Custom, Excise & Service Tax Tribunal
Electronic Corporation Of India vs Ccce&St, Hyderabad-Iii on 5 February, 2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench Court I Appeals No. E/810/2008 & E/857/2008 (Arising out of Order-in-Original No. 15/2008-HYD-III-Commr, dated 31.07.2008 passed by CCCE, Hyderabad-III) Electronic Corporation of India ..Appellant(s) Vs. CCCE&ST, Hyderabad-III ..Respondent(s)
Appearance Shri V.J. Sankaram, Advocate for the Appellant.
Shri Dass Thavanam, Superintendent/AR for the Respondent.
Coram:
Honble Mr. M.V. RAVINDRAN, MEMBER (JUDICIAL) Honble Mr. MADHU MOHAN DAMODHAR, MEMBER(TECHNICAL) Date of Hearing: 25.01.2018 Date of Decision: 05.02.2018 FINAL ORDER No. A/30173-30174/2018 [Order per: MADHU MOHAN DAMODHAR]
1. Both these appeals involving the same impugned order, are taken up for common disposal.
2. The facts of the case are that M/s ECIL (hereinafter referred to as assessee) the appellants herein, are manufacturers of various excisable goods. The dispute in both these appeals concern eligibility for exemption under notification No. 64/95-CE, dated 16.03.1995, as amended, for goods cleared to the programme SAMYUKTA for the period 1.6.2006 to 21.8.2006. In appeal 810/2008, the impugned order, inter-alia has demanded duty amount of Rs. 51,97,951/- with interest thereon in respect of one VHF photo type system and one UHF photo type system cleared vide invoice No. 90020, dated 31.07.2006 by appellant to Defence Electronics Research Laboratory (DLRL), without payment of duty under notification No. 64/95-CE, dated 16.03.1995. Hence appeal No. E/ 810/2008 by assessee aggrieved by denial of exemption benefit and demand of duty liability.
3. Department is aggrieved by the non-imposition of penalty by the adjudicating authority under rule 25 of Central Excise Rules, 2002, hence appeal No. E/857/2008.
4. On 25.01.2018, when both these appeals came up for hearing, on behalf of assessee, Ld. Advocate Shri V.J. Sankaram reiterated the grounds of appeal and also made oral and written submissions which can be broadly summarised as under:
a) It is exfacie incorrect to assume that the age long exemption ceased to exist by 1.6.2006 and re-commenced on 21.8.2006.
b) The basic objective in granting the exemption is that all goods require for the SAMYUKTA PROGRAMME should be duty free always. As long as the programme continues the exemption should continue and therefore it should be deemed to have continued and there was only short administrative delay in issuing the notification extending the period of exemption.
c) Otherwise, it would lead to incredible premise that for the short period of 81 days, the exemption was not there, although it was existing for many years either and continued in the year 2006 without any break by later notification no. 40/2006-CE. Such notifications were issued during earlier period also extending period of extension. There were also such time lag earlier also in issuing notifications.
d) In fact, after these proceedings by another show cause notice dt 23.12.2008 was issued for similar spell, this time demanding duty on goods supplied on 22.12.2007 on the ground that on that day there was no exemption as the exemption expired by 30.11.2007, it was later revived by notification No. 15/2008 dated 17.03.2008 after 97 days. This case was dropped by Commissioner (Appeals) by his order-in-appeal No. 3/2010(H-III)CE, dated 28.4.2010. No appeal seems to have been filed by Revenue on this order.
5. In respect of departmental appeal No. E/857/2008, Ld. Counsel states that for these very reasons, there cannot be any penalty imposable on the assessee.
6. On the other hand, Ld. AR Shri Das Thavanam, on behalf of department, in respect of appeal No. 810/2008 submits the confirmation of duty liability is fully justified, and at the same time prays that appeal of Department No. E/857/2008 seeking imposition of penalty may be allowed.
