Customs, Excise and Gold Tribunal - Tamil Nadu
M/S Southern Structurals Ltd. vs Commissioner Of Central Excise, ... on 3 September, 2001
ORDER
Shri S.L. Peeran
1. This appeal arises from Order-in-Original No. 18/97 dated 27.6.97 passed by the Commissioner of Central Excise, Chennai holding (a) that appellants had manufactured only parts of crane and their contention that they had manufactured only complete crane is not acceptable (b) that they had not given all the details pertaining to manufacture of parts and details which they had been furnished was only with regard to complete crane and therefore the a larger period is applicable and hence duty for larger period is confirmable in terms of Rule 9(2) of Central Excise Rules read with proviso to sub-section (1) of Section 11A of C.E. Act since there was mensrea involved with an intention to evade duty, therefore penalty of Rs. 2 lakhs under Rule 173Q of C.E. Rules, 1944 has been imposed.
2. Ld.Chartered Accountant Shri P.C. Anand very forcibly and vehemently pleaded that the Commissioner has recorded their submissions in 34 paragraphs in 18 pages, however his finding portion of the order is vague and does not deal with all their contentions, documents, pleas and citations. The order is not a speaking order. He contends that be that as it may, what they had declared and manufactured was a fully complete crane; the crane was weighing about 100 tons. Such huge crane could not be moved to the Cochin Port Trust in one consignment. They had to remove it piece by piece for easy transportation purpose. A few parts had been imported directly to the place of assembly at Cochin Port Trust. Merely because a few parts were imported, that does not take away the characteristic of a full crane in terms of Interpretative Rules 2(a). The item is deemed to be complete crane in CKD condition and the Commissioner has not applied the rules of interpretation, section notes and chapter notes and therefore the order is not a correct order. He submits that CERA had taken an objection to the department having accepted their declaration and documents as complete crane as far back as in 1993. However, the department in fact held on to their view that what was cleared was complete crane and did not issue show cause notice upto April'96. Therefore, the show cause notice issued in 1996 for clearances made in the year 1991-94 is clearly barred by time. He submits that assessments had been completed. There was nothing left in the matter and no fact had been suppressed for invocation of larger period. The fact that department did not agree with the report of CERA is noted by the Commissioner in para-39 of the order. He submits that when all the goods have been assessed and duty has been paid as complete crane, then the question of treating it, after lapse of several years, as parts of crane and claiming short levy does not arise. There is absolutely no intention to evade duty and classification list had been approved after due application of mind. Therefore, question of alleging suppression or clandestine removal under Rule 9 does not arise at all. He also submits that there is no misdeclaration in the classification list as held by the Commissioner as what they had cleared was only complete crane and not the parts as held by the Commissioner. He submits that the entire case-law, documents, and submissions have not been gone into in great detail. He submits that the issue pertaining to clearance of crane, parts of crane has been upheld by the Tribunal in the case of SHRIKE CONSTRUCTION EQUIPMENT PVT. LTD Vs CCE Pune - 1997 (95) ELT 644 (T) as well as in the case of VINAR SYSTEMS LTD Vs CC Calcutta 2001 (131) ELT 578 (Tri-Kolkata). He further submits that as appellants did not have intention to evade duty, the question of invoking larger period or allegation of misdeclaration does not arise, in terms of Apex Court judgment rendered in CCE Vs HMM Ltd., 1995 (76) ELT 497 (SC) and that of TAMIL NADU HOUSING BOARD - 1994 (74) ELT 9 (SC). He files list of citations and written submissions and seeks for setting aside the order.
3. Ld.DR Shri Soundararajan at the outset submits that the whole issue lies within the compass of verification of facts. All the facts are required to be verified in terms of documents filed before the department, various registers maintained by them and also seized documents during investigation. Ld.DR points out that the Commissioner has examined the declaration and found the facts having been mis-declared; that they had cleared only parts. Larger number of parts had been imported directly to the place of assembly. What was cleared cannot be considered as a fully manufactured crane as large number of parts had been imported and used at the time of assembly outside the factory. Therefore what was cleared was only parts and hence larger period is invokable. He submits that although the Commissioner did not issue the show cause notice within a reasonable period after the CERA report, that by itself is not a ground to hold that larger period is not invokable in terms of Larger Bench judgment rendered in the case of NIZAM SUGARS LTD. (1994 144 ELT 429 (B) therefore, he justified the order passed by the Commissioner.
