Custom, Excise & Service Tax Tribunal
Cce, Jaipur vs M/S.Alwar Processors Pvt. Ltd on 12 February, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, PRINCIPAL BENCH NEW DELHI
COURT NO. I
Date of Hearing/decision: 12/02/2014
Appeal No. E/3034 of 2005-Ex (DB)
[Arising out of Order-in-Appeal No.165(MPM)CE/JPR-I/05 dated 15.06.2005 passed by Commissioner (Appeals-I), Central Excise- Jaipur-I]
For approval and signature:
Honble Mr. Justice G.Raghuram, President
Honble Mr. Rakesh Kumar, 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 Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
CCE, Jaipur Appellant
Vs.
M/s.Alwar Processors Pvt. Ltd. Respondent
Appearance: Sh. Shweta Bector, DR for the Appellant Sh. Bipin Garg, Advocate for the Respondent CORAM : Honble Mr. Justice G. Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO: 51466 / 2014 Per Rakesh Kumar The relevant facts leading to filing of this appeal are, in brief, as under:-
1.1 The respondent are engaged in the processing of fabrics with the aid of power and during the period of dispute, had one Hot Air Stenter with five chambers. According to the respondent company, they were also having proprietary interest in another unit viz. Anubhav Textile, Kairthal, which was engaged in the weaving of grey fabrics by Power Looms and according to them, the production of grey fabrics by M/s. Anubhav Textile, during 1998-99 (upto Feb, 1999 ) was Rs.2.68 Lakhs. The Central Government under Section 3 A (3) of the Central Excise Act, 1944 specified the rate of excise duty on the processed textile fabrics falling under Heading No.52.07, 52.08, 52.09, 54.06, 54.07, 55.11, 55.12, 55.13, 55.14 of the Tariff, manufactured by an independent processor with the aid of Hot Air Stenter. In terms of para-6 of this notification, the same was not applicable to a composite mill i.e. a manufacturer or processor engaged in processing of fabrics with the aid of power along with spinning of yarn from fibers and weaving or knitting or crocheting of fabrics within the same factory and includes a multi-locational composite mill, i.e., a public limited company which is engaged in the processing of fabrics with the aid of power along with the spinning of yarn from fibres and weaving or knitting or crocheting of fabrics in one or more factories owned by the same public limited company. The department was of the view that the respondent are independent processors, as their production of grey fabrics from their unit M/s. Anubhav Textile, Khairthal was negligible, as compared to the value of processed fabrics manufactured by them during the same period and accordingly, the department was of the view that the respondent are required to discharge their duty liability under Compounded Levy Scheme of Notification No.36/98-CE dated 10.12.98 issued under Section 3 A (3) of the Central Excise Act, 1944 read with Rule 96 ZQ of the Central Excise Rules. In this regard, an order No.5/2000 dated 18.2.2000 was passed by the Asstt. Commissioner holding that the respondent are independent processors and are liable to discharge duty liability under Rule 96 ZQ read with Notification No. 41/98-CE dated 10.12.98. By another order No87/2000 dated 3.7.2000, the Asstt. Commissioner confirmed the duty demand of Rs.57,98,870/- for the period from 16.12.98 to 27.02.99 and for the period 28.2.99 to 5.11.99. On appeals being filed to the Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-appeal dated 28.3.2001 set aside the orders-in-original No. 5/2000 dated 18.02.2000 and also the order-in-original No. 87/2000 dated 3.7.2000 in so far as it covered the period from 16.12.98 to 27.02.2099 .and for the subsequent period from 28.02.99 remanded the matter to the Asstt. Commissioner for denovo consideration in terms of the directions given in para 12 D of the order. Thus, by this order, the duty demands for the period 16.12.98 to 27.2.99 were set aside and the demands in respect of the period from 28.2.99 onwards, the matter was remanded to the Asstt. Commissioner for de novo adjudication. In de novo adjudication, the Asstt. Commissioner vide order-in-original No. 20/2004 dated 10.02.2004 confirmed duty demand of Rs.45,55,061/- for the period from 28.2.1999 to 5.11.1999 and also imposed penalty on the respondent under Rule 96 ZQ(5)(ii).On appeal being filed to the Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-appeal dated 16.05.2005 allowed the appeal on the ground that M/s Anubhav Textile is engaged in the activity of weaving of fabric and therefore respondent are not covered under the definition of independent processors, and are not covered under the Compounded Levy Scheme notified under Section 3 A(3) of the Central Excise Act, 1944 read with erstwhile Rule 96 ZQ of the Central Excise Rules which are not applicable to them. He accordingly set aside the duty demand, interest and penalty. Against this order of the Commissioner (Appeals), this appeal has been filed by the Revenue only on the ground that the respondent during the period of dispute were covered by definition of independent processors.