7. Heard both sides and have gone through the facts.
8. The parent notification No. 64/95-CE, dt. 16.03.1995 inter-alia exempted central excise duty on all goods supplied to the programme SAMYUKTA under the Ministry of Defence, with the caveat that the exemption shall not have affect on or after the first day of December, 1999. However, the validity of the exemption was kept on being extended by various notifications as under:
Sl. No. Notification Number and date Date upto which exemption to SAMYUKTA programme was available Date of issue of amending Notification
1. 64/95-CE dt/ 16.03/1995 (parent notification) 30.11.1999 20.02.2000
2. 4/2000-CE, dt. 21.02.2000 31.08.2000 29.09.2000
3. 49/2000-CE, 29.09.2000 30.11.2002 03.12.2002
4. 58/2002-CE, dt. 03.12.2002 31.03.2003 12.06.2003
5. 51/2003-CE, dt. 12.06.2003 31.03.2004 23.03.2004
6. 18/2004-CE, dt. 23.03.2004 31.11.2005 24.01.2006
7. 1/2006-CE, dt. 24.01.2006 31.052006 21.08.2006 The notification No. 1/2006-CE extended the validity of the parent notification 64/95-CE, upto Ist day of June, 2006. However, the next notification extending the validity period was 40/2006-CE, dt. 21.08.2006 which extended the validity period upto Ist day of December, 2007. Department has taken the view that since the amending notification No. 1/2006-CE caused extension of validity period only upto 01.06.2006, and since there was no further notification was issued for extending the validity beyond 01.06.2006, till notification No. 40/2006-CE was issued on 21.08.2006 duty free clearance under parent notification No. 64/95-CE would not be available for the interim period. It however appears to be reason that the Government have continued extending validity of the parent notification on the exemption even beyond 21.08.2006, hence the intention to extend the exemption for the programme SAMYUKTA would not have ceased for the short period of 2 = months.
9. A similar issue had come up before Honble Supreme Court in W.P.I.L Limited vs. CCE, Meerut reported in [2005(181) ELT 359 (SC)]. The facts were that pumps as well as part thereof which were used for manufacture of power driven pumps exempted from levy of excise duty since 1978. However, while issuing a consolidated notification No. 46/94, incorporating earlier notification dt. 01-03-1994, part of power driven pumps which all along have been exempted, were omitted. The Government on representations, amended the notification No. 46/94 by issuing another notification No. 95/94 of April 25, 1994 correcting the mistake and restoring exemption to the parts of power driven pumps also. Department took the view that as there was no exemption for the intervening period 01.03.1994 to 21.04.1994, duty liability would arise in respect of parts cleared by the appellant. Honble Supreme Court has held as follows:
14. In our opinion, therefore, the authorities were in error in upholding the demand and in directing the appellant to pay excise duty.
15. The learned counsel for the appellant is also right in relying upon a decision of this Court in Collector Of Central Excise, Shillong v. Wood Craft Products Ltd.. 1995 3 SCC 454 In that case, this Court held that a clarificatory notification would take effect retrospectively. Such a notification merely clarifies the position and makes explicit what was implicit. Clarificatory notifications have been issued to end the dispute between the parties.
16. In view of the consistent policy of the Government of exempting parts of power-driven pumps utilised by the factory within the factory premises, it could not be said that while issuing Notification No. 46/94 of 1-3-1994, the exemption in respect of the said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained as it was and in view of demand being made by the Department, a representation was made by the industries and on being satisfied, the Central Government issued a clarificatory Notification No. 95/94 on 25-4-1994. It was not a new notification granting exemption for the first time in respect of parts of power-driven pumps to be used in the factory for manufacture of pumps but clarified the position and made the position explicit which was implicit.
10. We find that the ratio of W.P.I.L. Limited judgment is applicable on all fours to the facts of the present appeal. We also find that for subsequent period i.e. 01.12.2007 to 16.03.2008 which also was not covered by notification till issue of amended notification 15/2008 CE, dt.17.03.2008, in similar proceedings emerged against this very appellant, Commissioner (Appeals) vide order in appeal No. 05/2010 (H-III) CE, dt. 28.04.2010, inter-alia relied upon the same WPIL Limited judgment of Honble Apex Court, held with the subsequent notification entitles the exemption to the goods cleared by the appellant for the intervening period also. We are informed that the Order-in-Appeal has not been appealed against by the Department.
11. In the circumstances and in particular applying the ratio of Honble Apex Courts judgment in the case of W.P.I.L. Ltd (supra), we hold that the benefit of notification No. 67/95-CE in respect of impugned goods cleared by the appellant will be available even during the period of dispute. Impugned order is therefore set aside and appeal allowed with consequential benefits, if any, as per law.
(Pronounced in open court on 05.02.2018.)
(MADHU MOHAN DAMODHAR) (M.V. RAVINDRAN)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
vrg
(1) Appeal No. E/810/2008
E/857/2008