Custom, Excise & Service Tax Tribunal
) Opg Metals Pvt. Ltd vs Commissioner Of Central Excise on 16 July, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal Nos.E/102/2009, E/103/2009,
E/104/2009 and E/299/2009
[Arising out of Order-in-Original No.20/2008 dt. 25.11.2008 and OIO No.5/2009 dt. 9.3.2009 passed by the Commissioner of Central Excise & Service Tax, Tiruchirapalli]
1) OPG Metals Pvt. Ltd.
2) Shri Arvind Gupta
3) Shri Ashok Bhora
4) Shri OPG Metals Pvt. Ltd. Appellant
Versus
Commissioner of Central Excise,
Tiruchirapalli Respondent
Appearance:
Shri S. Venkatachalam, Advocate For the Appellant Shri K.P.Muralidharan, AC (AR) For the Respondent CORAM : Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member Date of Hearing/Decision : 9.7.2015 & 16.7.2015 FINAL ORDER No.41501-41504/2015 Per R. Periasami
All the appeals are taken up together as the issues involved are identical in nature arising out of two Orders-in-Original passed by Commissioner of Central Excise, Trichy.
Appeal Nos.E/102/09, E/103/09, E/104/09 arising out of OIO No.20/2008 dt. 25.11.2008.
2. The brief facts of the case are that appellants are manufacturers of billets and ingots of iron and steel falling under Central Excise Heading 7207 and 7206 of CETA and also registered with Central Excise and discharging duty on the finished goods cleared during the period Jan'05 to July'05. On verification of records, it was alleged that appellants cleared M.S. billets and M.S. ingots without payment of duty after conversion. The appellants have entered into conversion agreements with M/s.Kanishk Steel Industries Ltd., Gummidipoondi, Kanishik Steel Industries Ltd., Bangalore and M/s.Sonal Vyapar Ltd., Salem. As per the agreement, appellants received MS scrap, H.M.S, L.M.S., Scrap turnings and boring scrap and sponge iron etc. for conversion into M.S. Billets/ingots. It was alleged that after conversion the appellants cleared the finished goods without payment of duty to their principal suppliers. There was no evidence to show that appellants or the principal supplier claimed the benefit of exemption under Notification No.214/86. No declaration filed by the principal supplier with jurisdictional Central Excise authority under whose jurisdiction the job worker was located. Accordingly, a show cause notice dt. 1.9.2008 was issued to the appellants demanding excise duty under proviso to Section 11A(1) on the total quantity of MS billets manufactured and cleared to their principal raw material supplier. Notice was also issued to Shri Arvind Gupta, President of the company, Shri Ashok Bhora, Director of Kanishk Steel Industries Ltd. for imposition of penalty under Rule 25 of Central Excise Rules, 2002. Adjudicating authority in the impugned order confirmed the duty of Rs.10,99,22,258/- being excise duty payable on the goods manufactured and cleared during the period from Jan'05 to March'07 and also appropriated the amount of Rs.15,00,919/- and imposed equivalent penalty along with interest. He also imposed penalty of Rs.25 lakhs on Shri Arvind Gupta, President of the company and Rs.10 lakhs of Ashok Bhora, Director of Kanishk Steel Industries under Rule 25 of CER.
Appeal No.E/299/2009 arising out of OIO No.5/2009 dt. 9.3.2009.
3. As far as this appeal is concerned, the issues are identical to the above appeal except another show cause notice dt. 7.1.2009 was issued for the period of December 2007 and the adjudicating authority confirmed the demand Rs.1,13,27,118/- under Section 11A and imposed equivalent penalty under Section 11AC.
