Rajasthan High Court - Jaipur
Commissioner Of Central Excise &Ser; ... vs Continental Engines Ltd Unit-Ii on 8 November, 2017
Author: K.S. Jhaveri
Bench: K.S. Jhaveri
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
D.B. Central/Excise Appeal No. 72 / 2017
Commissioner of Central Goods & Service Tax, Earlier
Commissioner of Central Excise & Service Tax, Commissionerate
Alwar, A Block, Surya Nagar, Alwar in the State of Rajasthan
----Appellant
Versus
Continental Engines Ltd., Unit II, A-88 RIICO Industrial Area,
Bhiwadi Distt. Alwar in the State of Rajasthan
----Respondent
Connected With D.B. Central/Excise Appeal No. 73 / 2017 Commissioner of Central Goods & Service Tax, Earlier Commissioner of Central Excise & Service Tax, Commissionerate Alwar, A Block, Surya Nagar, Alwar in the State of Rajasthan
----Appellant Versus Continental Engines Ltd., Unit II, A-88 RIICO Industrial Area, Bhiwadi Distt. Alwar in the State of Rajasthan
----Respondent D.B. Central/Excise Appeal No. 74 / 2017 Commissioner of Central Goods & Service Tax, Earlier Commissioner of Central Excise & Service Tax, Commissionerate Alwar, A Block, Surya Nagar, Alwar in the State of Rajasthan
----Appellant Versus Continental Engines Ltd., Unit II, A-88 RIICO Industrial Area, Bhiwadi Distt. Alwar in the State of Rajasthan
----Respondent D.B. Central/Excise Appeal No. 75 / 2017 Commissioner of Central Goods & Service Tax, Earlier Commissioner of Central Excise & Service Tax, Commissionerate Alwar, A Block, Surya Nagar, Alwar in the State of Rajasthan
----Appellant Versus (2 of 10) [ EXCIA-72/2017] Continental Engines Ltd., Unit II, A-88 RIICO Industrial Area, Bhiwadi Distt. Alwar in the State of Rajasthan
----Respondent D.B. Central/Excise Appeal No. 76 / 2017 Commissioner of Central Goods & Service Tax, Earlier Commissioner of Central Excise & Service Tax, Commissionerate Alwar, A Block, Surya Nagar, Alwar in the State of Rajasthan
----Appellant Versus Continental Engines Ltd. (Machine Division), A-88 RIICO Industrial Area, Bhiwadi Distt. Alwar in the State of Rajasthan
----Respondent _____________________________________________________ For Appellant(s) : Mr. Siddharth Ranka For Respondent(s) : Mr. P.K. Kasliwal with Mr. Priyesh Kasliwal _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 08/11/2017
1. In these appeals common questions of law and facts are involved, hence, they are decided by this common judgment.
2. By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal preferred by the assessee.
3. Counsel for the appellant has framed the following questions of law:-
(3 of 10) [ EXCIA-72/2017] In DB Excise Appeal No. 72/2017, 73/2017, 74/2017, 75/2017 & 76/2017 "i) Whether the ld. CESTAT was correct in law in extending the benefit of concessional rate of duty to the assesse in respect of scrap sale subject to the approved limits of SION fixed by the DGFT, when no such norms were fixed during the relevant period when such scrap were sold which is in violation of conditions prescribed under Notification No. 23/2003 dt. 31.03.2003?
ii) Whether the CESTAT ought to have remanded matters to Original Adjudicating Authority after a pasage of 13 years since issue of first SCN, passage of 11 yers since passing of OIO and 9 years after issue of OIA?"
4. Counsel for the appellant Mr. Siddharth Ranka has taken us to the orders of Commissioner and the CIT(A) and contended that in spite of the concurrent finding of both the authorities, the Tribunal has seriously committed an error in allowing the appeal inasmuch as without considering the notification which came much prior and without considering the observations made by authority which reads as under:-
"6. I observe that the issue involved in all the three appeals is common with regard to availability of concessional rate of duty on the scrap cleared by 100% EOU (i.e. the appellant) in terms of notification no. 23/2003-CE dated 31.03.2003. the department has denined the benefit to the appellant on the ground that input-output norms in respect of the finished goods in their case were not fixed and approved under duty exemption scheme by the Development Commissioner for availing benefit of concessional rate of duty in terms of the annexure No. 23/2003-CE dated 31.03.2003. The condition no. 2 of the annexure to above notification stipulated that the benefit was available only if the goods were cleared in (4 of 10) [ EXCIA-72/2017] Domestic Tariff Area in accordance with para 6.8
(d) of the Exim Policy, the sale of waste/scrap/remnants by units not entitled to DTA sale shall be on payment of full duties.
