Customs, Excise and Gold Tribunal - Mumbai
Pushpam Ceramics And Peddar And Peddar ... vs The Commissioner Of Central Excisee on 6 May, 2004
ORDER K.D. Mankar, Member (T)
1. The appeal of the appellant is directed against the order-in-original Passed by the Commissioner of Central Excise (Appeals) Pune, whereunder demand of Rs. 2,28,806/- has been confirmed, (put of the total demand of Rs. 26,85,945/-) apart from imposition of penalty of equivalent amount under Section 11AC and a penalty of Rs. 1 lakh on M/s. Peddar and Peddar, other appellants, under Rule 209A for abetting duty evasion.
2. The brief facts of the case are that, the appellants M/s. Pushpam Ceramics are engaged in the manufacture of excisable goods falling under sub heading Nos.3207.90, 2905.90 and 3206.10. In the course of internal audit, it was revealed that the appellants were also engaged in the manufacture of an item viz., PVA liquid (Polyvinyl Alcohol Solution) on the basis of job work. As per Chapter Note 6 to Chapter 39 of the Central Excise Tariff Act, 1985 conversion of one primary from of plastic into another plastic form (such as powder into solution) amounts to manufacture. It as revealed that though the said activity attracted excise duty, the appellants had not paid any duty while clearing the said PVA solution to their principal manufacturer. Hence the duty demand cum show cause notice.
3. As mentioned earlier, as against show cause notice demand of Rs. 36,34,132/-, the Commissioner has confirmed the demand to the extent of Rs. 2,28,806/- in the adjudication proceedings. The present appeal is directed against the duty as confirmed and against the penalty.
4. The appellants have challenged the demands on the ground of limitation as well as on merits.
5. Heard both sides.
6. First challenge to the demand is on the ground that even though the Chapter Note 6 to Chapter 39 deems the conversion of powder into solution as amounting to "manufacture", the department is required to establish that the product is marketable before attempting to collect duty on such product. The Ld. Counsel has stated that the department has not established that the product is marketable. Countering this submission the Ld. DR invited our attention to the contents of the show cause notice wherein it has been stated that, the tile manufacturers as a matter of fact have a standard practice to send PVA powder to various job workers for conversion into solution and utilise the PVA solution so received for manufacturing tiles.
7. The appellants also contested the demand on the ground of limitation, stating that, there was no intention to evade duty on the ground that, whatever duty that is sought to be collected at their end, would be available to the customer (principal manufacturer) for availment of modvat credit. This submission is also without any basis, for the simple reason that, the fact of conversion of PVA into PVA solution has not been disclosed to the department and therefore this was a case of suppression of facts and duty is rightly demanded by invoking extended period of limitation.
8. The concept of waiver of demand on the ground of revenue neutrality or waiver of penal action for non payment of duty on inputs has been clarified by the Larger Bench of the Tribunal in the case of Jay Ushin Ltd. v. Commissioner of Central Excise Delhi reported in 2000 (119) ELT 718 (Tri. LB) to mean that the revenue neutrality must accrue to the assessee and not to the buyer. Therefore, the submission of the Counsel to quash the demand on the ground of revenue neutrality is not acceptable.
9. The next ground is that, from the worksheet appended to the order-in-original Passed by the Commissioner, it can be seen that the appellants were availing concessional rate of duty (i.e. 20% - 10 % = 10%) in respect of first clearance up to Rs. 50 lakhs for their own products. The product manufactured on job work basis for the principal manufacturer (M/s. Pedder & Pedder) falls under Chapter 39 of the Central Excise Tariff. It is submitted by the appellants that it is not necessary that the manufacturer is required to pay the same rate of duty of 10% in respect of first clearances of this product (Chapter 39) also. Since they have not taken any modvat credit in respect of duty paid on the inputs (PVA powder), the PVA solution was eligible to be cleared without payment of duty provided the overall clearances value of all the goods viz., PVA solution plus other goods manufactured by the appellants and cleared on payment of duty, are within the value limit of Rs. 50 lakhs. It has been pleaded that the cumulative value of all the goods cleared during the financial years covered by the show cause notice, has never exceeded the limit of Rs. 50 lakhs.
10. We note that, the factual position as stated above is not in dispute. In fact in the worksheet enclosed to the impugned order-in-original in Column No. 11 thereof, the cumulative value for 1996-97 is indicated as Rs. 5,17,792/-, that for 1997-98 it is Rs. 11,93,325/-, for 1998-99 it is Rs. 20,26,511/- and for 1999-00 it is Rs. 3.04.783/-. The appellants placed reliance on the judgment of Tribunal reported in 1993 (63) KIT 759 (Tri) in the case of Faridabad Tools Pvt. Ltd. v. Collector of Central Excise, wherein it has been held that, a manufacturer is permitted to take benefit of full exemption as well as partial payment in terms of Notification No. 175/86-CE provided the goods are different in each mode of duty payment. This judgment has been confirmed by the Hon'ble Supreme Court as reported in 1996 (82) ELT A149. As already stated full exemption is sought in respect of goods falling under Chapter 39, while partial duty payment has been made in respect of other goods (Chapter 32 & 29). Consequently, we hold that the impugned order Passed by the Commissioner is required to be set aside and is so set aside. The appeal is allowed with the consequential relief, if any, in accordance with the law.
(Operative part pronounced in Court)