4. Heard both sides. Ld. Advocate appearing for all the three appellants submitted a written synopsis and reiterated the same. He submits that SCN relating to first appeal E/102/09 is hit by limitation as the period involved is from Jan'05 to March'07 whereas SCN dt. 1.9.2008 was served on the appellants on 9.1.2008. The entire demand is hit by limitation as there is no suppression of facts and they filed monthly ER-1 returns and clearly indicated removal of MS billets without payment of duty. He drew our attention to the copies of series of correspondence/letters addressed to the Asst. Commissioner of Central Excise annexed at pages 85 to 91 of paper book. The principal manufacturer M/s.Sonal Vyapar Ltd., Salem addressed a letter dt 10.11.2004 to the jurisdictional Asst. Commissioner of Central Excise, Salem I Division, Salem intimating that the goods were being sent under Rule 4 (5)(a) of CCR 2002 to their job worker and also intimating that they were availing Notification No.214/86 dt. 25.3.1986. Appellants have also addressed letters dt. 1.4.2005, 8.8.2005 directly to the jurisdictional AC intimating the receipt of raw materials for conversion under Rule 4(5)(a) of CCR. That end use certificate dt. 21.9.2005 was also obtained from the jurisdictional DC on the consumption of raw material and the DC has certified that appellants have consumed the raw materials in manufacture of MS ingots. The department never raised any doubt or any objection on the intimation letters submitted to the AC Division.
5. On merits of the case, he submits that they have not violated any procedure and being a job worker, they received the inputs, processed and after conversion the MS Ingots/Billets were returned to the principal manufacturers under valid invoice cum delivery challan. Both receipt of the raw material and clearance of the goods were accompanied by valid documents. He submitted copies of both supplier's invoice and delivery challans. In the said invoices, it is clearly mentioned that the goods were sent for conversion under Rule 4(5)(a) of CCR. They have returned the entire goods after conversion and also returned the scrap arising out of manufacture to the respective supplier/manufacturer who has discharged the excise duty on their finished goods manufactured out of MS Ingots/Billets. Since they are being a job worker they were not required to pay excise duty as duty is to be discharged by the principal manufacturer on their final products.
6. Ld. Advocate further submits that they have accounted that quantity of raw material, MS Scrap received and quantity of MS billets and ingots manufactured were duly accounted in their records and Form IV register. He submitted the worksheet showing quantity of raw material received vis-a-vis quantity of ingots and billets manufactured as filed in Annexure-I & II. He submits that there is no allegation in the SCN of any diversion of MS ingots and billets. All the three principal manufacturers duly accounted in their Form-4 on the receipt of billets in their account and same were used in the manufacture of final products viz. MS angles, TMT bars and channels etc. and cleared on payment of excise duty. He produced copy of invoices, inward register, ER-1 returns, Central Excise invoices of Kanishk Steel Industries and others as annexed in paper books. He submits that entire MS scrap received from the 3 principal manufacturers were converted into MS billets, ingots returned to the principal supplier and the principal supplier has paid higher excise duty on the TMT bars and MS angles. They availed cenvat credit on the consumables used in the manufacturer of final product.
6.1 Regarding appeal No.E/299/09, he submits that SCN was issued under normal period but adjudicating authority confirmed the demand and imposed equivalent penalty under Section 11AC. He submits that the principal manufacturer has filed undertaking before the jurisdictional AC, Karaikal. He refers to page 102 of the paper book of this appeal. He further submits that since there is no suppression no penalty can be imposed under Section 11AC. He also submits that penalty on Shri Ashok Bhora is not imposable as there is no allegation or contravention has been made against him. He relied on the following citations both on merits as well as on limitation:-
(1) Inar Profiles Pvt. Ltd. Vs CCE Visakhapatnam 2014 (310) ELT 200 (Tri.-Bang.) (2) Vandana Dyeing Pvt. Ltd. Vs CCE Mumbai 2014 (307) ELT 528 (Tri.-Mum.) (3) Aggarwal Rolling Mills Vs CCE New Delhi 1997 (93) ELT 615 (Tribunal) (4) Moon Chemicals Vs CCE Trivandrum 2007 (215) ELT 434 (Tri.- Chennai) (5) Seam Engineers Vs CCE 2009 (238) ELT 809 (Tri.-Mumbai) (6) M.Tex & D.K. Processors (P) Ltd.