Appellant's contention is that they had applied for fixing input-output norms to the Development Commissioner but till date no norms had been fixed. The appellant further contended that the jurisdictional Range Officer had forwarded the verification report to the Development Commissioner confirming approx. 10% wastage arising during the course of machining of their final products. They sought one month time during the course of personal hearing held on 07.11.2007 for submitting the required certificate in respect of norms fixed by the Development Commissioner. Thus the issue before me to decide is whether the appellant was eligible to clear scrap in question at concessional rate of duty fulfilling the conditions of notification no. 23/2003-CE dated 31.03.2003 read with para 6.8 of the Export Import Policy.
7. I observe that the appellant has not disputed the requirement of fixation of input and output norms in terms of para 6.8 of EXIM Policy at the relevant time for availing benefit of concessional rate of duty on the scrap in question cleared by them in DTA under notification no. 23/2003-CE dated 31.03.2003. The contention of the appellant that they had applied to the Development Commissioner for fixing input- output norms but till date no norms were fixed by the Development Commissioner in their case does not help the appellant in as much as they cleared the scrap in question without fulfillment of the requirement of fixation of the input output norms by the Development Commissioner for availing benefit of concessional rate of duty under notification no. 23/2003-CE dated 31.03.2003 read with Paragraph 6.8 of the Export and Import Policy. I observe that clearance of the scrap in question at concessional rate of duty cannot be made in terms of the above provisions without fulfillment of statutorily stipulated conditions. It is well settled that exemption notifications are to be given strict interpretation. As such the appellant was not entitled to clear the scrap at concessional rate of duty under the said notification no. 23/2003-CE dated 31.03.2003 during the relevant period. I further observe that the appellant cleared the scrap in question (5 of 10) [ EXCIA-72/2017] during the period from October, 2003 to December, 2005 and every time during the course of hearing held before the adjudicating authority and the appellate authority they pleaded that they had applied to Development Commissioner for fixing norms and the required certificate will be submitted soon. The contention of the appellant that the adjudicating authority should have waited for the report of the Development Commissioner is not tenable in as much as till to day they could not submit the required certificate pertaining to the clearances effected even more than four years ago. I observe that the relevant provisions as discussed above require fulfillment of the conditions at the time of clearances of the goods for availing concessional rate of duty. The department has waited for a fairly reasonable time and the case cannot be kept open sine die. The request of the appellant made during the course of personal hearing for allowing one month's time for getting the norms fixed by the Development Commissioner has since elapsed on 7.12.2007. That contention that the jurisdictional Range Officer had submitted a report to the Development Commissioner confirming the approx. wastage of 10% also cannot help them. The Range Officer is not the designated authority to issue any certificate required under the law as discussed above. The ratio of the judgments relied upon by the appellant are not applicable to the issue at hand in the given facts & circumstances. The Circular No.21/95-Cus., dated 10.03.1995 referred to by the appellant has no concern with the issue involved in the instant case as the said circular was on a totally different subject. I observe that the appellant continued to pay concessional rate of duty in spite of knowing that they do not have the required approved norms for the impugned goods. Seen in this context, I am of the view that the quantum of penalty imposed by the adjudicating authority in each impugned order is reasonable and justified."
5. Counsel for the respondent Mr. P.K. Kasliwal has taken us to the order of the Tribunal which reads as under:-
(6 of 10) [ EXCIA-72/2017] "3. Ld. Counsel submits that though no input output norms for clearance of scrap in details was fixed initially at the time of clearance of the scrap during disputed period, subsequently the DGFT has fixed the SION norms for clearance of scrap.
