Custom, Excise & Service Tax Tribunal
M/S. Matrix Laboratories Ltd vs The Commissioner Of Customs, Central ... on 23 November, 2012
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Single Member Bench
Court - I
Date of Hearing: 23.11.2012
Date of decision: 23.11.2012
Central Excise Appeal No. 2335/2010
(Arising out of Order-in-Appeal No. 86/2010 (H-IV) CE dated 27.08.2010 passed by the Commissioner of Customs, Central Excise and Service Tax, Hyderabad)
For approval and signature:
Honble Mr. P.G. Chacko, Member (Judicial)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Matrix Laboratories Ltd. ..Appellant
Vs.
The Commissioner of Customs, Central Excise & Service Tax
Hyderabad Respondent
Appearance Mr. G. Venkata Rao , authorized signatory for the appellant Mr A.K. Nigam, Additional Commissioner (AR) for the respondent Coram:
Honble Mr. P.G. Chacko, Member (Judicial) FINAL ORDER No._______________________2012 In this appeal filed by the assessee, the challenge is against demand of duty of Rs. 1,79,427/- for the period from October 2004 to January 2006 as also against equal amount of penalty imposed on the appellant. The case of the appellant (manufacturing unit IV of the company) is that they were undertaking job works for unit I of the same company during the said period and were clearing the job-worked goods, without payment of duty, in terms of Notification No. 214/86 CE dated 25.03.1986 (as amended). They took CENVAT credit on furnace oil procured by themselves. According to them, they were eligible to claim the benefit inasmuch as the finished goods cleared to unit I were not to be treated as exempted goods. In this connection, the appellant claims support from a few decisions including Commissioner Vs. Isibars Ltd. 2010 (255) E.L.T. 312 (Tri.-Mumbai). The appellant has also pleaded limitation against the demand of duty by submitting that the factum of availment of CENVAT credit on furnace oil was clearly disclosed to the department through the ER-1 returns periodically filed during the aforesaid period and therefore the allegation of suppression of facts is not tenable against them.
2. The authorized signatory for the appellant has reiterated the above case. The learned Additional Commissioner (AR) submits that the conditions attached to Notification No. 214/86 CE were not complied with by the principal manufacturer (unit I) and hence the appellant (unit IV) was not entitled to claim the benefit of the notification. The appellant, just as a normal manufacturer, ought to have paid duty on the goods cleared to unit I. It has also been argued that the relevant facts were gathered by the department only through a letter dated 10.08.2007 submitted by the appellant. They suppressed the material fact during the period of dispute and for a considerable period thereafter. As this was done with intent to evade payment of duty on the subject goods, the extended period of limitation was rightly invoked in the show-cause notice dated 25.03.2009.
3. After considering the submissions of both sides, I find that the appellant has not succeeded in making out a valid case on merits. It is not in dispute that the goods in question were cleared to unit I belonging to the same company. Where unit IV wanted to claim the benefit of the above notification, unit I should have satisfied the relevant conditions. Unit I should have given an undertaking to the Assistant Collector having jurisdiction over unit IV that the job-worked goods would be used in, or in relation to, the manufacture of final products by unit I. Unit I also ought to have produced evidence of such use of the job-worked goods. They should also have undertaken to discharge duty liability in respect of the finished products. There is no evidence on record to show that any of these obligations was discharged by unit I. The authorized signatory has invited my attention to an affidavit dated 3/4 December 2009 submitted by the principal manufacturer (unit I). This affidavit is no substitute for the undertaking which ought to have been made by them to the Assistant Collector having jurisdiction over unit IV. Moreover, curiously, even this affidavit does not say that such undertakings were duly given by unit I to the Assistant Commissioner having jurisdiction over the appellant-unit (unit IV). Under these circumstances, the appellant cannot be held to have undertaken any job work for unit I and hence cannot claim the benefit of the above notification for the period of dispute. On merits, they are liable to pay duty on the goods in question.
4. Nevertheless, the appellant seems to have a good case on the ground of limitation. I have perused copies of sample returns filed by them during the period of dispute. These returns fairly show the amounts of CENVAT credit taken on inputs, input services etc. From these returns, it should have occurred to the department that the appellant was taking CENVAT credit and clearing dutiable goods without payment of duty during the material period. Therefore the departments allegation of suppression of facts does not seem to be tenable on the facts of this case. The show-cause notice demanding duty for the period October 2004 to January 2006 was issued as late as in March 2009. It did not invoke the extended period of limitation on valid grounds. The impugned demand of duty is therefore liable to be held time-barred. It is ordered accordingly. Needless to say that the penalty imposed on the appellant is also to be set aside.
5. In the result, the appeal is allowed on the sole ground of limitation.
(Pronounced and dictated in open Court) (P.G. CHACKO) MEMBER (JUDICIAL) iss