2001 (136) ELT 73 (Tri.-Del.) (7) G.G. Automotive Gears Ltd. Vs CCE Indore 2014 (308) ELT 546 (Tri.-Del.) (8) CCE Bangalore Vs Bharath Fritz Werner Ltd.
2007 (218) ELT 177 (Kar.)
7. Ld. Special Counsel appearing for the main appellant submitted written synopsis along with paper book containing relevant documents. He submits that the Range Superintendent of Central Excise, Mayiladutharai, on scrutiny of ER 1 Returns, sought clarification from the appellant vide his letter dt. 31.8.2006 and again on 23.10.2006 on clearance of billets/ingots manufactured by them, both on payment of duty and without payment of duty. Thereafter summons were issued, statements were recorded from Shri Arvind Gupta, President of the company and statement was recorded from Shri Ashok Bhora, Director of Kanishk Steel Industries. He referred to letter dt. 1.4.2005 addressed to AC by the appellant and submits that it is only an intimation of receiving the raw materials under Rule 4(5) (a) of CCR and returning the goods to the principal manufacturer. He referred to invoices issued by the appellant under Rule 11 of CER where the MS billets have been cleared to M/s.Kanishk Steel Industries and only the quantity and value is mentioned and there is no conversion charges mentioned in the invoice. The invoice bears the rubber stamp affixed stating that "raw materials sent for conversion under rule 4/5(a)". He further submits that appellant never intimated the department of availing 214/86 notification. The department was on the bonafide belief that appellant had followed the procedures correctly and that the entire monitoring was done by the jurisdictional Central Excise authorities at the principal manufacturer's place. As per notification 214/86, manufacturer who is availing the notification has to file an undertaking to the Asst. Commissioner of Central Excise having jurisdiction over the factory of job worker that the said goods have been received and consumed within the factory and discharged central excise duty. No evidence is brought on record to prove that the supplier of the raw material had supplied raw material to them under the provisions of notification No.214/86-CE. He submits that in the present case no declaration has been filed by supplier of raw material before the ACCE, Karaikal. Filing declaration with other jurisdictional authority cannot be considered as complying the conditions of the notification. He further submits that Rule 4 (5) (a) is ab initio not applicable to the instant case as this Rule only relates to cenvat where an appellant-manufacturer can avail credit on the inputs sent to a job worker. In the present case, the principal supplier has not availed cenvat credit on the MS scrap. The letter dt. 25.11.2007 of Kanishk Steel Industries addressed to the appellants confirms that they have not availed input cenvat credit on the entire quantity of 3501.210 MTs of MS scrap. He relied the statement of Mr.Ashok Bhora of Kanishk Steel Industries who admitted the fact that they have not availed cenvat credit on the MS scrap. MS scrap were not supplied from the premises of M/s.Kanishk Steels but were directly sent from the port of import by CHA. He relied on copy of invoice at page 4 of the paper book submitted by Revenue wherein the CHA cleared the imported MS scrap with the endorsement "sent for conversion to M/s.OPG Metals (P) Ltd., Mayiladuthurai under Rule 4(5)(a) directly from CFS to appellant's unit. It is clearly showed that the principal manufacturer has not received the inputs and availed any credit on the goods but directly sent to the appellant for manufacture of MS Billets. He relied on the statement of Shri Asok Bhora, Director of M/s.Kanishk Steel Industries annexed to page 11 of paper book, wherein at Question No.16, he has admitted that goods were directly sent from CHA to appellant's unit and no credit was taken by them.
