Custom, Excise & Service Tax Tribunal
Crompton Greaves Ltd vs Commissioner Of Central Excise on 8 May, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.E/1059 & 1058/09 (Arising out of Order-in-Appeal No.AGS(124)06/09 dated 25/06/2009 & No. AGS(126)17/09 dated 25/06/2009 passed by Commissioner of Central Excise & Customs (Appeals), Aurangabad) For approval and signature: Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr.S.S. Garg, Member (Judicial) 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 :Yes 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? ========================================
Crompton Greaves Ltd., Appellant
Vs.
Commissioner of Central Excise, Respondent
Aurangabad
Appearance:
Shri.Porchkhanwala, Advocate for appellant
Shri.Sanjay Haseeja, (AR) for respondent
CORAM:
Honble Mr. P.S. Pruthi, Member (Technical)
Honble Mr. S.S. Garg, Member (Judicial)
Date of Hearing : 08/05/2015
Date of Decision : /05 /2015
ORDER NO
Per: P.S.Pruthi
1. These two appeals are filed by the appellant. The first appeal No.E/1059/09 is against the order-in-appeal No. No.AGS(124)06/09 dated 25/06/2009 passed by Commissioner of Central Excise & Customs (Appeals), Aurangabad, upholding the demand of Rs.10,84,868/-,Rs.78,835/- & Rs.25,06,568/- under Section 11AC of Central Excise Act, 1944 and equivalent amount of penalties under Section 11AC read with Rule 25 of Central Excise Rules and Rule 15 of the Cenvat Credit Rules, 2004. The second appeal No.E/1058/09 is against the order-in-appeal No.AGS (126)/17/09 dated 25/06/2009 passed by Commissioner of Central Excise & Customs (Appeals), Aurangabad, upholding the rejection of refund claim of Rs.21,59,663/-.
2. The facts are that the appellant manufactures electric motors and generators and exports a substantial portion of the goods to EOUs and through merchant exporters without payment of duty as provided under Rule 19 of the Central Excise Rules, 2002. The period of dispute is from 11/08/2003 to 15/11/2006. They had undertaken exports within six months from the date of clearance from their factory. The first issue in Appeal No.E/1059/09 is non-submission of proof of export documents within six months in respect of exports through merchant exporters, involving excise duty of Rs.25,06,568/-. The second issue is non-production of re-warehousing certificate in respect of goods cleared to the EOUs, within 90 days from the date of clearance from their factory, involving duty of Rs.10,84,868/-. The third issue is wrong availment of Cenvat credit of Rs.78,835/- on capital goods.
3. Heard both sides.
4. The learned Counsel submits that there is not even a whisper of export having not taken place or the goods not being dispatched to the EOUs and the matter is merely procedural in nature. They were forced to pay the amount of Rs.25,06,568/- and Rs.10,84,868/- only on the ground of non submission of proof of exports/re-warehousing certificates. On the first issue he states that vide their letters dated 21/05/2006, 31/01/2007, 21/06/2007 & 25/10/2007, they had given proof of export in respect of a large number of consignments. But the department ignored these letters and went ahead to issue a show-cause notice dated 14/05/2008 which was adjudicated vide Additional Commissioners order dated 15/10/2008 confirming the demand of Rs.25,08,568/- which was already paid vide Cenvat debit entry No.282 dated 15/02/2007. This order was confirmed by the Commissioner (Appeals). The Commissioner (Appeals) observed that the test check of some ARE-1s showed that proof of export was not submitted in respect of 10 ARE-1s involving duty of Rs.1,00,134/-. The test check was done without informing the appellant. In any case, the 10 ARE-1 forms are actually relevant to the deemed export to the EOUs. Having submitted the proof of export they are not required to pay interest and penalty. Further, instead of refunding the amount for which they have produced the proof of export for consignments involving duty of Rs.21,59,663/-, the adjudicating authority rejected the refund claim on the ground of time bar which is upheld by the Commissioner (Appeals) and is the subject matter of appeal No.E/1058/09. The learned Counsel submits that the responsibility of producing proof of exports lies on merchant exporter as held by the Tribunal in the case of Jay Jagdish Sugar Vs. CCE, Nasik 2004 (175) ELT 314 (Tri-Mumbai), CCE, Surat Vs. Shagun Processors Pvt. Ltd. 2009 (236) ELT 52 (Tri-Ahmed) and by Joint Secretary (Revision) in Order No.1635/2012 dated 26/11/2012.
4.1 Regarding the issue of non-availability of re-warehousing certificates in respect of exports made to EOUs, the contention is that it is the responsibility of the EOU and their jurisdictional Superintendent to ensure dispatch of re-warehousing certificates in terms of Rule 20 (3) of the Central Excise Rules. The appellant, in written submissions, states categorically that they did not execute any Bond for clearance of goods to the 100% EOU. The Bond was executed by the 100% EOU who obtained CT-3 certificate against which the goods were supplied by them. They relied on the Tribunals order in the case of Santogen Textile Mill Ltd., Vs. CCE, Mumbai 2007 (214) ELT 386 (Tri-Mumbai) and Tribunal order in the case of CCE, Nagpur Vs. Simplex Mill Co. Ltd., - 2007 (215) ELT 107 (Tri-Mumbai).
4.2 On the last issue of Cenvat credit on capital goods, the learned Counsel states that no inquiry whatsoever was conducted regarding use of these goods.