4. The Learned C.A. in reply submits that question of applicability of larger bench judgment of NIZAM SUGARS LTD does not arise as in that case the facts had not been disclosed and they had not paid duty by filing classification list and other documents. He submits that in so far as their case is concerned, they had maintained all the registers, filed classification list, and RT-12 returns had been assessed and they paid duty also as complete crane. Therefore, in these facts and circumstances, when all the information was with the department, then the question of invoking larger period does not arise. He also relies on the judgment of HERCULIS HOIST LTD - 1997 (94) ELT 530 wherein in a similar circumstances, the Tribunal has taken a view that larger period is not acceptable, when RT-12 returns and classification list had been filed and they had paid duty on electric use and rotatory stator assembly and on the fact that price list for brake motors filed under Part-A had been accepted by department.
5. On a careful consideration of the submissions, we are of the considered opinion that the Ld.Commissioner has not examined various pleas, documents and citations referred to by them which has been noted in 18 pages in 34 paragraphs. The fact that the Commissioner has taken note of the goods to be parts of crane has not been supported by any evidence and discussions. Appellants referred to the price list, classification list, various registers, RT-12 returns which have been accepted and also to the CERA report which is not agreed by the department that the item manufactured and cleared on payment of duty was crane. They have made a plea that the item cannot be parts. It was due to the technical necessity that they had to clear the crane in piece and bits as the entire crane weighed more than 100 tons. Such plea has been accepted by the Tribunal in VINAR SYSTEMS LTD and SHRIKE CONSTRUCTION EQUIPMENTS PVT. LTD., (supra). However, the plea that department had knowledge as far back as in 1993 and they had filed duty paying documents, and therefore the issue of SCN in 1996 is clearly barred by time has not been fully appreciated and examined. The judgment in HERCULIS HOIST (supra) is required to be considered including various Apex Court judgments on the point of suppression, invocation of larger period and mis-declaration, and non levy of penalty.
6. We have also observed and noticed that for the purpose of classification, the interpretation rules, section note and chapter notes are applied. Appellants contention that merely because few parts had been imported by them itself will not take away the characteristic of a fully finished crane or in CKD condition has not been appreciated and findings recorded. The interpretation rules are clear that once the essential characteristics of the item in fully finished form, has come into existence, then the item has to be treated as fully finished crane. Therefore, earlier view taken by the department that what was cleared was fully finished crane and a changed view that it is parts is required to be examined thoroughly and findings has to be recorded as to how there is misdeclaration and how all the facts were not supplied to the department. The findings recorded by the Commissioner, not being speaking order, we are of the considered opinion that the impugned order is required to be set aside and matter remanded to the original authority. The Ld.Commissioner shall examine as to why the goods are not fully finished goods in terms of interpretative rules, section notes and chapter notes. The Commissioner shall also examine the citations on this very issue referred to supra. The Commissioner shall also examine as to how there was suppression of facts, when all the RT-12 returns and other documents had been accepted besides report of CETA which has been (SIC) challenged by the department. If these facts stated by the Chartered Accountant is verifiable, then benefit of the Supreme Court ruling are required to be applied. We give a direction that on readjudication, the Commissioner has to apply the ratio of the Supreme Court judgments and Tribunal in terms of judicial discipline. As the matter is an old one, the Ld.Commissioner shall dispose of the matter expeditiously and not later than five months from the date of receipt of this order by giving a full and complete hearing to the appellants. Ld.Commissioner shall give a speaking order on all the points raised by them in the matter and citations produced by them. Thus the appeal is allowed by way of remand.
(Pronounced & Dictated in Open Court)