7.1 He further submits that appellants have misdeclared in their ER-1 returns that they are following the procedure prescribed under Rule 4 (5) (a) of CCR. Since the principal manufacturer has not complied with the condition of the notification 214/86, Rule 4(5) (a) is ab-initio and not applicable. No monitoring done by the department either at the principal manufacturer's end or at the end of the job worker. Therefore he submits that extended period has been rightly invoked as there is clear cut suppression of facts. Appellants relying on letters addressed to the AC, Salem is only an intimation. Mere filing of ER-1 returns is not equivalent to compliance of conditions of exemption notification and Section 11AC has been rightly invoked and the adjudicating authority has rightly confirmed the demand and imposed penalty on the appellant under Section 11AC as well as imposed penalty on the co-noticees. He relied on the following citations :-
(1) Kartar Rolling Mills Vs CCE New Delhi 2006 (197) ELT 151 (SC) (2) Desh Rolling Mills Vs CCE Delhi 2000 (122) ELT 481 (Tribunal) (3) Jinabakul Forge Pvt. Ltd. Vs CCE Belgaum 1997 (93) ELT 373 (Tribunal) (4) International Engg. & Mfg. Services P. Ltd. Vs CCE Jaipur 2001 (135) ELT 551 (Tri.-Del.) (5) Non-Ferroous Industries Vs CCE Cclcutta 2002 (150) ELT 99 (Tri.-Kolkata) (6) CCE New Delhi Vs Hari Chand Shri Gopal 2010 (260) ELT 3 (SC) (7) CCE Coimbatore Vs Universal Radiators Ltd.
2011 (273) ELT 20 (SC) (8) Merchantile and Industrial Dev. Co.Ltd.Vs CCE Ahmedabad 2014 (313) ELT 553 (Tri.-Ahmd.) (9) Sun Pharmaceuticals Industries Vs CCE Jammu 2013 (289) ELT 449 (Tri.-Del.) (10) State of Jharkhand Vs Ambay Cements 2004 (178) ELT 55 (SC) (11) Union Quality Plastic Ltd. Vs CCE & ST Vapi 2013 (294) ELT 222 (Tri.-LB)
8. In counter, learned advocate for the appellant submitted that there is no allegation on the diversion or clandestine removal. He submits that all the sale invoices submitted along with appeal book were already submitted before the adjudicating authority and these documents were part of the proceedings. They have only made a worksheet. He further submits that wrong quoting of Rule cannot disentitle the benefit of notification. He relied the letter dt. 10.11.04 addressed to ACCE Salem at page 85 of the paper book and also Board's circular No.306/22/97-CX. dt. 20.3.1997 wherein it has been clarified that principal manufacturer can get the job work done on the inputs under Rule 57F (4) and in such case duty has to be discharged by the manufacturer and not by the job worker. He also submits that citations relied by the department are not applicable to the present case. He submits that Tribunal's order in the case of Sun Pharmaceuticals Industries Vs CCE Jammu (supra) is only an interim stay order. There is no restriction in CCR and the principal manufacturer can send the raw material directly from port to the job worker for conversion without availing cenvat credit and credit can be availed on receipt of goods from job worker.
9. Ld. special counsel in his rejoinder submits that since the notification No.214/86 has been denied and rule 4(5) (a) is not applicable to the instant case, excise duty cannot be fastened on the supplier of raw material.
10. We have carefully considered the submissions of both sides and the various annexures submitted by both special counsel for the Revenue and the advocate for the respondent.
11. The issue in the present appeal relates to demand of excise duty on the goods manufactured by the appellants under job work Notification No.214/86-CE. In the impugned order, the adjudicating authority has demanded Central Excise duty on the MG ingots/billets manufactured from MS scrap received from the principle suppliers and returned to the principal manufacturer. The demand pertains to the period Jan 2005 to March 2007. The facts of the case are already set out as above. Appellants entered into agreement with M/s.Kanishk Steels Industries, Gummidipoondi, M/s.Sonal Vyapal Ltd., Salem, M/s.Radice Ispat (India) Ltd., Calcutta and M/s.Kanishk Steel Industries, Bangalore. Adjudicating authority in the order dealt the issue in detail while demanding duty on the MS ingots and billets on the ground that in terms of Notification No.214/86 no declaration has been filed before the jurisdictional Central Excise Authorities under whose jurisdiction the job worker was located. Once the condition of notification No.214/86 is not complied, duty has been demanded on the appellant. Revenue heavily relied on the conditions of the notification No.214/86 which has not been complied. On the other hand, appellants contended that entire demand is hit by limitation.
