Customs, Excise and Gold Tribunal - Delhi
M/S. A. Infrastructure Ltd. vs Cce, Jaipur on 21 May, 2001
Equivalent citations: 2001(131)ELT389(TRI-DEL)
ORDER K. Sreedharan, J.
1. Appeal E/2009/2000-D is at the instance of the assessee.. Order under challenge in that appeal is Order-in-Original No.9/CE/JPD/2000 dated 9.3.2000 passed by the Commissioner of Central Excise, Jaipur. As per that order he confirmed a demand of Rs.16,15,885 under section 11A of the Central Excise Act and also imposed a penalty of Rs.5,00,000 invoking the provisions contained in Rule 173Q of the Central Excise Rules, 1944.
2. Show cause notice was issued demanding central excise duty of Rs.20,19,856. As against this amount, Commissioner confirmed the demand of Rs.16,15,885 only. Challenging the action of the Commissioner in confirming demand for lesser amount, the Revenue has come up by filing appeal E/373/2001-D. Commissioner confirmed the demand of duty to a lesser amount following the decision rendered by this Tribunal in Srichakra Tyres Ltd. Vs. Collector of Central Excise, Madras 1999 (108) ELT 361. Decision of this Tribunal in Sricharkra Tyres Ltd. was rendered by a Larger Bench. e are bound by that decision. The principle stated by this Tribunal in that Larger Bench decision was correctly followed by the commissioner. Therefore, we do not find any merit in the appeal filed by the Revenue. Accordingly, we dismiss appeal E/373/2001-D.
3. Now we take up assessee's appeal E/2009/2000-D. Appellant manufactures asbestos cement pipes and couplings falling under Chapter 68 of the Schedule to the Central Excise Tariff Act, 1985. They were availing the benefit of notification 38/93-CE dated 28.2.93 as amended by notification 79/93-CE dated 12.3.93. While so, Department issued show cause notice dated 29.11.95 demanding duty to the tune of Rs.20,19,856 in relation to asbestos cement pressure pipes and couplings cleared during the period from May 1995 to September 1995. For a proper understanding of the case set up in the show cause notice, we read paragraph 3 of the show cause notice-
After amendment in the notification No.38/93-CE dated 28.2.93 w.e.f. 12.3.93 there does not exist any condition therein that weight of the product is to be taken after deduction the water contents of the product. As such in the instant case the water content or the water gain in the finished product is to be taken into consideration of determining the percentage of the fly ash used in the product. The percentage of the fly ash consumed during the aforesaid period comes to only 22.89% as against 25% declared by the assessee, which is also a pre-requisite condition for availing the benefit of nil rate of duty under notification No.38/93-CE.
The manufacturer opposed the action initiated pursuant to the show cause notice contending that the entries made in the log book cannot be taken as the quantity of the finished product manufactured by utilising raw material as borne out by R.T.5 Returns. According to them R.T.5 Returns showed the actual quantity of raw material used in the production of finished product. Log book was maintained for showing the quantity obtained in the intermediate state, which was not to be cleared as such. They were to be cured by putting it in water for long period. While finished products are cleared they are dry and free from water content. The quantity of finished product cleared from the factory are rightly entered in RG.I register and if the percentage of fly ash, which has gone in in the manufacture of finished product, is assessed, it will be 25% or more. So, the action initiated by issue of show cause notice wherein the Department wanted to find out the percentage taking into consideration the water content or water gain is mis-conceived. These contentions of the manufacturer were rejected by the adjudicating authority while passing Order-in-Original dated 27.11.97. Aggrieved by that order, manufacturer came up before this Tribunal by filing appeal E/429/98-D. That appeal was disposed of by Final Order No.975/99-D dated 5..11.99, whereby the issue was remitted back to the Commissioner for de novo decision in the light of reported decision of this Tribunal in Eternit Everest Ltd. vs. CCS, Indore 1999 (34) RLT 417. After remand the present order impugned in this appeal happened to be passed . The main question that is to be gone into is whether the stand taken by the Department inthe show cause notice, namely, in finding out the percentage of fly ash used in the manufacture of asbestos cement pipes and couplings, water content or water gain in the finished product is to be taken into consideration or not.
