Custom, Excise & Service Tax Tribunal
M/S. Sri Sreerama Sahakara Sakkare vs Commissioner Of Central Excise, ... on 23 January, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
01. Appeal No.E/131/2000
[Arising out of Order-in-Original No.C.Ex.010/99 dated 22.12.1999 passed by the Commissioner of Central Excise, Bangalore-III]
02. Appeal No.E/409/2000
[Arising out of Order-in-Original No.C.Ex.09/99 dated 22.12.1999 passed by the Commissioner of Central Excise, Bangalore-III]
03. Appeal No.E/1509/2004
[Arising out of Order-in-Appeal No.233/2003-CE dated 23.07.2003 passed by the Commissioner of Central Excise, (Appeals), Mangalore]
For approval and signature:
Honble Mr. P.G. CHACKO
Member (Judicial)
Honble Mr. P. KARTHIKEYAN
Member (Technical)
_______________________________________________
1.
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 the Members wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental Authorities?
01. M/s. Sri Sreerama Sahakara Sakkare
Karkhane Ltd.
02 & 03. M/s. The Pandavapura Sahakara
Sakkare Kharkhane Ltd.
Appellants
Versus
Commissioner of Central Excise, Bangalore
Respondent
Appearance:
Shri S. Raghu, Adv.
for the Appellants Shri T.C. Rajadas, SDR for the Respondent CORAM:
Mr. P.G. Chacko, Member (Judicial) Mr. P. Karthikeyan, Member (Technical) Date of hearing : 23.01.2008 Date of decision : 23.01.2008 FINAL ORDER NO.____________ Per P.KARTHIKEYAN The first two appeals arise before us for the second time. In the first round vide final order No. 3219-3221/97 dated 03.12.97, the Tribunal had remanded the cases for fresh adjudication. These concern disputes relating to sugar season 1991-93. The third appeal is against an order of the Commissioner (Appeals) involving one of the above two appellants on the same dispute for 1994-95 and 1995-96 sugar seasons.
2. M/s. The Pandavapura Sahakara Sakkare Kharkhane Ltd., and M/s. Sreerama Sahakara Sakkare Kharkhane Ltd., manufacturing sugar short delivered/not delivered the export quotas assigned to them by the Export Agency (Agency) in terms of Sugar Export Promotion Act, 1958 (SEPA or, the Act) for the sugar seasons 1991-93. They also did not pay the Agency, proceeds of the quota sold in domestic market. Instead they paid the Agency the loss suffered by the Agency in sourcing their export quota from the market and exporting at a loss. During adjudication in the initial round the jurisdictional Commissioner had dropped the proceedings initiated to demand Additional Excise Duty (AED) for failure to deliver export quota to the Agency on the basis of a certificate issued to each of them by the Agency certifying that they had fulfilled the export quota obligation. Revenue had filed appeals before the Tribunal. Setting aside the orders of the Commissioner, the appeals were allowed by way of remand. Tribunal accepted the Revenues claim that the Commissioner could not have been satisfied about the truth of the contents of the certificates without any other supporting evidence. Tribunal permitted the parties to furnish evidence in this regard. It was also directed that the Commissioner should verify if the payment of loss suffered by the Agency in exporting the locally purchased sugar was an arrangement in terms of SEPA.
3. In denovo proceedings Commissioner enquired with the Agency if it was authorized to issue the certificates and if the arrangement followed was as per SEPA. Vide its letter dated 18.01.99 the Agency clarified that it had authority to issue certificates of discharge of export quota and that the arrangement was as per the SEPA. Directorate of Sugar which assigns quotas to every sugar factory for export also endorsed the claims of the Agency vide a separate letter dated 15.03.99. In denovo proceedings the Commissioner passed the impugned orders demanding AED at the rates specified by the Government for the purpose on the quotas not delivered to the Agency in terms of specific provisions in SEPA. Penalties of Rs. One lakh each were also imposed. He held that the appellants had not produced evidence as directed by the Tribunal and that the arrangement followed was not as per SEPA.
4. In the appeal before us the appellants have argued that they did not deliver the quota as the Agency did not demand that they should deliver the quota. SEPA required them to deliver the export quota only when the Agency demanded. As regards the acceptability of the certificates and their adequacy, they submitted that the letters from the Agency and Sugar Directorate testified that certificates were true and lawfully issued. The Ld Counsel reiterated these arguments.
5. The Ld. Counsel for the respondents cited the following case law in support of their claim that once the Agency had issued the certificate of discharge of export quota, the manufacturer was not liable to pay AED on any quantity of sugar on the ground of not delivering the same to the Agency for export.
(1) Final Order No. C-II-1101-1113 WZB/2003, dated 24/06/03, in the case of Vasanth Sahakari SSK Ltd., Vs. CCE, Mumbai.
In this order, the Tribunal held that Section 8 of SEPA provided that under special circumstances, the sugar meant for export could be sold in the domestic market. The said section specifically permitted sale of all or part of the quota sugar in the local market as the Export Agency thought fit. The certificates issued as regards the quota fulfilment by the Agency had to be considered and applied before duties under the provisions of Section 7 could be determined.
(2) Terna Shatkari SSK Limited Vs. CCE Aurangabad 2004 (177) ELT 159 (Tri.-Mum.).