12. On merits of the case, the appellant contended that being a job worker, duty cannot be demanded on them but it should be demanded on the principal supplier.
13. Before proceeding with merits of the case, we propose to examine the limitation issue as contended by the appellant. Appellant relied series of letters viz. letter dt. 10.11.2004 written by the principal manufacturer M/s.Sonal Vypar Ltd. addressed to ACCE, Salem about sending of Heavy Melting Scrap for conversion into MG Ingots to M/s.SAIKRIPA VYAPAR PVT. LTD. (appellant herein) and letter dt. 15.11.2004 of the appellant to the jurisdictional ACCE, Karaikal Letter intimating receipt of raw material from M/s.Sonal Vyapar Ltd. and sending it back after conversion within 180 days to the supplier. Appellants also relied on letter dt. 1.4.2005 and letter dt. 8.8.2005 addressed to the jurisdictional ACCE, Karaikal. On perusal of the letters, we find that appellants have intimated the receipt of raw material from the principal manufacturer for conversion under Rule 4(5) (a) of CCR. We also find from the letter dt. 10.11.2004 submitted by Sonal Vyapar Ltd. to ACCE, Salem-I Division, Salem on the job work intimation under Notfn 214/86 and Rule 4(5) (a) of CCR, wherein it is mentioned the principal manufacturer or the supplier to undertake to bring the finished goods and wastage to job work to their factory within 180 days. The said letter is reproduced herein below :-
"Sub: Job Work Intimation Under Notification No.214/86 dt. 25.3.86 and Rule 4/5(a) for the year 2004-05 We are purchasing Heavy Melting Steel Scrap from abroad. We want to send these materials under Sub Rule 5(a0 of Rule 4 of Cenvat Rules, 2002 for conversion to M/s.SAIKRIPA VYAPAR PVT. LTD., Komal Road, Maruthur Village, Mayiladuthurai Tk. We undertake to bring finished product and wastage from job worker to our factory within 180 days.
Accordingly, we have made an agreement with M/s.SAIKRIPA VYAPAR PVT. LTD. for converting out H.M.S into finished products. Photocopy of agreement enclosed for y our ready reference."
14. We find that during the same time, the appellant also sent a letter dt. 15.11.2004 to ACCE, Karaikalal intimating on the proposed conversion of MS scrap received from the principal supplier, Sonal Vyapar Ltd. for conversion into ingots. The said letter is duly acknowledged by the jurisdictional ACCE's office as evident from the paper book. Further, we find that jurisdictional authorities issued end-use certificate dt. 22.12.2005 wherein the DCCE, Karaikal certified that MS scrap received from Radice Ispat (India) Ltd. were fully utilized in the manufacture of MS ingots and billets. We find that appellants were filing ER-1 return. On perusal of copy of ER-1 returns, wherein they have declared clearance of MS ingots for conversion. We also find that the appellants unit was audited by the internal audit as well as CERA audit and periodical returns were filed during the relevant period. Perusal of documents reveal that the said invoices of clearances of MS ingots under job work were seen by Audit and accepted and not raised any objection on the clearances whereas the jurisdictional Superintendent on verification of ER-1 sought for clarification from the appellant for the clearance of the goods without payment of duty vide letter dt. 31.8.2006. The special counsel strongly contended that department has come to know the fact of clearance of goods without payment of duty on scrutiny of returns by the jurisdictional Range Superintendent on 31.8.2006 and immediately after detection, show cause notice was issued under Section 11AC. Revenue strongly relied on this letter dt. 31.8.2006 and contended that there was no intimation and there is clearance of the goods without payment duty and contended that demand is not hit by limitation.
