Customs, Excise and Gold Tribunal - Delhi
Pragati Metals Pvt. Ltd., Mamta And ... vs Commissioner Of Central Excise on 25 March, 2004
Equivalent citations: 2004(97)ECC99
ORDER V.K. Agrawal, Member (T)
1. These seven appeals arises out of six different Order-in-Appeal and filed by Pragati Metals Pvt. Ltd., M/s. Mamta & Company and M/s. Jagat Jyoti Steels Pvt. Ltd., are taken up together for disposal as the issue involved in all the appeals is identical.
2. Shri J.S. Agrawal, learned Advocate for all the Appellants, submitted that the Appellants manufacture S.S. utensils which are exempted from payment of duty under Notification No. 4/97-CE dated 1.3.97; that the duty paid stainless steel plates are purchased from market and are cut into small pieces which are hot rolled; that hot rolled pieces are chargeable to nil rate of duty; that after annealing, pickling, hot rolled pieces are subjected to the process of cold rolling; that thereafter, these are cut into circles in untrimmed condition which are trimmed subsequently; that trimmed circles are sold on payment of duty and are also used for captive consumption in the manufacture of utensils; that there is nil rate of duty in respect of trimmed circles as per sub-Heading 7220.50 of the Schedule to the Central Excise Tariff Act; that however, the appellants discharged duty on trimmed circles cleared for captive consumption also after issuing proper invoices; that they are also paying the duty on waste and scrap which occurs during all these processes; that the Commissioner (Appeals) under the impugned orders has confirmed the demand of Central Excise duty on cold rolled stainless patta and patti on the ground that these cold rolled patta and patti are used in the manufacture of utensils which are exempted from payment of duty and benefit of Notification No. 67/95-CE dated 16.3.95 is not available to them. Learned Advocate further submitted that the process of cold rolling from hot rolling stainless steel patta and patti does not amount to manufacture, as has been held by the Supreme Court in the case of CCE, Chandigarh v. Steel Strips Products Ltd., 1995 (50) ECC 164 (SC) : 1995 (77) ELT 248 (SC); that it has been held by the Supreme Court that on the basis of material brought on record by the Excise Authorities, it is not proved that hot rolled strips undergo a process of manufacture before they became cold rolled strips; that the Appellate Tribunal in the case of Pragati Metals Pvt. Ltd. itself vide Final Order Nos. 66-68/2002-B dated 15.2.2002 had remanded the matter to the Adjudicating Authority to determine as to whether the process of cold rolling of hot rolled products amounts to manufacture; that similarly in another case of Pragati Metals Pvt. Ltd., the Tribunal has vide Final Order No. 1 /2001-B dated 29.12.2000 remanded the matter to the Adjudicating Authority to decide the issue regarding process amounting to manufacture. The learned Advocate also relied upon the decision of the Supreme Court in the case of Tata Iron and Steel Co. Ltd. v. Union of India, 2004 (60) RLT 3 (SC) wherein the Supreme Court has held that cold rolling of hot rolling strips does not amount to manufacture in view of tariff description of Item No. 26AA (iii) of Erstwhile Central Excise Tariff, Finally he referred to the decision of the Supreme Court in the case of CCE, Chandigarh II v. Steel Strips Ltd., 2003 (87) ECC 246 (SC) : 2003 (56) RLT 1 (SC) wherein the Supreme Court has remanded the matter to record finding on the question whether the Excise Authorities have laid any evidence before the first Adjudicating Authority on the question as to whether cold rolled strips are the result of a process of manufacture undertaken by the respondents. Learned Advocate therefore contended that the first issue to be decided is whether the process of cold rolled process undertaken by them on hot rolled pieces amounts to manufacture. He also contended that the benefit of Notification No. 67/95 will be available to them as the same has been amended by the Notification No. 35/2001-CE dated 29.6.2001; that by this amending notification it has been provided that the benefit of Notification No. 67/95 in respect of goods, which are cleared by a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in Rule 6 of the Cenvat Credit Rules, 2001 shall be available. Finally, learned Advocate submitted that the Department has wrongly taken the sale price of January 2001 as assessable value of the imported goods instead of taking the average price as pleaded by them in their reply to show cause notice; that the assessable value has to be determined in terms of Section 4 of the Central Excise Act by granting abatement as per law laid down by the Larger Bench of the Tribunal in the case Srichakra Tyres Ltd. v. CCE, 2002 (80) ECC 588 : 1999 (108) ELT 361 which has been affirmed by the Supreme Court as reported in 2002 (142) ELT A 279; that the learned Advocate also relied upon the decision of the Supreme Court in the case of CCE v. Maruti Udyog Ltd., 2002 (80) ECC 249 (SC) : 2001 (141) ELT 3 (SC).
