Custom, Excise & Service Tax Tribunal
M/S Centuary Fibre Plates Pvt. Ltd vs The Commissioner Of Central Excise, ... on 2 August, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE COURT - I Application Involved: E/Stay/1946/2012 in E/2671/2012-DB Appeal Involved: E/2671/2012-DB [Arising out of Order-in-original No. 07/2012 (CE) Commr dt. 11/07/2012 passed by the Commissioner of Customs, Central Excise & Service Tax, Hyderabad ] M/s CENTUARY FIBRE PLATES PVT. LTD. Appellant Versus THE COMMISSIONER OF CENTRAL EXCISE, HYDERABAD Respondent
Appearance:
Mr. S. Thirumala, Adv For the Appellant Mr. R.K. Singla, A.R. For the Respondent Date of Hearing: 02/08/2013 Date of Decision: 02/08/2013 CORAM:
HON'BLE SHRI B.S.V.MURTHY , TECHNICAL MEMBER HON'BLE SHRI ANIL CHOUDHARY , JUDICIAL MEMBER Final Order No. 25784 / 2013 Order per. B.S.V.MURTHY The appellant is a manufacturer of rubberized coir mattresses and rubberized foam mattresses. In both the products Polyurethane Foam (PU Foam) is used which is also manufactured by the appellant. Prior to March 2011, both the final products other than PU foam manufactured by the appellant were totally exempt. In the budget of 2011, 1% duty was imposed in terms of Notification No. 1/2011-CE on both the final products other than PU foam manufactured by the appellants. The Notification prescribed 1% duty if no CENVAT credit is availed on inputs and 5% if CENVAT credit is availed. The appellants started paying 1% duty on the products other than PU foam and continued to avail CENVAT credit of duty paid on the inputs used in the manufacture of PU foam which was cleared for captive consumption in the manufacture of rubberized foam mattresses and rubberized coir mattresses. During the audit of the appellants factory in October 2011, it was pointed out to the appellants that according to Notification No. 1/2011, no CENVAT credit of inputs should have been taken and therefore they would be liable to pay 5% on the finished products manufactured by them. Immediately, the appellants paid the excise duty on PU foam cleared for captive consumption for the period from 1st March 2011 to September 2011 with interest. For the subsequent period from October 2011 to December 2011, along with the regular payment of excise duty, excise duty was paid on PU foam also. Taking a view that payment of excise duty on PU foam cleared by the appellants would not make them eligible for concessional rate of 1% applicable under Notification No. 1/2011, proceedings were initiated which has culminated in confirmation of the demand of central excise duty of Rs. 1,63,81,138/- with interest and penalties under Rule 25 of Central Excise Rules 2002 has also been imposed.
2. Learned counsel on behalf of the appellants submitted that according to Notification No. 67/1995-CE dated 16/3/1995, the goods manufactured and cleared for captive consumption are exempt if the finished product is liable to duty. According to Notification No 1/2011-CE, 1% duty that is payable on the finished products does not render the goods as the ones which are considered as dutiable in terms of the law and they have to be treated as exempted goods. In such a situation, utilization of PU foam manufactured within the factory for the purpose of manufacture of rubberized foam mattresses and rubberized coir mattresses which are exempt in terms of Notification No. 1/2011 since the duty at 1% was paid by the appellant was clearly not correct. The question that arises in this case is whether the appellants action of paying duty on the PU foam cleared within the factory would be sufficient in terms of Notification No. 1/2011 to make them eligible for 1% duty and in terms of Notification No 67/95 is the question.