He brought to our notice the letter dt. 20.12.2004 issued by the Assistant Development Commissioner of Noida Special Exonomic Zone in which the input output norm has been fixed on the basis of the request made by the appellant vide their letter dt. 29.03.2012. He further brought to my notice that for periods subsequent to those covered by the appeals presently under consideration, the Commissioner (Appeals) has considered the SION norms and had set aside the demand for confirmation of differential duty and remanded the matter to the original authority for de novo decision in the matter. In line, with the above remand order of Commissioner (Appeals), the original authority has since dropped the demand for differential duty in respect of subsequent period. Accordingly, he prays that the period covered by the present appeal may also be decided in their favour.
5. At the time of clearance of the scrap in DTA the SION norms were not available to the appellants. However, the same has since been fixed by the DGFT vide their letter dt. 23.2.2009. The concessional rate of duty @ of 30% envisaged under Notification no. 23/2003 dated 31.3.2003 is available in cases where such scrap has been allowed to be cleared in DTA. The differential duty has been demanded for different periods by Revenue by taking that view that since no norms were available at the time of clearance of the scrap., the same are to be considered as cleared without authorization and hence not entitled to the benefit of the notification. Since the input output norms have since been fixed by the DGFT the benefit of concessional rate for the scrap will be available to the appellants. I consider it necessary to remand the matter to the original adjudicating authority for verifying the calculation of the quantum of scrap cleared by the appellants during various periods covered under the present appeals. He is directed to extent the benefit of concessional rate of duty in respect of scrap subject to the approved limits of SION fixed by the DGFT. Since the issue is pending for a very long time I direct that this exercise will be completed within a period of two months from the date of receipt of copy of the present order. The (7 of 10) [ EXCIA-72/2017] appellant may be permitted to submit necessary details for verification and any other relevant evidence may be admitted as per law."
6. It is contended that the contention as has been raised by the appellant was never raised before the Tribunal, in that view of the matter, in the appeal u/s 35G, no substantial question of law arises inasmuch as no such foundation was laid before the Tribunal.
7. We have heard counsel for both the sides.
8. The contention raised by the respondent is required to be accepted in view of the fact that while considering the matter, the Tribunal in para 3 as reproduced hereinabove has specifically observed that demand for differential duty since was dropped in respect of subsequent period.
9. Counsel for the appellant has relied upon the decision of the Supreme Court in the case of Bony Polymers Pvt. Ltd. Vs. Commissioner 2017 (345) E.L.T. A69 (SC) while confirming the order of Delhi Tribunal held as under:-
"Having gone through the records of the case, we are of the considered opinion that the appeal, being devoid of any merit, deserves to be dismissed and is dismissed accordingly. The Appellate Tribunal in its impugned order had held that since Advocate DTA Sales permission granted under Para 6.8(k) of Foreign Trade Policy 2004-09 of FTP 2004-09 is not covered under Notification No. 23/2003- C.E. as per condition No. II(b), benefit of impugned notification is not available to assessee."
(8 of 10) [ EXCIA-72/2017] 9.1. He has also relied on the judgment in case of JSB India Ltd.
vs. Commissioner of Central Excise, Pune-I reported in 2014 (301) E.L.T. 241 (Tri.-Mumbai) wherein it has been held as under:-
"The Revenue arrived at assessable value of goods as per the verification done by the Deputy Director (Cost) CE Pune-I. The Deputy Director (Cost) in his report dated 1-2-2010 find that applicants are not taking in consideration the Selling and Distribution Expenses, and fixed overhead expenses, while arriving at the assessable value of goods. Further, we find that applicant cleared scrap to DTA for availing benefit of Notification No. 23/2003-C.E. : MANU/EXCT/0003/2003, dated 31-3-2003, Prima facie we find merit in the contention by the Revenue that applicant had not fulfilled the condition of the benefit of notification. In view of these circumstances, we find that applicant had failed to make out a case for total waiver of duty. Keeping in view the facts and circumstances of the case, the applicants are directed to deposit an amount of Rs. 10,00,000/- lakhs in addition to the amount already deposited within eight weeks for hearing of the appeal. On deposit of the above mentioned amount, the pre-deposit of remaining amount of dues are waived and recovery of the same is stayed during the pendency of the appeals. Compliance is to be reported on 27-9-2013."
