Custom, Excise & Service Tax Tribunal
Gb Bakers Industries Pvt Ltd vs Commissioner Of Central ... on 1 July, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order . 21052 / 2014 Application(s) Involved: E/Stay/26743/2013 in E/26425/2013-DB Appeal(s) Involved: E/26425/2013-DB [Arising out of 03-2013 dated 31/01/2013 passed by Commissioner of Central Excise and Service Tax , HYDERABAD-III ] Gb Bakers Industries Pvt Ltd Survey No.67,68 &74, Vanampally Village (lal Pahad) Kondurg Mandal, MAHABOOBNAGAR DIST - AP Appellant(s) Versus Commissioner of Central Excise,Customs And Service Tax HYDERABAD-III NULL OPP LB STADIUM ROAD, BASHEERBAGH, HYDERABAD, - 500004 ANDHRA PRADESH Respondent(s)
Appearance:
LAKSHMI KUMARAN & SRIDHARAN WORLD TRADE CENTRE NO.404-406, 4TH FLOOR, SOUTH WING BRIGADE GATEWAY CAMPUS NO.26/1, DR. RAJKUMAR ROAD, MALLESWARAM BANGALORE - 560009 KARNATAKA For the Appellant For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 01/07/2014 Date of Decision: 01/07/2014 Order Per : B.S.V.MURTHY The appellants are engaged in the manufacture of Good Day, Marie Gold, Tiger Krunch, Vitamarie biscuits on job work basis bearing the brand name of Britannia falling under Chapter Heading 1905 31 00 of the Tariff. The appellants hold Central Excise Registration No. AACCG5331MXM001. The appellants started their commercial production in March 2007 and started manufacturing the goods as a job worker of Britannia in terms of agreement dated 21.12.2006 entered into between the parties. In terms of the agreement, Britannia supplies the various duty paid raw materials to the appellants under cover of duty paid documents which indicate Britannia as the buyer and the appellants as the consignees. The appellant availed Cenvat credit of duty paid on inputs like sugar, various flavours, packing materials, furnace oil etc., and utilized the same for payment of duty on the final product cleared from the factory. Among the aforesaid biscuits, Marie gold biscuits are exempted from payment of duty since MRP of the product is below Rs. 100 per kg.
2. During the course of manufacture of biscuits, appellants also produced sugar syrup which they called as invert sugar. Invert sugar is a mixture of glucose and fructose obtained by hydrolyzing (breaking ) sucrose (cane sugar) which is a dimer into two monomers namely glucose, (dextrose) and fructose with the help of citric acid or enzyme. In the appeal memorandum it was submitted that to begin with 150 Kgs of sugar is dissolved in 65 litres of water in a kettle with heating facilities with stirring and heated up to 65 to 70? centigrade to ensure that the sugar is completely dissolved. Thereafter the temperature is increased to 105 degree centigrade and at this temperature 300 gms of citric acid dissolved in 500 ml of water and sieved is added and temperature is maintained at 105? centigrade for 45 to 60 minutes. Thereafter heat is turned off and contents are allowed to stand in the kettle for 20 to 30 minutes, the syrup is used in production of biscuits once the same attains room temperature. It was submitted by the appellants that the invert syrup does not contain any chemical which increases shelf life and therefore it cannot be stored for longer periods and used over a period of time. It was also submitted that syrup so prepared is never cleared to outsiders and is captivity consumed by the appellants. The entire syrup is consumed on a day to day basis and nothing is left over for more than 8 hours to avoid the syrup getting fermented.
3. Duty demand of Rs 3,28,16,314/- for the period from 2007-08 to 2011-12 has been confirmed with interest on the ground that sugar syrup so manufactured and used in the manufacture of exempted biscuits should suffer duty since benefit of Notification No. 67/95-CE is not available and it has also been held that sugar syrup is marketable. Penalty equal to the duty demanded has also been imposed.
4. Learned advocate on behalf of the appellant submits that the sugar syrup has been held to be marketable without any evidence whatsoever. He submits that the Commissioner has simply observed that because sugar syrup has a shelf life of 24 hours and since ready mix concrete which has a shelf life of less than that is marketable and is marketed, sugar syrup is also marketable. He submits that for this ground alone, the demand is not sustainable at all. He also submits that appellants had maintained separate records right from 2007 onwards and once separate record is maintained and CENVAT credit is not availed in respect of inputs used for exempted goods, benefit of Notification No. 67/95-CE would be available to them and this has not been extended. He submits that in the year 2010-11, the appellants opted for the procedure prescribed under Rule 6 (3A) of CENVAT Credit Rules and started reversing the credit every month, even then the demand has been confirmed for the whole period.
