Coal based Direct Reduction Kiln' route using non-coking coal as raw material. In such process of direct reduction, there is no smelting of iron ore and thus coal char/dolochar produced during reduction process cannot be considered as waste from iron and steel plant. The Central Excise Tariff under heading 2619 provides for "slag, dross, scaling and other waste from the manufacture of iron and steel". He stated that as per the Explanatory Notes issued by the World Customs Organization, Brussels, chapter heading 2619 covers those goods (slags) obtained during the smelting of iron ore. It is his submission that there is no smelting of iron ore in the DR kiln and therefore, 'dolochar' generated in the course of manufacturing cannot be said to be arising out of the iron and steel plant and hence, dolochar cannot be classified under Tariff Sub-Heading 26190090. In this regard, he also relied on the certificates issued by Chartered Engineer.
4Excise Appeal Nos.79415, 79425 & 79711 of 2018 4(ii). He further submitted that the various Benches of the Tribunal have already decided that 'dolochar' is not classifiable under chapter heading 2619 and hence not excisable. He placed reliance on the following decisions:-
CCE, Raipur vs. HEG Ltd. [Final Order dated 19.02.2016] G.R. Sponge & Power Ltd vs. CCE, Raipur [Final Order dated 20.06.2016] Jai Balaji Industries Ltd vs. CCE, Raipur [Final Order dated 19.12.2016] MSP Steel & Power Ld vs. CCE, Raipur [2017- TIOL-CESTAT-
DEL] CCE vs. Bellary Steels & Alloys Ltd. [2017 (358) ELT 1046 (Tri-Bang)] Bellary Steels & Alloys Ltd. vs. CCE [2006 (199) ELT 808 (Tri-
Bang)] HEG Ltd vs. CCE, Bhopal [2004 taxmann.com 194 (New Delhi
- CESTAT)] 4(iii). He further submitted that the Tribunal in the case of CCE vs. Reactive Metals of India Pvt Ltd [2018 (8) GSTL 194 (Tri-Hyd)] vide its Final Order dated 06.09.2017 has taken a view that dolochar is classifiable under chapter heading 2619. He submitted that said view has been taken without taking note of any of the precedent decisions already rendered by the Tribunal and hence 'Per Incurium'. It is his submission that 'Per Incuriam' decisions do not have any binding effect. He relied on the decision of the Hon'ble Supreme Court in the State of Bihar vs. Kalika Juer alias Kalika Singh & others [(2003) 5 SCC 448] and the decision of the Income tax Appellate Tribunal, Kolkata Bench, in the case of ITO vs. Modern International (ITA no. 1253/Kol/2011 Final Order dated 08.02.2012) to submit that the decisions which are 'Per Incurium' do not have any legal force.
5Excise Appeal Nos.79415, 79425 & 79711 of 2018 4(iv). He further submitted that even if it is assumed that dolochar is a slag and hence covered under chapter heading 2619, the same shall be unconditionally exempted from payment of central excise duty vide serial no. 6 of Notf. 4/2006 (Supra) which covers "slag arising in the manufacture of iron and steel".
4(v). The learned Chartered Accountant also contested the demand on limitation. He referred to the letter dated 26.08.2015 issued by the Superintendent of Central Excise whereby it has been clearly stated that mere because dolochar is sold cannot make it excisable and hence not liable to central excise duty. He accordingly submitted that the fact of clearance of dolachar was well within the knowledge of the department and hence suppression cannot be alleged to impose penalty and invoke extended period of limitation.
5. On the contrary, the learned Authorized Representative appearing for the Revenue supported the findings of the learned Commissioner (Appeals) and submitted that the Tribunal in the case of Reactive Metals of India (Supra) has already held that dolachar is classifiable under heading 2619 and therefore, the duty demand is rightly confirmed against the appellants. It is his submission that the appellants have fetched huge recovery for clearance of dolachar and hence the same is marketable on which duty is liable to be paid. He prayed that the appeal filed by assessee does not have any merit and is liable to be rejected.
6. Heard both sides and perused the records.
7. We find that the only issue to be decided is whether 'dolochar', also known as 'coal char', is classifiable under chapter heading 2619 of Central Excise Tariff.
