Customs, Excise and Gold Tribunal - Mumbai
Clancey Precision Components Pvt. Ltd. ... vs Commissioner Of Central Excise And ... on 25 May, 2007
Equivalent citations: 2007(119)ECC158, 2007ECR158(TRI.-MUMBAI), 2007(216)ELT242(TRI-MUMBAI)
ORDER M.V. Ravindran, Member (J)
1. All these four appeals are directed against Order-in-original dt. 28.2.2006 which confirm the demand of the duty and also imposed penalties on the appellants. Since the issue involved in this case is arising out of the same order-in-originals they are being disposed off by a common order.
2. The relevant facts of the case are the appellant company is a 100% EOU and procure inputs duty free either indigenously or by way of import, for use in relation to the manufacture of camshafts. One of the input procured by the appellant is Resin Coated Sand (RCS). This RCS is used to make moulds/patterns and cores, which are in turn utilized for the manufacture of camshafts. After the completion of the relevant processes, the resin coated sand after use yields burnt sand as remnant. This burnt sand is non-excisable goods and is disposed off by the appellant company. It is the contention of the Revenue that the appellant company having availed benefit of Notification No. 1/95-CE dt. 4.1.1995 & No. 53/97-CE-Cus. dt. 3.6.1997 are governed by the conditions at paragraph 7 and having not complied with the same are liable for payment of the Customs/Central Excise duty on the inputs procured and consumed by them. The appellants resisted the show cause notice on merits. The adjudicating authority come to the conclusion that the appellant has violated the paragraph No. 7 of the said notifications and on this conclusion confirmed demand and imposed penalties on the appellant.
2. The Ld. Advocate submits that the paragraph 7 of Notification No. 53/97-Cus. was introduced for the purpose, to put an embargo on the consumption of the inputs which are to be consumed in the manufacture of exempted products. It is his submission that the said embargo does not apply if the final products which are manufactured by the appellants are excisable. He relies upon the decisions of the Tribunal in the case of Hanil Era Textile Ltd. as reported at which was affirmed by the Supreme Court as reported at [2005 (180) ELT A44].
3. The Ld. SDR submits that the appellants have clearly violated the paragraph 7 of Notification No. 53/97-Cus in much that the said para very clearly indicates that rejected waste and scrap material, if not excisable, Customs duty/Excise duty i.e. leviable on the inputs has to be discharged by the appellant company.
4. Considered the submission made in detail by both the sides and perused the records. It is undisputed that the appellants are 100% EOU and they procured duty free resin coated sand for the manufacture for final products that are totally exported by the appellants. It is also undisputed that the duty free inputs (RCS) has been accounted by the appellants and that the appellant have continuously achieved the export obligations as set by the DGFT. It is also not disputed that the manufacturing process results in the burning of the resin coated sand, which is of no use to the appellants, and it has to be cleared from the appellant's factory. It is also undisputed that the said burnt sand is a non-excisable item.
5. In order to examine whether the appellants have violated condition at paragraph 7 of Notifications No. 53/97-Cus. It is necessary to read the said para.
Notwithstanding anything contained in this notification exemption herewith shall also apply to goods which on importation into India are used for the purpose of manufacture of articles within hundred percent Export Oriented Unit and such articles (including rejects, waste and scrap material arising in the course of manufacture of such articles even if not exported out of India, are allowed to be sold in India, in accordance with the Export and Import Policy, on payment of duty of excise leviable thereon under Section 3 of the Central Excise Act, 1944 (1 of 1944) or where such articles (including rejects, waste and scrap material) are not excisable, customs duty equal in amount to that leviable on the inputs obtained under this notification and used for the purpose of manufacture of articles, which would have been paid, but for the exemption under this notification, shall be payable at the time of clearance of such articles; or where such articles are cleared to the warehouses appointed or registered under the notification of the Government of India in the Ministry of Finance, Department of revenue number 26/98-Central Excise (NT), dated the 15th July, 1998 or cleared to the warehouses authorized to carry on manufacturing process or other operations under Section 65 of the Customs Act, 1962 (52 of 1902) and under the manufacture and Other Operations in Warehouse Regulations 1966 or cleared to the licence holders referred to in Clause (e) of paragraph 9.10 of the said Export and Import Policy, without payment of duty.
It may be noticed from the above-reproduced paragraph 7 of the notification that the embargo put is in respect of the "such articles" which are non-excisable. It would mean that "such articles" are the articles which are be manufactured as final products by the appellant as per the LOP given by the DGFT. In the present case before us, the castings manufactured by the appellant are the "such articles" as envisaged in Notification No. 53/97. If that be the case, we find that the decision of the Tribunal in the case of Hani Era (Supra) clearly covers the issue in the present case before us. We may read paragraph 17 from the said judgment, which dealt with the very same paragraph 7 of Notification No. 53/97-Cus.
Further, Para 7 of Notification No. 53/97 provides that where the articles manufactured within a 100% EOU are not excisable, then customs duty is payable on imported goods used for the manufacture of such articles in an amount equal to customs duty leviable on such articles as if imported as such. W.e.f. 18.5.2001 condition 7 provided for payment of customs duty equal in amount to that leviable on the inputs obtained under the notification and used for the purpose of manufacture of such articles, which would have been paid, but for the exemption under the notification, and the duty was payable at the time of clearance of such articles. It is significant to note that the 'articles' referred to in paragraph 7 are the articles for the manufacture of which the 100% EOU has been set up, which in this case is yarn; therefore the question of payment of Customs duty does not arise when the non-excisable item is electricity which is not the articles referred to and covered by condition 7 of the Notification.
6. From the plain reading of the above, reproduced paragraph of the judgment, it is very clear that the appellants case is squarely covered by the decision of the Tribunal in the case of Hanil Era and it is also noticed that the said judgment has been upheld by the Hon'ble Supreme Court on an appeal filed by the Revenue.
7. Accordingly, we are of the view that the impugned order demanding the Customs duty and the Central Excise duty from the appellant is not sustainable and is liable to be set aside and we do so.
3. All the appeals are allowed with consequential relief if any.
(Pronounced in court)