5. Learned A.R. submits that as regards marketability, the appellant themselves have admitted that the goods are marketable. He draws our attention to paragraph 4 of the order-in-original and that portion is extracted below:
Further Shri S. Mohanan, Administrative Manager of the assessee, who looks after day to day activities of the Unit, in his statement dated 01.06.2012 given before the Superintendent of Central Excise, Kothur-II Range informed that they had not maintained any records for the sugar solution produced by them for use in the manufacture of Marie Gold Biscuit. However, he added that they only maintained records of sugar utilized in the factory. Though the assessee contended that they had not sold the sugar solution outside, and the entire product was consumed within the factory, but they failed to produce any evidence to that effect that the entire sugar syrup had in fact been consumed within the Unit. The product is known as Sugar Syrup in the commercial parlance and is capable of being marketed. The shelf life of 24 hours is quite sufficient to bring the goods in the market and sell. As such, it appeared that the sugar syrup made by them is capable of being brought into the market for sale. However, we find that the most important part in the statement of Shri Mohanan which was favourable to the appellant was not recorded either in the show-cause notice or in the impugned order. While giving the statement Shri Mohanan has stated as follows:
During May, 2007 Government of India had issued exemption Notification exempting Biscuit valued at Rs. 50/- or below on MRP per Kg. Later Rs. 50/- was enhanced to Rs 100/- per Kg. Britannia Marie Gold biscuits whose MRP per Kg is below Rs. 100/- and as such we started availing exemption from the payment of Central Excise duty during the month of May, 2007.
Once we stopped paying duty on the said biscuit, we also stopped taking Cenvat credit on the inputs like sugar, packing Materials etc. We maintained separate records for those raw materials. On your specific question regarding manufacture of sugar syrup, the explanation given by our Production Manager Shri K.V.R. Mallikarjuna, is correct and I agree to the same. On further clarifications, I submit that we plan day to day production of biscuit and accordingly we draw Sugar from the store and then make sugar solution by adding sugar in the water, To make it more clear, I submit that we take certain quantity of Sugar and then make sugar solution in shift A (eight hours) for consumption for the biscuit to be made in shift B. Similarly, we make sugar solution in shift B for consumption for the biscuit to be made in Shift C. what sugar solution we make in shift C is consumed in shift A. Practically, the entire Sugar solution would be consumed and nothing would be left over for more than 8 hours, On your specific question, I submit that we have not maintained any records for the Sugar solution produced. We maintained records for the entire Sugar used in the factory both for the Marie Gold Biscuit and for Good Day Biscuit.
I also submit that we do not take out or sell Sugar solution. It is made for day to day consumption. Sugar solution has a limited shelf life nod it will get fermented if kept for more time. I wish to add that Britannia Industries had never told us to maintain any records for such Sugar solution and also we felt that such Sugar solution is not excisable product. I also add that we do not take credit of duty paid on Sugar purchased by us.
6. It can be seen that the statement made by Shri Mohanan in the first part is that as soon as they stopped paying duty on the exempted biscuits, they also stopped taking CENVAT credit on the inputs. No doubt they did not maintain separate account of sugar solution which he also confirmed. Separate account is to be maintained for inputs and no doubt the inputs are sugar, glucose, citric etc. Therefore this does not need to an automatic conclusion that assessee did not maintain separate account at all. Nevertheless, when a statement like this is given and when the duty is being demanded on the ground that appellant was not eligible for the benefit of exemption Notification No. 67/1995- CE, in our opinion, it was the duty of the officer to question Shri Mohanan and verify the records and ensure that records have been maintained or not maintained and facts are brought out correctly. At this stage it would be appropriate to observe that Notification No. 67/95-CE provides that where separate records are maintained as per Rule 6 of CENVAT Credit Rules 2004 when the input is common to exempted goods and dutiable goods, benefit of Notification No. 67/95 would be available to the inputs in respect of which CENVAT credit has not been taken and separate record has been maintained. Once the CENVAT Credit itself is not taken, in respect of inputs utilized for exempted goods totally, and if this fact is coming out from the records, naturally there would be no need to maintain separate records since the very fact that credit has not been availed would be sufficient instead of making further queries and confirming the facts. Straight away proceedings have been initiated against the appellants on the ground that they were liable to pay duty on sugar syrup and it has been held to be marketable because it has a shelf life without carrying out any market enquiry and without collecting any evidence about its marketability and the fact that it has not been sold, proceedings were initiated. It is strange that only selective portion of the statement convenient to the department has been extracted in the show-cause notice resulting in proceedings culminating in confirmation of demand. Even though, the learned A.R. prays and argues that the matter should be remanded, we are not inclined to do so, since the categorical submission made in a statement recorded under Section 14 of Central Excise Act 1944 before a Gazetted officer of the Revenue has not been contradicted, No investigation has been conducted, no verification has been done and instead only convenient portions have been utilized for initiating proceedings. When a portion of the statement has been used for making out a case, another portion of the statement cannot be ignored or held to be false without any evidence. In view of the above, we come to the conclusion that appellants can be said to have maintained separate records in view of the categorical submission of Shri Mohanan that they stopped taking CENVAT credit in respect of inputs used for exempted goods from 2007 itself. We consider that this contention has to be accepted. In view of the above, even though only stay application has been listed, we allow the appeal itself in view of the fact that the most important part of any investigation i.e. to ascertain facts, apply law to the facts and propose action in accordance with law has not been followed in this case.
(Operative portion of the order has been pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Pnr..
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