We have perused the various decisions of the Tribunal relied by the appellants herein. We note that the co-ordinate Bench of the Tribunal at Bangalore in the case of CCE vs. Bellary Steels and Alloys 6 Excise Appeal Nos.79415, 79425 & 79711 of 2018 Ltd [2017 (358) ELT 1046 (Tri-Bang)] vide final Order dated 08.05.2017 while dealing with the demand raised by the Department on dolachar under heading 2619 observed as below:-
"4. The product in question arises in the process of manufacture of sponge iron in the rotary kiln where non-coking coal is added to the iron ore. Revenue's contention is that the impugned goods is generated as a waste containing coal char /dust/shell in the manufacturing process of sponge iron and hence it is to be rightly classifiable under 2619. It has further been contended that it is a new product which has a distinct name, character and use and is also found to be marketable.
It is to be noted that the impugned goods are nothing but waste arising during the course of manufacture of sponge iron. In the impugned order, the learned Commissioner (Appeals) has referred to the Chemical Examiner's report which indicates that the goods are predominantly comprising of coal. The use of the impugned goods is also as fuel to generate heat. For these reasons in the impugned order, the view taken is that the product is akin to coal and accordingly is to be classified under 2701.00. We find no reason to interfere with such a finding of the Commissioner (Appeals) and hence the same is upheld and the appeals filed by the Revenue are rejected."
We further note that the various co-ordinate Benches of the Tribunal have also held that dolochar arising in the course of sponge iron manufacture cannot be said to be manufactured product but is a waste item on which duty demand cannot be sustained. The Tribunal in Heg Ltd's case (Supra) vide Final Order dated 19.02.2016 while referring to the Supreme Court's decision in the case of Ahmedabad Electricity Co. Ltd 2003 (158) ELT 3 (SC) has held that char / dolachar is not liable to central excise duty. Similar views have been taken in the decisions relied by the appellant in the case of G.R. Sponge & Power Ltd (Supra), Jai Balaji Industries Ltd (Supra). We are therefore 7 Excise Appeal Nos.79415, 79425 & 79711 of 2018 of the view that the issue is no longer res integra inasmuch as the issue already stands settled in favour of the appellants.
In so far as the decision in the case of Reactive Metals of India Pvt Ltd (Supra), where contrary view has been taken, we find that none of the precedent decisions of the Tribunal has been referred or dealt by the Tribunal. We agree with the contention of the learned Chartered Accountant that the said decision in the case of Reactive Metals (Supra) is 'Per Incuriam' and hence cannot be relied by following the law settled by the Hon'ble Supreme Court in the State of Bihar vs. Kalika Juer alias Kalika Singh & others (2003) 5 SCC 448. The Income tax Appellate Tribunal, Kolkata Bench, in the case of ITO vs. Modern International (ITA no. 1253/Kol/2011 Final Order dated 08.02.2012) wherein the Hon'ble Tribunal observed as below:
"8. In the light of the views expressed by coordinate bench, with which we are in considered agreement, we decline to be guided by the decision of the coordinate bench in Lovelesh Jain (supra). We have our highest regards to the views so expressed by the coordinate bench, but quite clearly the coordinate bench was oblivious of the fact that there is already a binding judicial precedent on the issue, and as held by Hon'ble Andhra Pradesh High Court (FB) in the case of B R Constrictions (supra), a decision so rendered in "ignorance of a previous decision of its own or of a Court or co-ordinate jurisdiction which covered the case before it" lacks binding precedence value.
9. Even after this decision was pointed out, learned Departmental Representative does not give up. His next plea is that now that divergent views have been expressed by coordinate benches, the matter should at least be referred to a Special Bench. We see no legally sustainable merits in this plea either. Once we hold that Lovelesh Jain decision (supra) by the coordinate bench cannot be accorded binding precedence value, the binding judicial precedents that we have before us in favour of the assessee. In any case, we are in considered agreement with the reasoning adopted by, and conclusions arrived in, these binding judicial precedents. We, 8 Excise Appeal Nos.79415, 79425 & 79711 of 2018 therefore, see no reasons to refer the matter to the Special Bench either."
In so far as limitation is concerned, we have perused clarification provided by the Central Excise Department vide letter dated 26.08.2015 that merely because dolochar is sold it cannot be said to be excisable. In view thereof, there cannot be any suppression. Therefore, the case of the appellants succeeds both on merits and on limitation. The impugned order is set aside and the appeals are allowed with consequential relief as per law.
(Order pronounced in the open court on 17 December 2019.) SD/ (P.K.CHOUDHARY) MEMBER (JUDICIAL) SD/ (BIJAY KUMAR) MEMBER (TECHNICAL) sm