2. The learned counsel submits that the Commissioner has held that the inputs used in the manufacture of PU foam have to be considered as inputs and therefore the payment of duty made by them on the captively consumed PU foam is not at all relatable for the purpose of determining the admissibility of concessional rate on the finished products. On this ground, he has totally rejected the claim of the appellant that once they paid the duty on PU foam, the statutory obligation is fulfilled and they become eligible for the benefit of Notification No.1/2011 since they have not availed CENVAT credit on PU foam on which they discharged the duty liability. We are unable to find justification in the order passed by the Commissioner. In this case, if the finished products were exempt totally, and when the finished products were exempt totally there is no dispute that the appellant was paying excise duty on the PU foam and the benefit of exemption was allowed for the finished product namely rubberized mattresses. The situation has not at all changed in this case. The final products were exempt prior to March 2011 and they continued to be exempt in the eyes of statute after March 2011 since the Notification itself provides that payment of 1% duty would not render the goods as dutiable. Therefore the only omission or mistake that can be said to have been committed by the appellant in accordance with the statute would be clearance of PU foam within the factory without payment of duty which was rectified by the appellant as soon as the same was pointed out. This is because the exemption is available for captively consumed PU foam when used in dutiable products would continue to be available even after introduction of Notification No. 1/2011. Further, we also find that as submitted by the learned counsel, the decisions of the Tribunal in the case of Tata Chemicals Ltd. Vs Commissioner of Central Excise Rajkot [2008(232)E.L.T. 737 (Tri-Ahmd)] and M/s Shivalik Agro Poly Products Ltd. Vs. Commissioner of Central Excise, Chandigarh [1999 (114)E.L.T. 760 (Tribunal)] are on the same issue and support the case of the appellant. The decision in the case of Shivalik Agro Poly Products Ltd. was upheld by the Honble Supreme Court in 2005(184)E.L.T. 124(S.C.)]. In the case of Tata Chemicals Ltd,, in para-7, this Tribunal observed as follows:-
7.The next issue to be considered is the demand for Rs. 2,77,15,038/- for the periods from 2001-02 to 2005-06. The appellants have contested the demand on the ground of limitation. It has been said that all the facts were in the knowledge of the Department and separate proceedings had been initiated to recover Cenvat credit on the fuel used in the generation of electricity used in the manufacture of salt. Commissioner (Appeals) had allowed their appeal on merits as well as limitation. As regards the merits of the demand, the appellants state that they have paid excise duty on the soda ash used for purification of brine for the entire period. Since, full excise duty has been paid on the intermediate product, question of demanding 8% or 10% on the price of excise salt does not arise. Further, they have also reversed the credit of duty paid on the inputs that went into the manufacture of soda ash used in the manufacture of brine used for exempted product. The Commissioner has discussed the issue of limitation in his order and observed that the appellants had never brought it to the notice of the Department that a portion of soda ash has been used in the exempted product. We find force in the argument of the Department that while it can be said that use of electricity in the excise product as well as dutiable product was known to the Department, the same thing cannot be said about soda ash. It is quite possible that appellants may be accounting the soda ash separately and using the same for exempted products. Only on verification, it has been found that the soda ash used for manufacture of brine, which was in turn used for exempted product was not duty paid. Therefore, we feel that extended period has been rightly invoked. Further the fact that appellants on their own paid the duty on soda ash used for producing exempted goods on 5-9-2006 voluntarily also supports view. They have also claimed that they have reversed the credit also even though duty is paid on soda ash used for manufacture of exempted products, credit need not be reversed. However, the Commissioner has observed that this payment has been made without authority and without proper calculation. Therefore, the case will have to be remanded to the original Adjudicating Authority, who can get the correctness of the duty paid on the soda ash for the 5 year period by the appellants verified. Needless to say once duty is paid on the soda ash used in exempted goods, the reversal of the credit of duty paid on the inputs will not be required. Since, the duty has been paid in the soda ash used in the exempted product, the demand of amount of Rs. 2,77,15,038/- on salt has to be set aside. In the case of M/s Shivalik Agro Poly Products Ltd. also, this Tribunal observed as follows:-
6. We find that when the final product is indicated as protective? covers/tarpaulins, plastic granules have been shown as inputs and lay flat tubings are an intermediate product for the manufacture of protective covers/tarpaulins. We also find that when lay flat tubings were used in the manufacture of final products i.e. protective covers/tarpaulins cleared at nil rate of duty, duty was paid on lay flat tubings. Therefore, the decision of the Honble Supreme Court in the case of Chandrapur Magnet Wires reported in 1996 (81) E.L.T. 3 (S.C.) wherein it has been held that if credit has been taken but the duty is debited subsequently, benefit of exemption under Notification containing condition regarding non-availment of Modvat credit cannot be denied, is directly applicable. We also find that this is the view taken in the case of Shri Ram Vinyl and Chemicals (Final order No. 659/99-C, dated 27-7-1997) and there is no difference between that case and the present case except that the inputs in the Shri Ram Vinyl and Chemicals case are plastic granules, intermediate product PVC resin and final product PVC compound. Following the ratio of the Apex Court decision in the case of Chandrapur Magnet Wires, we hold that the appellants are entitled to the benefit of Notification 14/92 for protective covers/tarpaulins, in terms of Sl. No. 21 of the table annexed to that Notification. The reproduced paragraphs above would show that the decisions of the Tribunal are clearly applicable to the facts of this case also.
3. The above discussion would show that the case involved a short issue and we have considered the issue in necessary detail. Therefore no purpose would be served by giving complete waiver which the appellants in any case deserve and postpone the final hearing to a subsequent date especially in view of the fact that appellants submitted that show-cause notices are being issued for subsequent periods which will only increase further litigation on the same issue. Therefore, we consider it appropriate that appeal itself may be allowed at this stage and we do so with consequential relief, if any, to the appellant.
(Order pronounced and dictated in open court)
B.S.V. MURTHY ANIL CHOUDHARY
(TECHNICAL MEMBER) (JUDICIAL MEMBER)
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