Custom, Excise & Service Tax Tribunal
M/S Singhal Trading Co vs Cce, Delhi I on 20 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 20/09/2016. DATE OF DECISION : 20/09/2016. Excise Appeal No. 1187 and 1227 of 2011 (SM) [Arising out of the Order-in-Appeal No. 8-9/CE/DLH/2011 dated 14/02/2011 passed by The Commissioner (Appeals), Central Excise, New Delhi.] For Approval and signature : Honble Shri V. Padmanabhan, 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 would 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 :Seen copy of the order? 4. Whether order is to be circulated to the :Yes Department Authorities? M/s Manoj Steel Industries ] M/s Singhal Trading Co. ] Appellants Versus CCE, Delhi I Respondent
Appearance Ms. Seema Jain, Advocate for the appellant.
Shri N. Nunthuk, Authorized Representative (DR) for the Respondent.
CORAM: Honble Shri V. Padmanabhan, Member (Technical) Final Order No. 53747-53748/2016 Dated : 20/09/2016 Per. V. Padmanabhan :-
The two appeals are being decided together since the issues involved in both the cases are identical. Both appeals are made against orders-in-appeal both dated 14/2/2011. Both the appellants took registration from the Jurisdictional Central Excise Authorities on 10/4/13 and opted for payment of excise duty under the compounded levy scheme for manufacture of stainless steel pattas/pattis under the Notification No. 34/2001-CE dated 28/6/2001. However, no manufacturing operations were commenced in both factories. The Revenue issued show cause notices demanding Central Excise duty to the tune of Rs. 1,35,000/- each covering the period July 2003 to March 2004. The demand was made by Revenue on the basis of the application filed to avail the subject procedure in terms of para 2 of the said notification which was made for the period 01/7/2003 to 30/6/2004. In the first round of litigation, the case travelled right up to the CESTAT, where it was remanded back vide final order No. 758/2009 with the direction to the original Adjudicating Authority to examine whether any manufacture was carried out in the factories by ascertaining from various quarters. In the remand proceedings, the Original Authority vide his order dated 31/5/2010 confirmed the demand after failing to conclusively establish whether manufacturing activities were carried out. The Commissioner (Appeals) upheld the order. Hence, the present appeal.
2. The appellants submit that the Revenue has failed to establish that any manufacture took place in the factories. Even though they have applied to the Revenue Authorities for grant of permission under the compounded levy scheme, since they have not manufactured any stainless steel patta/pattis, no duty liability will rise against them. The learned DR on the other hand submits that since the manufacturers have been granted the permission on the basis of their application for undertaking manufacture and clearance of stainless steel patta/pattis under the compounded levy scheme, the duty liability will rise from that day and since the appellants have failed to discharge the same the duty demands are in order.
3. I have heard Ms. Seema Jain, learned Advocate for the appellant as well as Shri N. Nunthuk, learned DR for the Revenue.
4. The compounded levy scheme has been formulated under the Central Excise Rules, 2015 of the Central Excise (No. 2 Rule 2001). The relevant Notification No. is 34/2001-CE dated 28/6/2001. The notification prescribes payment of excise duty as a lump-sum to the extent of Rs. 15,000/- per cold rolling machine in respect of the product stainless steel patta/pattis. The notification mainly prescribes :
(1) an application to be filed by the manufacturer for grant of permission for a specified period for working under the compounded levy scheme. This application needs to be filed for a period not less than 12 months ;
(2) further to above the manufacturer needs to make an application in the form specified indicating the number of machines he plans to use for manufacture as well as the duty amount payable per month. Subsequently he is required to pay duty in terms of the number of machines he has applied for. The notification further placed down that if after undertaking step one above, if the manufacturer fails to follow step two, he will not be in a position to avail the benefit of the concessional rate of duty specified under the compounded levy scheme, but will have to pay excise duty on his entire production on payment of excise duty at rates prescribed in the 1st Schedule to the Central Excise Tariff Act.
5. In the present two cases, the manufacturers have completed step one above but have failed to comply with step two above, namely, submitting an application indicating the number of machines proposed to be used alongwith the duty payable thereon. The consequence of failure to comply with step two above, in terms of the notification, would be that they will be disentitled to avail the concessional rate available under the compounded levy scheme and will be required to discharge duty on the stainless steel patta/pattis manufactured and cleared at rates prescribed for such goods in the 1st Schedule to the Central Excise Tariff Act. In the present case the contention of the appellant is that manufacture was never undertaken in the two factories. Hence, even though the declaration about the number of machines was not complied with, no excise duty will be payable by them in as much as no goods have been manufactured and cleared. In the proceedings before the CESTAT in the first round of litigation, the case was remanded with the specific direction to the Original Authority to ascertain from other connected agencies such as labour department, balance sheets etc. to establish whether any manufacture has taken place. But what I find is that the Original Authority has failed to establish any manufacture. The levy of excise duty stands only when goods are manufactured and cleared from the factory. In the absence of any evidence to show that any goods have been manufactured and cleared there can be no justification for demand of excise duty. In terms of the provisions of the notification which are in the nature of concession, in exceptional circumstances (such as the one in the present cases in which the declaration regarding the number of machines has not been filed) the manufacturer will be liable to pay duty on the entire production. However, Revenue has failed to undertake any serious investigation to establish the manufacture, if any of the stainless steel patta/pattis under the circumstances, I have no option but to set aside the demands and allow the appeals.
(Dictated and pronounced in open court.) (V. Padmanabhan) Member (Technical) PK ??
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