Customs, Excise and Gold Tribunal - Tamil Nadu
Quality Fabricators And Ors. And ... vs Commissioner Of Central Excise, ... on 19 October, 2001
JUDGMENT
S.L. Peeran, Member (Judicial)
1. All these five appeals of the parties and the revenue arose from Order-in-original No. 11/96 dated 14.2.96 by which he has passed the final order as follows:
"I demand a sum of Rs. 14,44,557/- from M/s. Quality Fabricators and a sum of Rs. 1,35,939/- from M/s. Powermax, as per enclosed details, under Rule 9(2) read with proviso to Section 11A (1) ibid. I impose a penalty of Rs. 2,00,000/- on M/s Quality Fabricators and a penalty of Rs. 20,000 of M/s Powermax under Rule 173Q ibid. I impose a penalty of Rs. 2,00,000 on Shri C. Arunagiri, under Rule 209A ibid."
2. The appellants have challenged this order on the following grounds that the demand were barred by time as they were under the bonafide belief that their clearances were within the exemption limit of the notification No. 77/85 dated 27.3.85 for the period 1985-86 and notification No. 175/86 dated 1.3.86 for the periods 1986-97 to 1989-90. It is their contention that larger period cannot be invoked in their case as they did not have any intention to evade duty. They content that for invocation of larger period the ingredients of provision of Section 11A is required to be provided by alleging fraud, collusion, wilful misstatement and suppression of any fact or contravention of any Rules that intention to evade payment of duty. Mere fact that they did not file classification list or did not pay duty while clearing goods ipsofacto does not amount to suppression of facts. They contend that the entire trade did not pay duty on structures and semi-finished goods supplied a value proforma invoices and the clearances after due deductions fall within the limits of the notification. For the year 1985-86 the Department had valued at Rs. 40.96 lakhs while deduction claimed was Rs. 33.03 lakhs and the balance was 7.94 lakhs which fall within the exemption limit of Rs. 20 lakhs. As per notification No. 77/85 for the period 198-89 the department had assessed the value of clearance as Rs. 85.95 lakhs while the deduction claimed was Rs. 56.76 lakhs. The department had allowed Rs. 20.01 lakhs. Had the deductions as claimed by them been allowed then the assessable value would come down to Rs. 29.18 lakhs which is below the exemption limit of Rs. 30 lakhs.
3. For the year 1989-90 the department had assessed the value as Rs. 1.35 crores. The department had allowed deduction only Rs. 30.57 lakhs denying deductions for Rs. 1.05 crores. Had the department accepted their plea for deductions then the assessable value would have been to Rs. 18.04 lakhs which is well within the exemption limit of Rs. 30 lakhs. Therefore, they state that the deductions claimed on various headings including duty being cum duty was not considered. The aspect of duty to be treated as cum duty by the Larger Bench judgement rendered in the case of Shri Chakra Tyres as reported in 19999(108) ELT 361. They contend that besides these deductions they had also claimed deductions on various headings like engineering charges, dubbing invoices, value of bought out items including the cost of structures and the taxes of CST and ST paid eligible for deduction. In this regard they have relied on large number of judgement which has not been taken into consideration. Even otherwise, they were carrying on the activity of cutting, welding and for fastening of duty paid materials as per the requirements of BHEL. They were making structures for power plant project to be set up at BHEL. The item were long roof beam, frame, longitudinal roof beam assembly frame part bottom, engineering materials, bracket - 1 column with bracing, frame part top, shock bar guide, column with bracing, hopper assembly and column. They contend that all these item besides manufacturing of semi-finished goods which were in the spiral casting for fan of the silencer was produced out of plat and angle supplied on the terms of characteristics of final goods and they were not dutiable and excisable in terms of the following judgements:
1. Pratap Steel Rolling Mills (1990 (48) ELT 539 (T))
2. Tata Engg. & Locomotive Co. (1997 (87) ELT 463 (Bom.) Divisional Bench of Bombay High Court.
3. Tungabadra Steel Products Ltd. v. CCE, Meerut in Order No. 931/1998 dated 6.5.98 passed by CEGAT, SRB.
4. Elcon Engg. Co. Ltd. (1990 (107) ELT 337).
4. As regards the semi-finished goods being considered as final product they contend that the Commissioner has mis-applied Rule 2(A) of Interpretative Rules as item have not assumed the essential characteristics of complete or finished goods and the item were not marketable and therefore the following judgements would apply:
1) Moti Laminates (P) Ltd. - 1995 (76) ELT 241
2) Union Carbide India Ltd. - 1986 (7) ECR 217
3) VoI v. Delhi Cloth & General Mills - 1997 (92) ELT 315
4) CCE v. Bakelite Hylam Ltd. - 1990 (46) ELT 552
5. They further contend that the demand have barred by time. The following judgement of the Apex Court would apply.
1) Padmini Products - 1989 (43) ELT 195 (SC)
2) Tamilnadu Housing Board - 1994 (74) ELT (SC)
6. They further contend that the matter had been remanded for de novo consideration by the Tribunal to reconsider all these aspects. The Commissioner has not done so nor he has given the finding on eligibility and dutiability and also on classification. Therefore, the confirmation of demand without examining these questions is bad in law. They contend that they were entitled to the benefit of SSI exemption and denial of the same on the ground that the they did not posses certificate is not correct as they had provisional certificates, permanent certificate, the existence certificate and all the certificates required to be considered from the date of setting of the factory in terms of Tribunal judgement in the case of Goa Bottling Co. Ltd. as reported in 1993 (67) ELT 721 wherein it has been held that the benefit of notification No. 175/86 could not be denied when the authority with necessary certificate had declared that the unit had not SSI status from the particular date. They relied on the judgement of CCE v. Om Engineering Ltd. as reported in 2000 (36) RLT 501, wherein they held that the non-grant of benefit of notification is not sustainable. They further contend that the Commissioner in any case was justified in granting the benefit of notification for the first year and also for granting the other benefits in terms of the order including the eligibility of modvat credit and therefore the revenue is challenging the grant of benefit is not sustainable. They seek for allowing their appeal and dismissing the revenue appeal.
7. Ld. SDR reiterated the departmental contentions and sought for dismissing the parties appeal by allowing the revenue appeal.
8. On a careful consideration of the submission made, we notice that the matter had been remanded by the Tribunal with specific directions to reconsider the plea of the appellant with regard to the observation raised. However, the Commissioner in the impugned order has not touched upon the point pertaining to excisability, marketability and classification of the items in question. The appellants have taken a clear cut stand that the items are not goods as they are structurals and only activity carried out by them is to cut, bend, weld, etc on these duty paid structures and such activity does not bring into existence goods. We notice that this aspect has been agitated before the Tribunal and Apex Court in large number of judgements. The Apex Court in the case of CCE v. Manstrcuturals Ltd. as reported in 2001 (44) RLT 113 remanded the case for de novo consideration holding that the marketability, excisability had not been examined in the light of its earlier judgement. The Tribunal in the case of BARR Engineering and Structures v. CCE as reported in 2001 (46) RLT 624 have re-examined the issue in the light of the Apex Court judgement and have taken view that the revenue is required to establish that the case are commerciable, identifiable and marketable and therefore in the light of the Apex Court judgement have remanded the matter for de novo consideration. Further, while so remanding, they have noted that the plea of the assessable value to be treated as cum duty as in the case of Sri Chakra Tyres (supra).
9. In the light of the Apex court judgement rendered in the case of CCE v. Manstructurals and that of the M/s. BARR Engineering cited (supra) and in the absence of findings of excisability, marketability and classification of the products in question, the matter has to go back again to the Commissioner for de novo consideration and to decide initially on the aspect pertaining to excisability and dutiability of the product and also decide the question as to whether the semi-finished goods have acquired the essential characteristics of the final product before duty can be confirmed. We note that the appellants have further taken the contention that they are eligible for having SSI notification as they were having certificates. This issue has been decided in several judgements as noted supra. The Commissioner has to re-examine the aspect of eligibility of notification in the light of judgement noted supra. Therefore, we notice that the appellants have claimed various deductions which has not been properly dealt with in the light of well settled judgements like Sri Chakra Tyres and other judgement cited by the appellants. Therefore, this aspect pertaining to eligibility of deductions from the excisable value is required to be considered. Further the aspect pertaining to drawing the duty as cum duty has already been upheld by the Larger Bench in Sri Chakra Tyres (supra) and therefore this issue is required to be upheld.
10. The argument of the appellant that the demands are barred by time as during the period the items were held by the Tribunal and the appellants carrying the benefit belief and further according to them that if various deductions are allowed then the assessable value will be the eligibility limit is required to be reconsidered on de novo consideration. In case the Commissioner finds that deductions, if any, were allowed then the clearance could be within the limits. Thus the benefit is required to be extended and examined.
11. Therefore, the three appeals of the appellant assessee in E/455, 456 & 457/96 are allowed by way of remand for de novo consideration in the light of observations made.
12. Insofar as the revenue appeals are concerned, we have carefully considered to the submissions made including the grounds taken and we have also noticed the Commissioner's finding. It is seen that the Commissioner has carefully examined the case pertaining to he eligibility of modvat credit and with regard to the claim that no duty is required to be charged on bought out items. On a careful consideration we find that the Commissioner has correctly determined this aspect of the matter and no interference is required on this aspect as the issue pertaining to modvat credit has already been covered by the Apex Court judgment rendered in the case of M/s. Formica India as reported in 1995 (77) ELT 511 (SC) so also the aspect pertaining to non-levy of duty on brought out items as the items had already suffered duty. In that view of the matter, the revenue appeals Nos. E/1212 & 1213/97 are dismissed.
(Order pronounced in the open court on 19.10.01)