2. Heard both the sides.
3. Ms. Sweta Bector, ld. Departmental Representative, assailed the impugned order by reiterating the grounds of appeal in the Revenues appeal and emphasized that the respondent notwithstanding their proprietary interest in M/s Anubhav Textile during the period of dispute would be covered by definition under independent processors as given in Notification No.36/98- CE dated 10.12.98, as the production of M/s. Anubhav Textile was negligible less than 1% of the production of processed fabrics by the respondent as independent processors. She also cited the judgment of Honble Punjab & Haryana High Court in the case of Shree Bhagwati Steel Rolling Mills Vs. CCE, Chandigarh - 2007 (207) ELT 58 (P&H) wherein it was held that notwithstanding the omission of Section 3 A w.e.f. 11.5.2001 and omission of Rule 96ZO, 96ZP, 96ZQ w.e.f. 1.3.2001, the liability of the assessee for the period prior to 1.3.2001 when the compounded levy scheme under Section 3 A of the Central Excise Act, 1944 read with Rule 96ZQ was in operation, would survive. She, therefore, pleaded that the impugned order setting aside the duty demand and penalty is not correct.
4. Shri Bipin Garg, Advocate, ld. Counsel for the respondent, pleaded that in view of omission of Rule 96ZQ of the erstwhile Central Excise Act, 1944 w.e.f. 1.3.2001 by notification no.6/2001-CE without saving clause and omission of Section 3 A of the Central Excise Act, 1944 w.e.f. 11.5.2001 without saving clause, neither any proceedings initiated for recovery of duty or imposition of penalty for the period prior to 1.3.2001 would survive nor any proceedings for recovery of duty or imposition of penalty can be initiated, that in this regard, he relies upon the judgment of the Honble Gujarat High Court in the case of Krishna Processors reported in 2012 (280) ELT 186 wherein Honble High Court after considering the judgment of Punjab & Haryana High Court in the case of Shree Bhagwati Steel Rolling Mills (supra) has held that when Section 3 A of the Central Excise Act, 1944 was omitted w.e.f. 11.5.2001 without any saving clause, no recovery of duty can be made after the omission of Section 3 A by resorting to Rule 96ZQ and that neither new proceedings could be initiated under Rule 96ZQ after omission of Section 3 A nor the proceedings initiated under Rule 96 ZQ prior to omission would survive. He pleaded that in this case, though the show cause notices for confirming the duty demand had been adjudicated prior to the omission of Rule 96 ZQ w.e.f. 1.3.2001 and omission of Section 3 A of the Act w.e.f. 11.5.2001, the Commissioner (Appeals) had set aside the Assistant Commissioners order vide order-in-appeal dated 28.3.2001 had set aside the duty demand for the period from 16.12.98 to 27.2.99 and had remanded the matter to the Asstt. Commissioner for period from 28.02.1999 for quantification of the duty demand as per the directions in the order and the de novo adjudication order confirming duty demand of Rs.45,55,061/- was passed only on 20.2.2004 i.e. after the omission of Rule 96ZQ and Section 3 A without any serving clause. He accordingly pleaded that the proceedings for duty demand of Rs.45,52,061/-, which had not concluded prior to omission of Section 3 A, would not survive, as Section 3 A of the Central Excise Act and Rule 96 ZQ of the Central Excise Rules had been omitted without any serving clause. He, therefore, pleaded that there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records.
