Custom, Excise & Service Tax Tribunal
M/S. Mukand Ltd vs Cce Belapur on 23 February, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/3855/03 Mum
Arising out of Order-in-Appeal No. PKA/172/Belapur/2003 dated 28.08.03 passed by the Commissioner of Central Excise (Appeals), Mumbai II.
For approval and signature:
Shri. M.V. Ravindran, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
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 :
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?
M/s. Mukand Ltd.
:
Appellant
Versus
CCE Belapur
Respondent
Appearance Shri P.V. Patankar, Advocate for appellant Shri S.S. Katiyar, SDR For Respondent CORAM:
Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 23.02.11 Date of Decision : 23.02.11 ORDER NO.
Per : M.V. Ravindran This appeal is directed against the order-in-appeal No. PKA/172/Belapur/2002 dated 28.08.2003.
2. The relevant facts that arise for consideration are that the appellant herein had manufactured and cleared excisable goods i.e. EOT cranes falling under Chapter 84 of CETA, 1985. The appellant paid appropriate central excise duty on the value of the EOT cranes. During scrutiny of the records of the appellant, conducted by CERA it was found that the appellant has not included the value of the magnets which were imported and cleared along with EOT cranes. Therefore, the range Superintendent issued two show-cause notices dated 4.5.88 and 27.11.89 demanding differential duty on an allegation of non-inclusion of the value of the magnets in the assessable value of the EOT cranes. The said demand was confirmed by the adjudicating authority vide order-in-original dated 18.08.2000. Aggrieved by such an order the appellant preferred an appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) vide order-in-appeal dated 26.04.2001 remanded the matter back to the adjudicating authority by recording the following findings:-
7. I have carefully considered the facts of the case, grounds of appeal, findings of the adjudicating authority and law on the subject. I find that basically it needs to be seen as to whether the said Magnets are attached to the cranes, before clearances from the appellants factory premises or that they were removed separately and installed at site. If the said magnets attached to the crane, before its removal, it is dutiable, otherwise not.
3. Consequent to such remand order the adjudicating authority took up the matter for denovo proceedings. Vide order-in-original dated 17.6.2002 the adjudicating authority dropped the proceedings initiated by the said two show-cause notices. Aggrieved by such an order the Revenue preferred an appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) vide impugned order set aside the order-in-original and allowed the appeal of the Revenue by recording the following findings:-
I have carefully gone through the case records and issue involved therein. I have also gone through the appeal memorandum and cross objection filed by the respondent. The issue to be decided in this case is whether the magnet was attached to the EOT crane in the factory premises before clearance in CKD condition and no other aspect is presently to be considered because the Commissioner of Central Excise (Appeals) has already given earlier clear cut directives and the said OIA was acceptable to both the contending parties as no appeal has been filed against said order. The show-cause-cum Demand notice states that the respondents had imported and received the magnet and had taken Modvat Credit in their R.G.23 A Pt II Register. It is thus obvious that the magnets were received in the factory and as is expected a manufacturer has to verify the working of their manufactured product before their despatch / clearance i.e. to say fully assembled EOT crane in this case. Thus, a fully assembly of the EOT crane was made attaching the magnet thereupon and when found OK; then only those would be dismantled and the EOT crane cleared in a CKD condition. Moreover, the respondents have not refuted the aforementioned position indicated in the Notice. It is also noticed from the records that the adjudicator has not examined the report received from the Range Supdt which states that no modvat credit was availed by the respondent vis-`-vis the allegation made in the Notice saying that such a modvat credit was in fact taken and made further inquiries on the contradictory nature of the position. Hence, the order-in-original is to be held to be not proper, correct and legal as pointed out in the appeal memorandum filed by the appellant-department. Under the circumstances, the appeal succeeds. Accordingly, I set side the order-in-original and allow the appeal. 3.1 Aggrieved by such an order, the assessee is before us.