9.2. He has also relied upon the decision in case of Meneta Automotive Components Pvt. Ltd. vs. C.C.E. & S.T. Rohtak reported in 2013 (292) E.L.T. 49 (Tri.-Del.) wherein it has been held as under:-
"We find that under the Notification No. 21/2002- Cus., dated 1-3-2002 the melting scrap of Iron & steel is exempted on S. No. 200 of the notification. There is no condition in the notification for availing the exemption. Prima facie the applicant has a strong case for availing the exemption, from basic Custom duty under Notification 21/2002. As regards the applicability of the exemption from the (9 of 10) [ EXCIA-72/2017] SAD under the Notification 23/2003, we find that under Para 6.8(e) of the Foreign Trade Policy waste and scrap arising out of the manufacture can be sold in the domestic policy area as per standard Input Output norm notified under duty exemption scheme and in respect of items not covered by the norms Development Commissioner may fix ad hoc norms for the period for six months. We note that applicant has applied for fixation of ad hoc norms to the Development Commissioners only on 4-7-2009 whereas the applicant was selling their scrap to DTA since 29- 3-2008. We are of prima facie view that prior to 4- 7-2009 the applicant is not eligible for the benefit of exemption from SAD. Taking into consideration the amount of SAD involved for the period prior to 4-7-2009 and also the issue to time limitation contended by the applicant, we direct the applicant to deposit an amount of Rs. 10 lakhs as pre-deposit within a period of 8 weeks and report compliance on 29-4-2013. On due compliance there shall be stay of recovery of the balance dues till disposal of the appeal."
10. Counsel for the respondent has relied upon the order passed by Joint Commissioner in the case of assessee in case no. 39/2011 wherein it has been observed as under:-
"The Assistant Commissioner Central Excise Division Bhiwadi was requested to confirm whether the quantity of scrap cleared by the assessee at concessional rate of duty in DTA are within norms or not. And also to verify detained charts submitted by assessee to support their contention. The Assistant Commissioner Central Excise Division Bhiwadi has verified charts submitted by assessee and submitted their report vide their letter C.N. V (Misc.) 02/Adj/II/2009/3187 dated 14.03.2011 that the matter has been reexamined in terms of para 6 of Order in appeal No. 202(DK)CE/JPR-I/2009 dated 24.08.2009 passed by the Commissioner(Appeals) Central Excise Jaipur-I for scrap cleared during the period (April 2007 to Sept. 2007) involved in the Show cause notice. It is observed that the SION norm in terms of the provisions of the Foreign trade policy was fixed on 20.03.2009 whereas period covered under the SCN is April 2007 to September, 2007 and the (10 of 10) [ EXCIA-72/2017] show cause notice was issued for whole quantity of scrap cleared. Whereas in terms of para-6 of aforesaid OIL the excess quantity cleared than quantity as per fixed norms was to be taken for demanding duty in the show cause notice. It is found that as per norms the assessee could clear a quantity of 325819.5 KG (Chart enclosed) whereas in actual they have cleared 318255.02 KG as mentioned in the show cause notice which limit of norms fixed for the assessee.
I find that the jurisdictional Assistant Commissioner Central Excise Division Bhiwadi has verified the actual scrap cleared during the period involved in the SCN in terms of provisions of Foreign Trade Policy as well as the Notification No. 23/2003-CE dt. 31.03.2003 and found that as per norms the assessee could clear a quantity of 325819.5 KG whereas in actual they have cleared 318255.02 KG as mentioned in the show cause which is within limit of norms fixed for the assessee.
In view of the above I hold that the quantity of scrap cleared by the assessee as mentioned in the show cause notice at concessional rate of duty in DTA is within limit of norms fixed for the assessee. As such, the impugned demand does not survive and the same is liable to be dropped and accordingly no penalty is liable to be imposed."
11. In our considered opinion, the view taken by the Tribunal is just and proper. The judgments cited by counsel for the appellant will not apply in the facts of the case. No substantial question of law arises.
12. The appeals stand dismissed.
(VIJAY KUMAR VYAS)J. (K.S. JHAVERI)J. A.Sharma/77-81