Custom, Excise & Service Tax Tribunal
M/S Garware Marine Industries Ltd vs Commissioner Of Central Excise, ... on 4 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/3312/04 (Arising out of Order-in-Appeal No. BPS(302)82/2004 dated 31.8.2004 passed by the Commissioner of Central Excise (Appeals), Aurangabad). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
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 should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s Garware Marine Industries Ltd.
Appellant
Vs.
Commissioner of Central Excise, Aurangabad
Respondent
Appearance:
Shri Ravindra Jain, Consultant
for Appellant
Shri Navneet, Addl. Commissioner (AR)
for Respondent
CORAM:
SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL)
SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing: 04.09.2013
Date of Decision: 04.09.2013
ORDER NO.
Per: P.R. Chandrasekharan
The appeal is directed against Order-in-Appeal No. BPS(302)82/ 2004 dated 31.8.2004 passed by the Commissioner of Central Excise (Appeals), Aurangabad.
2. The appellant M/s Garware Marine Industries Ltd., Ahmednagar are manufacturers of Nylon Fishing Nets. The raw material for such Fish net is nylon yarn. The nylon yarn is first converted into the nylon twine and the twine is used for the manufacture of fishing nets. Vide Notification No. 6/2002-CE dated 1.3.2002, all goods made from yarn, monofilament, tapes or strips on which the appropriate duty of excise leviable under the First Schedule, the special duty of excise leviable under the Second Schedule or, as the case may be, the additional duty leviable under the Customs Tariff Act, 1975 has already been paid, was exempted from duty. In the present case, since nylon twine is manufactured from nylon yarn, which is exempted from duty, the exigibility of nylon twine arose. The Hon'ble Apex Court in the case of Commissioner of Central Excise, Vadodara Vs. Dhiren Chemical Industries 2002 (139) ELT 3 (SC) held that the expression appropriate duty of excise duty leviable means some duty ought to have been paid and it would not include raw materials, which is not leviable to excise duty or such duty is Nil. Subsequent to this decision of the Hon'ble Apex Court, the CBE&C vide Circular No. 667/58/2002-CX dated 26.9.2002 clarified that in the light of the Apex Courts decision in the case cited supra, nil duty paid goods or fully excisable goods should not be deemed to be goods on which appropriate duty of excise has been paid and modified the circular issued to that effect earlier vide Circular No. 125/36/95-CX dated 15.5.1995. In pursuance of the said Circular, a show-cause notice was issued to the appellant demanding duty on nylon twine cleared during the period from 26.9.2002 to 1.11.2003 as it did not satisfy the condition prescribed under Notification No. 6/2002. For the purpose of computation of duty demand, the invoices issued by the appellant for captive consumption was taken as the basis and all invoices issued subsequent to 26.9.2002 upto 1.1.2003 were taken into account and a quantity of 43,987 kg was arrived at with an assessable value of Rs.77,08,669/- and a duty liability of Rs.12,33,387/-. A show-cause notice dated 8.8.2003 was issued to the appellant demanding the duty and also proposing to impose penalty. The demand was confirmed vide order dated 22.3.2004 along with interest and also by imposing penalty of Rs.6 lakhs under Rule 25 of Central Excise Rules, 2002. Aggrieved of the said decision, the appellant preferred an appeal before the lower appellate authority, who vide the impugned order upheld the demand of duty along with interest but set aside the penalty. It is against this decision, the appellant is before us.