4. The learned Counsel took us through the show-cause notices and replies filed by them. He also took us through the order-in-appeal. It is his submission that the appellant has been claiming that they are not manufacturing the magnets and are importing the same. He would submit that the EOT cranes are completely manufactured without magnets. He would submit that magnets which were supplied along with EOT cranes were on the request of their clients. He would also submit that on the spot verification done by the Range Supdt. of Central Excise and the report submitted to the adjudicating authority indicates that the cranes were designed for handling heavy iron billets without magnets as well as with magnets as per the requirement of the assessees customers. He would submit that the learned Commissioner (Appeals) has erred in not considering the factual position.
5. The learned SDR on the other hand would strongly defend the order of the Commissioner (Appeals). It is his submission that the reports submitted by the Range Supdt. could have been erroneous, only for the reason that the cranes were already cleared from the factory premises, when the verification was conducted by the said officer. It is also his submission that the cranes which were cleared could not have made operational without the magnet being supplied. He would submit that such magnets were used for lifting billets and transporting them over distance. It is his submission that the magnets are essential part of the EOT cranes, hence value of the said magnets should have been included for discharge of the duty liability on the EOT cranes.
6. We have considered the submissions made by both the sides and perused the records. We find that the issue involved in this case is regarding the magnets which were purchased and cleared by the appellant from the factory premises along with EOT cranes and whether value of such magnets needs to be included in the assessable value of the EOT cranes. It is seen from the records that the assessee while replying to the show-cause notices, as early as in June 88 and December 89 had taken clear stand that the cranes which were cleared from the factory were in knocked down condition, it was also submitted that the condition in which the cranes were cleared, possessed the essential characteristics of a EOT crane. It was also submitted by them that as a special requirement of their customers, they imported lifting magnets and supplied them along with EOT cranes. In support of such claim they had annexed the copy of the order/agreement received from their customers along with the reply. It was also submitted by the appellant before the lower authorities, that for working of the cranes, magnets are not necessary and the crane can be used without magnet.
7. As against such detailed submissions, the adjudicating authority in the denovo proceedings caused verification of the assessees claim. The findings of the adjudicating authority in this case are very vital which are reproduced as under:-
The issue before me is whether the Central Excise duty is payable on lifting magnet along with other parts of the crane which were bought out items and cleared subsequent to clearance of EOT crane. Commissioner (Appeals) in his order have stated that it needs to be seen as to whether the said magnets are attached to the cranes, before clearance from the assessees factory premises or that they were removed separately and installed at site. If the said magnets attached to the crane, before its removal, it is dutiable, otherwise not. To ascertain the factual position, range Supdt. was directed to do verification at assessees factory premises. He vide letter No. R-I/MKD/Magnets/02/229 dated 06.04.2002 have informed that the assessee have manufactured and supplied 6 Nos. 16 Ton Rotating Trolly Cranes to Visakhapatnam Steel Project Visakhapatnam and E.O.T. Cranes to Sunflag Iron and Steel Co. Ltd., Nagpur. These cranes are designed for handling of Billets without magnets as well as with the magnets as per the requirement. The assessee is not manufacturing magnets in their factory but the same were imported by them from Japan as per the requirement of these cranes on which no process appears to have been undertaken on such bought out item and no Modvat Credit was availed on these magnets.
8. It can be seen from the above reproduced portion that the range Supdt. of Central Excise who was in-charge of the assessees factory, vide letter dated 6.4.2002, after spot verification had clearly indicated that the cranes were designed for handling billets without as well as with magnets. This factual position would indicate that the appellants finished product i.e. EOT cranes were completely manufactured, even without being fitted with magnets. As against these factual verification report, findings of the learned Commissioner (Appeals) (has already reproduced in para 3 above) seems to be presumptions. Today also the learned SDR could not point out any contrary evidence from the record, on which Revenue relies upon to allege that the magnet is an essential part of the EOT crane. From the findings of the learned Commissioner (Appeals), we notice that learned Commissioner (Appeals) has presumed that the magnets were opened and tested in the factory premises. To come to such conclusion it seems that there is no evidence. In view of this factual position and in the foregoing, we are of the considered view that impugned order is not correct and is liable to be set aside and we do so.
9. The impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Pronounced in open Court) (P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk 7