Custom, Excise & Service Tax Tribunal
M/S.Stl Exports Ltd vs Cce, Indore on 19 February, 2016
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/decision:19.02.2016
Excise Appeal No.E/714/2006-EX(DB)
[(Arising out of Order-in-Appeal No.IND-I/345/2005 dated 26.10.2005 of the Commissioner (Appeals-I), Central Excise, Indore (M.P.)]
For approval and signature:
Honble Shri S. K. Mohanty, Member (Judicial)
Honble Shri B. Ravichandran, Member (Technical)
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Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.STL Exports Ltd. .Appellants
Vs.
CCE, Indore .Respondent
Appearance:
Rep. by Shri Mayank Garg, Advocate for the appellant.
Rep. by Shri Govind Dixit, DR for the respondent.
Coram: Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No.51007/2016 dated:19/02/2016 Per B. Ravichandran:
The appellants are a 100% EOU engaged in the manufacture of galvanized M. S. Pipe. They are importing zinc without payment of customs duty in terms of notification no.53/79 Cus dated 3.6.1997. Condition no.7 of the said notification stipules that the imported goods are to be used for the purpose of manufacture of articles within 100% EOU and such articles (including reject, waste and scrap arising in the course of manufacture of such article) if no exported out of India, are allowed to be sold in India in accordance with EXIM Policy on payment of duty of excise leviable thereon under Section 3 of the Central Excise Act, 1944 or where such articles (including reject, waste and scrap material arising in course of manufacture of such articles) are not excisable, on payment of customs duty on the imported goods used for the manufacture of such articles in an amount equal to the customs duty leviable on such articles, as if imported as such. A dispute arose regarding duty liability and quantification of duty relating to zinc scaling / dross / ash arising in the course of production of galvanized pipe. Seven demand and show cause notices were issued to the appellants to recover appropriate customs duty on imported zinc used for production of above said goods (scaling/dross/ash). These demands were to recover customs duty in the event of the above goods being treated as non-excisable. The issue was adjudicated by the original authority who vide order dated 22.06.2005 confirmed the demands. On appeal, the ld. Commissioner (Appeals) vide the impugned order dated 26.10.2005 substantially upheld the original order. Aggrieved by this, the appellants are in appeal before us.
2. The ld. Counsel for the appellants contested the findings of the impugned order on the following grounds:
a) The impugned goods - zinc, scaling, dross and ash are not manufactured items and hence the provisions of condition no.7 of notification no.53/97-Cus has no application. Reliance placed on Honble Supreme Courts decision in Indian Aluminium Co. and Tribunals decision in Bhusan Steel Ltd. 2012 (284) ELT 713 (Tribunal-Mum) and Honble Punjab & Haryana High Courts decision in Shri Ram Agro Chemicals (P) Ltd.
b) the demands are overlapping with no clear allegation as to what type of duty is being demanded due to which legal provision.
c) If at all, only duty of customs payable on zinc contained in dross, etc. can only be demanded not on the whole value of such dross, etc. This is clear from the amendment carried out in the said condition with effect from 18.05.2001. The said amendment is only clarificatory applicable for all the periods.
d) There are serious inconsistencies in the impugned order. The first demand covered period for which central excise duty was already paid. The appellant can be liable to one type of duty either excise or customs duty. The department itself is not clear as to what provision or what duty is applicable to the appellant. The ld. Commissioner (Appeals)did not give any findings on applicability of Tribunals decision in Umaji Overseas 2005 ( 184) ELT 402 (Tribunal-Mum) relied on by the appellants.
3. Ld. AR supported the findings in the impugned order. He submitted that the zinc scaling, dross, etc. are cleared on valuable consideration. These have clear marketability and hence are excisable goods.
4. Heard both the sides. Examined appeal records.
5. The point for decision is the appellants liability in terms of condition no.7 of notification no.53/97-Cus dated 3.6.1997. The admitted facts are that the appellants imported zinc without payment of customs duty in terms of said notification. They have used the zinc for the intended purpose of galvanising. During the said process, scaling, dross and ash were generated. The dispute is on the duty liability of these products. We notice that the Honble Supreme Court in Indian Aluminium Co. Ltd. 2006 (203) ELT 3 (SC) held that though dross and skimming do arise during the process of manufacture but these are not manufactured products. An article is not exigible to tax only because it may have some saleable value. The Supreme Court concluded that dross is not a manufactured product. In Shri Ram Agro Chemicals (P) Ltd. 2009 (234) ELT 218 (P&H), the Honble Punjab & Haryana High Court and the Tribunal in Bhusan Steel Ltd. (supra) held that zinc skimming and dross arising as by-products during galvanization are not manufactured excisable products.
6. A perusal of condition no.7 of the said notification will show that customs duty is payable only when imported goods are used for the purpose of manufacture of such articles (here zinc, dross, etc.). The settled legal position is that these are not manufactured items. Hence, on this ground alone, the present impugned order confirming the duty demand will not survive.
7. We noticed further that the various demands issued to the appellants did not specify the legal basis or reason for such demand of customs duties. They indicated that in the event of the impugned goods were found to be non-excisable, then customs duty is payable. Apparently, such conditional and provisional demands are not legally sustainable.
8. We find in view of above analysis, the impugned order is not sustainable and accordingly set aside the same. Appeal is allowed.
[operative portion already pronounced in open court] ( S.K. Mohanty ) Member (Judicial) ( B. Ravichandran ) Member (Technical) Ckp.
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