Custom, Excise & Service Tax Tribunal
M/S. Prerna Syntex vs Cce, Jaipur-I on 28 October, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
Date of Hearing: 05.09.2014
Pronounced on:28.10.2014
E/1866/2006-EX[DB]
[Arising out of Order-in-Appeal No. 59/(MPM)CE/JPR-I/2006 dated 13.03.2006 passed by the Commissioner (Appeals), Central Excise, Jaipur-I]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see 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 copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s. Prerna Syntex Appellant
Vs.
CCE, Jaipur-I Respondent
Present for the Appellant : Ms. Sukrit Das, Advocate Present for the Respondent : Shri M. S. Negi, DR FINAL ORDER NO. 54135/2014 PER: R.K. Singh Appeal has been filed against Order-in-Appeal No. 59/(MPM)CE/JPR-I/2006 dated 13.03.2006 which up held the Order-in-Original No. 111/2005 dated 02.12.2005 passed in respect of Show Cause Notice dated 02.12.2004.
2. Briefly stated, the facts are as under:
The appellants are a 100% export oriented unit and generate electricity for captive consumption. Some of the electricity generated is also supplied to their residential colony. Vide letter dated 28.12.1999 they intimated Revenue that from 01.01.2000 they would be supplying electricity to their residential colony also and would pay duty on the high speed diesel used in generating electricity supplied to the colony; thet installed separate meter for that. They procured diesel duty free as well as on payment of duty and claimed that the electricity generated by using duty paid diesel would have been more than the quantity of electricity supplied to the colony. Department issued them a Show Cause Notice dated 02.12.2004 stating that they did not have any separate storage tank for duty paid diesel and thus it was impossible for them to claim that only duty paid diesel was used for generation of electricity supplied to their colony and that they did not use any non-duty paid diesel for generating electricity supplied to residential colony. Therefore based on the quantity of electricity supplied to the colony during the period January 2000 to July 2003. The Revenue computed a demand of Rs. 6,16,913/-being the duty payable on diesel required to produce that quantity of electricity on the presumption that only non-duty paid diesel was used therefore. The said demand was confirmed alongwith interest and equal mandatory penalty invoking the extent period for willfull mis-statement.
3. The appellants have contended that:
(i) There was not wilfull mis-statement or suppression on their part and Show Cause Notice does not invoke proviso to Section 11A for demanding duty.
(ii) The total amount of duty paid diesel used by them during the period would have generated more electricity than the total quantity of electricity supplied to the colony.
4. We have considered the facts and submissions. It is evident that the appellants had duly intimated Revenue that they would be supplying electricity to their residential colony w.e.f01.01.2000. They had been procuring (importing) duty paid diesel also and their use of such diesel, it is not disputed by Revenue, would have produced more electricity than the quantity of electricity supplied to the colony for which they had even installed a separate meter. The Show Cause Notice does not bring out as to what they wilfully mis-stated/suppressed with the intention to evade. It is seen that two more Show Cause Notices on the same issue were issued to the appellants on 23.07.2004 and 01.09.2004. The Honble Supreme Court in the case Nizam Sugar Factory Vs. CCE, AP 2006 (74) RLT 564(SC) has held that while issuing second and third Show Cause Notices involving same/similar facts, suppression/wilfull mis-statement could not be alleged. Further the appellants were not unjustified in thinking that as the total duty paid diesel used by them would have generated more electricity than the quantity supplied to their residential colony, they were complying with condition of Notification No. 1/95-CE / 22/2003-CE. In the case of Gopal Zarda Udhyog Vs. Commissioner of CCE, Delhi 2005-TIOL-123-SC-CX- the Supreme Court observed that mere failure or negligence on the part of the manufacturer does not attract the extended period. In case of CCE Vs. Chempher Drugs Liniments 2002-TIOL-266-SC-CX Supreme Court held that something positive other than mere inaction or failure on the assessees part or conscious withholding of information when assessee knew otherwise is required for invoking extended period. In the case continental Foundation Joint Venture Vs. CC. Chandigarh-I 2007 (216) ELT 177 (SC) Supreme Court has observed that for invoking extended period and mandatory penalty the noticee has to be put on notice explicitly so as to enable them to submit their defence. Thus, the allegation of wilfull misstatement/suppression of fact is clearly not sustainable.
5. Even on merit, the appellants had procured more diesel on payment of duty (by way of import) than required to generate electricity supplied to their colony and this point is not disputed. If it is not possible (because of common storage tank) for the appellants to conclusively demonstrate that duty paid diesel only was used for generating electricity supplied to the colony, it is equally impossible for the Revenue to show that it was not so used or to quantify as to how much duty free diesel out of the mixed lot was used for that purpose. What is being stated here is that such approach of the department is shylockian untenable and falls in the category of ludicrous hair-splitting. Incidentally, similar demand, against the appellants for a different period was set aside by CESTAT 2010 (261) ELT 945 (Tri-Del.).
6. In the light of the foregoing, we allow the appeal.
(Justice G. Raghuram) President (R.K. SINGH) TECHNICAL MEMBE Neha 1