15. On perusal of records, dt. 10.11.2004 and 15.11.2004 and subsequent letters, we are unable to accept the Revenues plea that the Department came to know only upon scrutiny of ER-1's on 31.8.2006. In the letter addressed by the appellants they have clearly informed that on the activity of conversion of MS scrap into MS ingots under rule 4 (5) (a) of CCR wherein they have clearly stated that after conversion MS ingots as billets will be returned to principal supplier and on perusal of the invoices of the appellant under Rule 11 of CER where appellant clearly mentioned that the goods were "sent for conversion under Rule4 (5) (a)". We find that appellants have informed the concerned jurisdictional authorities at every stage about their carrying out the job work and receipt of MS scrap and conversion into billets and ingots as per conversion agreements to the principal suppliers. Therefore, we are of the considered opinion that appellant has not suppressed any facts particularly to the fact that the said letters were duly received by the jurisdictional authorities and there was no objection raised by the authorities and no verification was done treating that it is only an intimation. This is further supported by the evidences that both the internal audit and by the CAG Audit who verified the records, returns and invoices periodically and accepted the clearance. Therefore, it cannot be said that the Revenue has come to know only after jurisdictional Superintendents letter dt. 31.8.2006. Therefore, we hold that the fact of receipt of scrap for conversion and return to the principal manufactures are clearly known to the department and there was suppression of facts by the appellant. In this regard, we rely Honble Supreme Courts decision in the case of Continental Foundation Jt. Venture Vs CCE Chandigarh-I - 2007 (216) ELT 177 (SC) wherein the Hon'ble Apex Court held that mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. The relevant paragraph of Supreme Court order is reproduced as under :-
"10. The expression? suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as fraud or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.
11. Factual position goes to show the Revenue relied on the circular dated 23-5-1997 and dated 19-12-1997. The circular dated 6-1-1998 is the one on which appellant places reliance. Undisputedly, CEGAT in Continental Foundation Joint Venture case (supra) was held to be not correct in a subsequent larger Bench judgment. It is, therefore, clear that there was scope for entertaining doubt about the view to be taken. The Tribunal apparently has not considered these aspects correctly. Contrary to the factual position, the CEGAT has held that no plea was taken about there being no intention to evade payment of duty as the same was to be reimbursed by the buyer. In fact such a plea was clearly taken. The factual scenario clearly goes to show that there was scope for entertaining doubt, and taking a particular stand which rules out application of Section 11A of the Act.
12. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word wilful, preceding the words mis-statement or suppression of facts which means with intent to evade duty. The next set of words contravention of any of the provisions of this Act or Rules are again qualified by the immediately following words with intent to evade payment of duty. Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Mis-statement of fact must be wilful.
13. That being so, the adjudicating authorities were not justified in raising the demand and CEGAT was not justified in dismissing the appeals."
The ratio of the above Apex Court's decision is squarely applicable to the present case. By respectfully following the Supreme Court decision (supra), we hold that demand is hit by limitation.