3. Countering the arguments Ms. Charul Barnwal, learned Senior Departmental Representative and Shri H.C. Verma, learned Departmental Representative, submitted that in the case of Steel Strips Ltd. l995 (77) 248 (SC), the process of cold rolling was held to be not amounting to manufacture on the basis of material brought on record by the Excise Authority; that it has been held by Supreme Court in that judgment that "it is for the Excise Authorities to lay evidence in this behalf before the first Adjudicating Authority regardless of the fact that he is an officer of the Excise Department. There should, ordinarily, be no difficulty in establishing that the article is the result of a process of manufacture; in the event to difficulty, it would be open to the Excise Authorities to seek a direction requiring the assessee to set out in writing what it does to obtain the article ....... Failure to lay the requisite evidence cannot be made up by reference to authoritative publications........ Upon such material as has been referred to by learned Counsel for the Excise Authorities, which we have set out above, we find it 'not proved' that hot rolled strips undergo the process of manufacture before they become cold rolled strips." The learned Senior Departmental Representative therefore, contended that the judgment in the case of Steel Strips Ltd. cannot be taken as a precedent to hold that the process of cold rolling of hot rolled products does not amount to manufacture. The Departmental Representative further mentioned that in the case of Tata Iron and Steel case (supra), the process was held not amounting to manufacture in view of Tariff description of Erstwhile Item 26AA (iii) in which there was no separate Headings in respect of cold rolled strips and hot rolled strips; that under the present Central Excise Tariff separate sub-Headings have been provided for hot rolled products and cold rolled products; that in the second case of Steel Strips Ltd. as reported in 2003 (56) RLT 1 (SC), the matter as been remanded for re-examination as to whether process of cold rolling of duty paid hot rolling steel strips amounts to manufacture. They also contended that the process of annealing in the case of Pragati Metals Pvt. Ltd. is undertaken before the process of cold rolling is undertaken; that by the process of cold rolling a new different product emerges with different uses and as such the process amounts to manufacture. Finally, the Departmental Representative submitted that the benefit of Notification No. 67/95 as amended by Notification No. 35/01 dated 29.6.2001 will not be available to them as the Notification was amended after the period involved in all the appeals.
4. We have considered the submissions of both the sides. We observe that the issue whether the process of cold rolling of hot rerolled products amounts to manufacture, has been considered by the Tribunal in many decisions earlier. In the case of one of the appellants herein namely M/s. Pragati Metals Pvt. Ltd., the Tribunal has remanded the matter to the Adjudicating Authority to determine as to whether the process involved amounts to manufacture, 2002 (141) ELT 803 (Tri), Jagat Steel Industries v. CCE, New Delhi III. We also observe that the Supreme Court in the case of Steel Strips Ltd., 2003 (56) RLT 1 (SC) has remanded the matter for considering whether rolled cold strips are the result of process of manufacture undertaken by the assessee. Following the ratio of these decisions, we remand the matter to the Adjudicating Authority to decide whether the process of cold rolling of hot rolled products amounts to manufacture under Section 2{f) of the Central Excise Act after affording a reasonable opportunity of hearing to the Appellants. The Appellants have also claimed the benefit of Notification No. 67/95 as amended by Notification No. 35/2001 dated 29.6.2001. The amendment in the Notification will not be available retrospectively to the Appellants in absence of any mention in the amending Notification to the effect that the amendment would be applicable retrospectively.
5. We agree with the learned Advocate that the valuation of the product chargeable to Central Excise duty is to be determined in accordance with the provisions of Section 4 read with Valuation Rules applicable at the relevant time and in accordance with the law laid down by the Supreme Court in the case of Maruti Udyog Ltd. and by the Larger Bench of the Tribunal in the case of Srichakra Tyres.