6. Though the show cause notices for duty demand of Rs.45,55,061/- had been issued during the period prior to omission of Rule 96ZQ i.e. prior to 1.3.2001 and these show cause notices had initially been adjudicated during the period prior to 1.3.2001, on appeal being filed to the Commissioner (Appeals), vide appellate order dated 28.03.2001, of the Commissioner (Appeals) the Asstt. Commissioners order was set aside and the matter was remanded to the original adjudicating authority for de novo adjudication for quantification of duty demand for period from 28.02.1999 to 05.11.1999 and the de novo adjudication proceedings were completed only in 2004 long after omission of Section 3 A w.e.f.11.5.2001 and omissions of Rule 96ZQ w.e.f. 1.3.2001 without serving clause. The point of dispute is as to whether the proceedings initiated before 1.3.2001 would survive after omission of Rule 96ZQ without serving clause w.e.f. 1.3.2001 and omission of Section 3A without serving clause w.e.f. 11.5.2001. We find that this issue was considered by the Honble Gujarat High Court in case of Krishna Processors Vs. Union of India (supra), wherein Honble High Court considered the following issues:-
(i) Whether in view of the omission of Rule 96ZQ of the Rules with effect from 1st March, 2001, the adjudicating authority could thereafter have initiated action for breach thereof by issuance of show cause notice and/or could have continued with the proceedings initiated but not concluded prior thereto?
(ii) Whether any obligation or liability incurred under Section 3A of the Act is saved by Section 6 of the General Clauses Act and whether after the omission of Section 3 A of the Act with effect from 11th May, 2001 proceedings initiated under the Rules 96ZQ, 96ZP and 96ZO of the Rules would survive?
(iii) Whether Section 38 A of the Act saves all obligations and liabilities incurred under Rule 96ZQ of the Rules? If yes, whether the said position would prevail even after the omission of Section 3 A of the Act?
7. The Honble High Court relying upon the judgments in the case of Rayala Corporation Pvt. Ltd. reported in 1969 (2) SCC 412 and subsequent judgment of the Apex Court in the case of Kohlapur Cane Sugar Works Ltd. reported in 2000 (119) ELT 257 (SC) concluded that no proceedings could have been initiated under the omitted Rule 96ZQ after omission of Section 3 A w.e.f. 11.5.2001 in absence of any saving clause. The Court further held that all proceedings which were pending as on 11.05.2001, even if initiated prior to omission of Rule 96ZQ would thereafter automatically lapse and no order could be passed if they were not concluded at the time of omission of Section 3A w.e.f. 11.05.2001. In this judgment, the Honble High Court has also considered the judgment of Punjab & Haryana High Court in the case of M/s Bhagwati Steel Rolling Mills Vs. CCE, Chandigarh reported in 2007 (207) ELT 58 (P&H) and held expressed its disagreement. In view of the above judgment of the Honble Gujarat High Court, which is based on the judgment of the Apex Court in the case of Rayala Corporation Ltd. (supra) and Kohlapur Cane Sugar Works Ltd. (supra), after omission of Rule 96ZQ w.e.f. 1.3.2001 and omission of section 3A of the Act without saving clause w.e.f. 11.05.2007, the proceedings initiated prior to omission which had not been concluded as on 11.05.2001 would lapse. In this case, though, initially the show cause notice issued prior to 1.3.2001 had been adjudicated by the Asstt. Commissioner, the Commissioner (Appeals) had set aside the order and had remanded the matter for part of the period of dispute to the Asstt. Commissioner for de novo adjudication and de novo proceedings were concluded in 2004, long after omission of Rule 96ZQ w.e.f. 01.03.2001 and Section 3A w.e.f. 11.05.2001 without any serving clause and therefore the same would lapse. In view of this, we do not find any merit in the Revenues appeal. The same is dismissed.
(Justice G. Raghuram) President ( Rakesh Kumar ) Member (Technical) Ckp.