16. On merits of the case, on perusal of records and findings of OIO, we find that the adjudicating authority has denied the exemption notification No.214/86-CE. There is no dispute on the fact that appellant have received MS scrap as per conversion agreements entered into with the principal manufacturer/supplier and there is no dispute on the fact that appellants are also original manufacturers of MS ingots and billets on their own account and discharging central excise duty on the final products. It is an admitted fact that appellant received raw materials on job work and after conversion cleared MS ingots/billets to their principal supplier M/s.Kanishk Steel Industries. Vyapar, Salem, Ispat Radice (India) Ltd. in the respective central excise jurisdiction. On perusal of the challans and invoices, we find that the invoice bears the clear endorsement sent for conversion under Rule 4 (5) (a). The revenues main plea is that the main condition of the notification stipulates filing of undertaking by the principal manufacturer before the jurisdictional central excise authorities where the job worker is located and the same has not been complied by them and no declaration filed by the principal manufacturer. On perusal of letter dt. 10.11.2004, we find the principal manufacturer Sonal Vyapar (India) Ltd. filed undertaking before ACCE, Salem. Revenues contention that the principal manufacturer has not filed required undertaking before the jurisdictional ACCE, Karaikal. We find that the principal supplier Sonal Vyapar (India) Ltd. is registered under the Central Excise with ACCE, Salem. It is not the case that the principal supplier has not filed any declaration. In the said declaration where the principal supplier had clearly intimated the sending of raw materials for job work under notification No.214/86. Further, appellants also in their letter dated 15.11.2004 addressed to the jurisdictional ACCE, Karaikal informed the job work. We find that no SCN has been issued or any investigation carried out with the principal suppliers of raw materials as to whether the duty has been discharged on the final product cleared by the principal manufacturer as per the job work notification. Further, it is pertinent to see that both the appellant and the principal suppliers are duly registered with the Central Excise and following Central Excise procedures. The principal manufacturers duly declared/intimated to the department that raw materials were being sent for conversion under Rule 4 (5) (a) as evident from the correspondences, invoice and DC and other documents. Being a central excise manufacturer the principal manufacturer is entitled to send raw material as such or for further processing under Rule 4 (5) (a). The rule includes the term removal of raw materials for further processing" and the department is not disputing that the goods are not returned by the appellant after conversion. The appellant also produced copies of Form-4 evidencing receipt of MS ingots/billets by the principal manufacturer. All these facts conform that appellant being a job worker received MS scrap as per the conversion agreement duly converted in the ingots and billets and cleared the same to the respective principal supplier. It is not the case of the department that finished goods not suffered duty or cleared without payment of duty. It is also on fact that scrap received from the supplier got converted into MS ingots and duly returned to the principal manufacturer and there is no direct sale of MS ingots or billets of job work goods directly by the appellant after the conversion scrap received from the supplier. In this regard, Revenue relied on Supreme Court judgement in the case of CCE New Delhi Vs Hari Chand Shri Gopal (supra) wherein the apex court has set out the guidelines for availing the exemption notification No.121/94-CE under Chapter X procedure. In the present case, the principal supplier filed declaration/intimation as per Notfn 214/86before ACCE, Salem instead of filing with the jurisdictional ACCE Karaikal. Therefore, it is not the case of non-compliance. It is also in the present case, it is revealed that goods are cleared after conversion under Rule 4 (5) (a). Therefore, the revenue relying on the Honble Supreme Courts decision is distinguishable on facts and not applicable to the facts of the case. The department has also relied in the case of CCE Vs Universal Radiators Ltd. (supra) and other citations. The same are not applicable to this case. In this regard, there are series of Tribunals decisions on this issue where the Tribunal has held that benefit of notification No.214/86 cannot be denied and duty cannot be demanded on the job worker. In this regard, we rely this Tribunal decision in the case of Aggarwal Rolling Mills Vs CCE New Delhi (supra). The relevant paras 20 & 21 are reproduced as under :-
"20. Furthermore, if an assessee firm was a small? scale manufacturer and therefore, governed by the SSI Notification and at the same time some items manufactured by it were entitled to benefit of some other notification the same could not be denied unless it was specifically so stated in either one or both of the notifications. Thus e.g. some notifications themselves indicate that benefit thereof shall not be available if the assessee has already availed of the benefit under Rule 56A and 57A (as for example Notification No. 134/94). Since there is no such stipulation in the Notification 214/86 the benefit thereof could not be denied to a person enjoying SSI benefit.
21. It is also significant that Notification 1/93 is? an SSI notification which specifically includes certain headings and excludes others. Therefore, generalisation is not possible. In the circumstances, the benefit under Notification 214/86 could not be denied to the appellants from the period it came into force and they had opted for the same subject to the fulfilment of conditions and the procedure prescribed therein. The duty liability, if any, which may arise in case of non-fulfilment of the conditions prescribed in para 2 would lie on the supplier(s) of the raw material or semi-finished goods as the responsibility has been explicitly cast on him as a principal manufacturer."