5. The learned AR reiterates the findings of the Commissioner. He states that the warehousing provisions are governed by Rule 20. The Government has vide Notification No.22/2003-CE dated 31/03/2003 obliges the consigner to follow the procedure under Rule 11 & 20 and the user industry to follow the procedure contained in Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Circular No.579/16/2001-CX dated 26/06/2001 has been issued which puts the responsibility on the consigner if the warehousing certificate is not received within 90 days of the removal. While referring to the Circular it was contended that once the goods are removed from the factory for export and if the goods are diverted the responsibility of payment lies on the warehouse in terms of Rule 20 (3).
6. We have carefully considered the submissions of both sides.
7. On the first issue of non-production of proof of exports, we find that the whole issue has been treated in a very careless and shoddy manner by the authorities. The Commissioner (Appeals) has simply done a random check of some ARE-1s and come to the conclusion that the proof of exports have not been submitted in respect of ARE-1s involving duty of Rs.25,06,568/-. Adoption of a method of random check for confirming full duty demand is unsustainable in the eyes of law. Commissioner has concluded on the basis of random check that the evidence submitted by the appellant is not reliable. We fail to understand the logic behind this conclusion without a 100% check of all the ARE-1s submitted by the appellant. In fact the issue of show-cause notice well after the submission of proof of exports under various letters written by the appellant to the department is most unfortunate. The learned Counsel states that even the 10 ARE-1s selected for random check are not related to the ARE-1s which covered export through merchant exporters. These ARE-1s actually relate to the export to the EOUs. Therefore, we find that the matter needs to be examined afresh by the adjudicating authority taking into account all documents submitted by the appellant. The adjudicating authority while deciding the case afresh must also visit various judicial pronouncements referred by the learned Counsel to the effect that it is the merchant exporter who is responsible for accountal of the goods when the goods are no longer in the control of the consigner. Even in the matter of penalty, the judgements in the case of Jay Jagdish Sugar (supra) and Shagun Processors (supra) hold that the responsibility rests on the merchant exporter.
7.1 The next issue is regarding non-receipt of re-warehousing certificates. The revenue has not been able to explain how Rule 20 (3) is not applicable. Rule 20 (3) states that the responsibility for payment of duty on the goods that are removed from the factory of production to a warehouse or from one warehouse to other warehouse shall be on the consignee. Even if Rule 20 (4) which casts the responsibility upon the consigner is considered it is for the Revenue to seek documents from the Superintendent in charge of the consignee as laid down in Board Circular No.851/9/2007-CX dated 30/05/2007. In the absence of any such verification, the demand of duty cannot be sustained. The Tribunal held in the case of Simplex Mill (supra) that the manufacturer cannot be saddled with the payment of duty because of the omissions of EOUs. The same view was expressed in the case of Santogen Textile Mill (supra). Therefore, on this issue also the case needs to be decided afresh by the adjudicating authority after making necessary verification and considering various decisions of courts.
7.2 On the issue of capital goods, both the lower authorities have not cared to examine the nature of the goods and analyse whether Cenvat credit can be allowed. We note that these goods are HR Plates, Hand Rails, fabrication racks, platform, etc. which are found to be used in erection of machinery used in factories. The Cenvat credit is allowable in such cases as held by the Tribunal in the case of Andhra Pradesh Paper Mils Ltd. Vs. CCE, Visakhapatnam 2009 (240) ELT 555 (Tri-Bang), which in turn relied on various judgements including that of Honble High Court of Rajasthan in the case of Aditya Cement Vs. UOI 2008 (221) ELT 362 (Raj). This matter needs to be looked into again by the adjudicating authority after examining the use of the goods.
8. In the second appeal against the rejection of refund claim on the grounds of limitation, we find that the demands relating to the first appeal appear to have been wrongly confirmed for various reasons as set out in our observations above. We do find that amounts were got debited without even caring to consider the proof of exports submitted by the appellant in their letters dated 21/05/2006, 31/01/2007, 21/06/2007 & 25/10/2007. Revenue without considering these letters went ahead and issued a show-cause notice on 14/05/2008 after compelling the appellant to debit the amount of Rs.25,06,568/- vide Cenvat Credit Entry No.282 dated 15/02/2007. This is total travesty of justice and needs to be rectified by the Revenue. The time limitation for determining the refund will start from the date of finalisation of the issue of demand of duty. Further, the fact that the proof of export was available to the department before issue of show-cause notice means that the amount was forcibly recovered from them and can only be termed as deposit and can definitely not be termed as an amount deposited towards excise duty. Reliance is placed on CCE Vs. Ucal Fuel Systems Ltd. 2014 (306) ELT 26 (Mad- HC). Therefore, refund is not hit by time bar.
9. As the issues are procedural in nature and arise from either non-verification of documents submitted by the appellant or non-observance of proper procedure by Revenue, the imposition of penalties is unwarranted and therefore, set aside.
10. We set aside the penalties imposed in the first appeal. Matters relating to both appeals are remanded back to the adjudicating authority for denovo adjudication on the lines of our observations above. The appeal relating to refund must be decided only after the appeal relating to demand of duty is decided. As the matter pertains to the year 2006, it would in the interest of justice that the case is decided afresh within four months of the receipt of Tribunals order.
11. Appeals are disposed of in above terms.
(Pronounced in Court on .) (S.S.Garg) Member (Judicial) (P.S. Pruthi) Member (Technical) pj 1 9