In this order the Tribunal decided that once the export Agency certified that the export quota had been fulfilled, the excise department had no authority to challenge the said judgment when the provisions of Sugar Export Promotion Act, 58 conferred no such authority on the central excise authorities to sit in judgment of the said authority and hold that export in question had not been completed. It was also held that even if the quota sugar was not delivered to the agency, initiating proceedings in terms of the provisions of the Section 7 of the SEPA by the department on their own without corresponding advice from the designated authority under the SEPA was illegal. He also submitted that the notices to demand AED in terms of SEPA were issued beyond the normal period and the demands were barred by limitation.
6. Ld SDR for the Revenue submitted that the appellants had only made good the net loss suffered by the Agency in buying sugar from the domestic market to meet the quotas allotted to the appellants and the appellants had not delivered the export quotas to the Agency. Therefore the demand of AED was in accordance with law. On the same grounds taken in the appeals discussed above the Ld SDR justified the demand affirmed in the order impugned in appeal No. E/406/2000, for quantity not delivered in similar circumstances and the penalty imposed. Ld Counsel argued that the order of demand of the original authority affirmed by the Commissioner (Appeals) is not in accordance with law.
7. We have carefully considered the case records and the rival submissions. The Export Agency is specified in terms of Section 3 (1) of SEPA when it will be lawful for that authority to perform all functions of export agency under the Act. As per the Section 4 of the Act, the Central Government may fix from time to time the quantity of sugar that may be exported during any period within 20% of the total production of sugar in India in the relevant sugar season, in order to earn foreign exchange, considering the sugar available and the sugar required for domestic consumption. Section 5 empowers the Government to determine the export quota for any season for the various sugar factories. As per Section 6 every owner (sugar factory) shall, on demand by the Agency, deliver to it from time to time the sugar produced in his factory not exceeding the aggregate of his export quota. Section 7 makes applicable the provisions of Central Excise and Salt Tax 44 and the rules in order to levy and collect an AED in addition to other duties, at a specified rate on the export quota short delivered. Section 8 requires the Agency to take all practical steps to export sugar delivered to it. It is also conferred powers, to sell the sugar delivered to it in India and purchase such quantity of sugar it may consider necessary for export at any time. In taking action in terms of Section 8, the Agency shall take into account the demand supply situation in the domestic and international markets for sugar, the convenience of transporting sugar from particular factories for export, among other factors. The Agency may sell sugar or allow any sugar factory to sell whole or part of the export quota assigned to it, at a price approved by it on condition that the sale proceeds are paid to it. As per Section 9, the Agency shall reimburse the sugar factory owners the proceeds of export of the quota sugar less the expenditure incurred by it.
7.1 In the case of the orders in remand, we are required to see if the Agency was competent to issue export quota obligation discharge certificate following the appellants making good the Agencys loss on export of sugar sourced against the export quota of the appellants and whether the certificates could be accepted as lawful and truthful.
7.2 As per Section 8 of SEPA, a factory is required to deliver the export quota sugar on demand by the Agency. Section 8 empowers the Agency not to procure quota sugar from any particular sugar factory considering the market for sugar in different parts of the country, in the international market, the economics of the logistics involved and source the sugar from any other sugar factory. The Section also empowers the Agency to sell sugar or permit the factory to sell sugar being export quota at a price fixed by the agency and receive the sale proceeds.
7.3 It is obvious from the correspondence on record that the Federation of Sugar Manufacturers Associations in the country had taken up with the sugar manufacturers, the need for export of sugar and to absorb the loss so that the sugar may fetch reasonable price in the domestic market. The export Agency had decided to request the factories to make certain remittance on the basis of the estimated export loss to be able to receive the export quota for sale in the domestic market by the concerned sugar factories. This decision was arrived at in order to simplify the matters in accordance with the provisions of SEPA. The Directorate of Sugar, Ministry of Food and Civil Supplies, had also informed the appellants of the above arrangement to remit the loss suffered by the Agency in the above arrangement. The letter No. 14-2/96-E dated 15.03.99 of the Sugar Directorate, established beyond any doubt that the arrangement evolved with the trade was in accordance with the SEPA. The certificate dated 4.2.95 issued by the Export Agency in its discharge of official duties in implementing a Central Act have to be accepted as regular, lawful and truthful. This position has been confirmed by the Export Agency in their reply in response to the reference by the office of the adjudicating authority. Therefore, we accept the arrangement evolved by the authorities as being in terms of the provisions of SEPA and that the appellants had discharged their export quota obligation. In the circumstances, the appellants had not failed to deliver export quota requiring them to pay the AED in terms of Section 7 of SEPA. In the circumstances, we vacate the impugned orders of the Commissioner and allow the appeals filed by the two appellants.
7.4 As regards the appeal filed by M/s. The Pandavapura Sahakara Sakkare Kharkhane Ltd., against the order of the Commissioner (Appeals), we find that the sugar factory had short delivered sugar for export as it was not called upon to deliver the entire quantity by the Agency. The Agency had issued export quota discharge certificate to the appellant for the period in terms of the provisions of SEPA. Similar arrangement involved all the sugar factories in the country for more than one sugar season. Several appeals filed in that connection were disposed by the Tribunal on the same lines as we have decided the appeals on the remand orders. For instance, the Tribunals decision in Vasanth Sahakari SSK Ltd. (supra) and Terna Setkari SSK Ltd. (supra). In the circumstances, we allow the appeal filed by M/s. The Pandavpura Sahakara Sakkare Kharkhane Limited.
(Operative portion of the order pronounced in open court on 23-01-2008) (P.KARTHIKEYAN) (P.G.CHACKO) MEMBER (T) MEMBER (J) Ksr/BB 28-01-2008 ??
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