17. Further, this Bench of the Tribunal in the case of Moon Chemicals Vs CCE (supra), held that failure to file declaration/undertaking of raw material supplier, cannot be a ground to deny the benefit of notification No.214/86. The relevant paras-3,4 are reproduced as under :-
"3.?After giving careful consideration to the submissions, we find that the lower appellate authority sustained the demand of duty on the ground that the condition laid down in para (2) of Notification No. 214/86 was not complied with by the appellants. The goods specified under the Notification were exempted from payment of duty of excise, where such goods were manufactured in a factory as a job work and utilized in relation to the manufacture of final products on which duty of excise was leviable. The exempted goods and the final products were specified respectively in Col. 1 & Col. 2 of the Table annexed to the Notification. It is not in dispute that the raw material received by the appellants from M/s. Vijay Detergent Products (P) Ltd. and the goods returned to the latter after job work were specified in the Table annexed to the Notification. Again, it is not in dispute that the goods after job work were supplied to M/s. Vijay Detergent Products (P) Ltd. under cover of commercial invoices and that only the labour charges mentioned in such invoices were collected from them by the appellants. The Revenue has no case that the work undertaken by the appellants did not fall within the scope of the expression job work under Explanation-I to the Notification. Their only case is that the condition laid down in para (2) of the Notification was not complied with by the appellants. The appellants have claimed that the Sodium Silicate Solution returned after job work to their customer was removed by the latter on payment of duty for home consumption from their factory. This claim has not been contested by the Revenue. In the circumstances, the appellants were eligible for the benefit of the Notification subject to the surviving condition that the raw material-supplier gave an undertaking to the Asst. Commissioner or Deputy Commissioner of Central Excise having jurisdiction over the appellants factory to the effect that the goods would be removed (by the raw material-supplier) on payment of duty for home consumption. The demand of duty is consequential to non-fulfillment of this condition. The appellants have resisted the demand of duty on the ground that it was for the raw material-supplier to comply with the said condition. It is their further case that the department could have recovered duty on the subject goods from M/s. Vijay Detergent Products (P) Ltd. on the ground of non-fulfillment of the said condition. We find that the Tribunals decision in Aggarwal Rolling Mills (supra) supports this case of the appellants. No binding decision to the contrary was cited by the DR.
4.?In the result, the impugned order is set aside and this appeal is allowed."
The ratio of above decision is squarely applicable to the present case.
18. Further the Boards circular dt.20.4.1997 categorically clarified that as per provisions of Rule 4 (5) (a), the manufacturer can get the job work done on the inputs in terms of provisions of Rule 57F (4) of CCR. In this context, the duty liability is required to be discharged by the principal manufacturer and not by the job worker. In the present case, no input credit has been availed by the job worker. Revenue contended that Rule 4 (5) (a) of CCR is not applicable on the ground that principal supplier has not availed credit. In the present case, the scrap was directly sent from the port of import to the job worker and the principal supplier has availed credit immediately on receipt of MS ingots and billets from the job worker. There is no restriction on the manufacturer to send raw material directly from the place of import to the job work premises. Therefore, we hold that there is no dispute on the receipt of scrap and clearance of MS ingots/billets to the principal supplier, the question of demanding duty on the job work does not arise. In view of the foregoing discussions, we are of the considered view that demand of excise duty on the job worker i.e. appellant is not sustainable both on limitation and on merits.
19. As regards second appeal, we find that principal manufacturer also filed declaration to ACCE Karaikal vide letter dt. 20.11.2007 and clearly indicated the jurisdictional ACCE on job work under Rule 4 (5) (a). Since the appeal of the main appellant is allowed by setting aside demand and penalty, the penalty imposed on the co-noticees are also liable to be set aside. Accordingly, the appeals of the co-noticees are also allowed. In the result, the impugned order is set aside and all the appeals are allowed.
(detailed order dictated on 16.7.2015 and
pronounced in open court)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
gs
20