4. Notification No.38/93 gave exemption to all goods falling under Chapter 68 of the Schedule to the Central Excise Tariff Act, 1985, in which not less than 25% by weight of fly ash or phospho-gypsum or both had been used. This complete exemption from duty is available to goods falling under Chapter 68 provided fly ash weighing 25% of the finished product is used in its manufacture. A question that may arise is at what stage of the finished product the percentage of fly ash is to be assessed.Goods falling under Chapter 68 should be goods which are at the stage of clearance from the factory.At the stage of clearance of these pipes which contained water are not being cleared form the factory. So, the water content which went in for setting the ash with cement is not be taken into consideration for finding out the %age of the fly ash content.
5. When the pipes are formed its quantity is entered in the log book maintained by the manufacturer. Pipe at that stage was not in a marketable stage. That pipe had to be cured in water for the requisite period. While undergoing the curing process some may crack.That cannot go in in finding the finished goods. Nor are such pipes, which are rejects, 'goods' falling under Chapter 68 of the Schedule to the Central Excise Tariff Act. This means that the goods which are ready for being cleared form the factory are the one which are entitled to claim the benefit of notification. Their weight should decided whether fly ash constitute 25% of the raw material which were used for their manufacture.In Eteernit Everest Ltd. vs. CCE, Indore 1999 (34) RLT 417, A bench of this Tribunal took the view that percentage of fly ash should be determined with reference to actual weight of the finished goods at the time of clearance and not by taking quantity of water issued at raw material stage, used for manufacture of the product. CBEC Circular No.477/43/99-CX makes it clear that the percentage of weight of fly ash has to be calculated taking into account the weight of fly ash used with reference to the weight of the finished product in dry condition. In the light of the specific pronouncement by this Tribunal and the Board's circular, there was no room for the adjudicating authority to take into consideration the water content or water gain in the finished goods for finding out the percentage of fly ash content. Commissioner in his order after referring to the decision of the CEGAT observed-
"This means that whatever weight of finished product in dry condition is produced is to be taken into account while determining the percentage of fly ash used and not the weight of finished product in dry condition which had been entered in the RG-I register."
Water are not in a position to find the meaning of this observation.RG-I register shows the weight of the finished product available for clearance. From entries in RT-5 Returns raw materials which went into production of that quantity of pipes mentioned in RG-I are clear. Percentage of fly ash is to be found out there from. Learned Departmental Representative sought to rely on the decision of this Tribunal to which one among us (Shri G.R.Sharma) was a party in support of his contention that the weight of wet pipes is to be taken into consideration (Jalmadhu Corporation Vs. CCE, Jaipur 1999 (114) ELT 883). In that case, question was whether the documents which were found case, question was whether the documents which were found out by the excise authorities were to be relied on for finding out the total quantity of finished product.This Tribunal held documents so found out by the authorities of the excise department are correct documents showing the quantity produced.This is clear from the following observation made by the Bench in paragraph 8-
"What was sought to be established by the Department on the basis of statement given by Shri P.S.Ray was that on a perusal of the private records maintained by Shri Noor Mohammad whether it was possible to say that the percentage for the fly ash used in the manufacture of AC pressure pipes was less than 25%."
Such is not the position in the case before us.So, that decision has no application to the facts before us.
6. In view of what has been stated above we are clear in our mind that the stand taken in show cause notice, that water content was also to be taken into consideration for arriving at 25% of fly ash content which went into production of asbestos cement pipes cannot be sustained. In view of what has been stated above we do not find any ground to sustain the order passed by the Commissioner. The order impugned is set aside on account of the fact that total production of pipes as per RG-I register was 956 MTs and the quantity of fly ash which went into its production was ground 243.25 MTs, which worked out about 25%.
7. Appeal allowed with consequential reliefs, if any.