3. The learned Counsel for the appellant submits that all along the intention of the Government has been to exempt the raw materials used in the manufacture of fishing nets, which is used by the fisherman community and to achieve this objective, notification No. 6/2002 was issued granting exemption to all goods made from nylon yarn on which appropriate duty of excise has been paid. In view of the decision of the Hon'ble Apex Court in the case of Dhiren Chemical Industries (supra), wherein it was held that appropriate duty of excise means payment of some duty and does not include material on which no duty has been paid, the Government issued another exemption vide Notification No. 1/2003-CE dated 2.1.2003, wherein nylon twine used in the manufacture of fishing nets was unconditionally exempted. Therefore, the duty demand for the period from 26.9.2002 to 1.1.2003 on nylon twine is not sustainable in law. It is further argued that even assuming that appellant is not eligible for exemption and the appellant is liable to pay duty on nylon yarn captively consumed, the quantity and value thereof is incorrect as per the records maintained by the appellant, which is verifiable by the department. The quantity of nylon twine cleared for captive consumption during the period 26.9.2002 to 1.1.2003 is only 63,461/- kg valued at Rs.46,36,553/- and the duty liability works out to Rs.7,41,848/-. The appellant has discharged this duty liability, whereas the show-cause notice proposes to demand a duty of Rs.12,33,387/-, based on the invoices issued by the appellant which is incorrect. In respect of captive consumption, the appellant normally issues an invoice at the end of the month towards the quantity consumed during the month; that does not mean that the clearance of the goods have not taken place throughout the month. Since the demand is for the period 26.9.2002 to 1.1.2003, the duty demand is sustainable only on that quantity of the nylon twine captively consumed during the month.
4. Learned Addl. Commissioner (AR) appearing for the Revenue, on the other hand, submits that the impugned order is sustainable in law and he submits that as per the Excise Law, the clearance has to made under the cover of invoice and it is the issue of invoice, which indicates the quantity and value, which is relevant for computation of duty demand. If seen from that perspective, the show-cause notice has only taken into account the clearance for the period from 26.9.2002 to 1.1.2003. Therefore, the impugned demand is sustainable in law. Accordingly, he pleads for upholding the impugned order.
5. We have carefully considered the submissions made by both the sides.
5.1 In view of the decision of Hon'ble Apex Court in the case of Dhiren Chemical Industries (supra), it is clear that the appellant is not eligible for the exemption under Sr. No. 142 of Notification No. 6/2002 dated 1.3.2002, inasmuch as the conditions prescribed thereunder are not satisfied and the appellant became eligible for duty exemption on the captively consumed twine w.e.f. 2.1.2003. From the records, it is also seen that the appellant had requested for grant of exemption under Section 11C of the Central Excise Act, 1944 which was considered by the Government of India and vide letter dated 1.10.2004, the said request was rejected by the Government. Therefore, during the period from 26.9.2002 to 1.1.2003, the appellant is liable to pay excise duty on the nylon twine captively consumed and we hold accordingly.
5.2 As regards the computation of demand, as per the show-cause notice the period of demand is 26.9.2002 to 1.1.2003. This is evident from para 4 of the show-cause notice and also from the Annexure to the show-cause notice which computes the value of nylon twine cleared during the period from 26.9.2002 to 1.1.2003. Clearance of the goods is a physical activity and has nothing to do with the issue of invoice. Even in a case can be established. Thus, the clearance of nylon twine can be easily verified from the records maintained by the assessee during the impugned period. As per the appellant, the actual quantity cleared is only 63,461 kgs. and the duty liability works out to Rs.7,41,848/-, which they have paid. Since this demand is sustainable in law, the appellant is also liable to pay interest leviable thereon as per the provision of Section 11AB of Central Excise Act, 1944. Inasmuch as the appellant has paid the duty, which can be verified by the Revenue, this demand of duty is legally sustainable. However, the Revenue is at liberty to verify the quantum of duty paid by the appellant and if the amount paid is found to be correct, the appellants liability will be limited to payment of interest thereon. On the other hand, if from the records maintained by the appellant assessee, the quantification done by the appellant is incorrect, the Revenue is at liberty to quantify the nylon twine cleared for the period from 26.9.2002 and demand duty accordingly.
6. The appeal is disposed of in the above terms.
(Dictated and pronounced in Court)
(Anil Choudhary) (P.R. Chandrasekharan)
Member (Judicial) Member (Technical)
Sinha
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