Custom, Excise & Service Tax Tribunal
Ahmedabad-Iii vs Gujarat Ambuja Export Ltd on 14 July, 2021
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Excise Appeal No.10884 of 2017
(Arising out of OIO-AHM-EXCUS-003-COM-024-029-16-17dated 29/11/2016 passed by
Commissioner of Central Excise, AHMEDABAD-III)
C.C.E. & S.T.-Ahmedabad-III .........Appellant
Custom House... 2nd Floor,
Opp. Old Gujarat High Court, Navrangpura,
Ahmedabad,Gujarat-380009
VERSUS
Gujarat Ambuja Export Ltd. .........Respondent
Unit II Thor Road Kadi, Mehsana-Gujarat WITH Excise Appeal No.10885 of 2017 (Arising out of OIO-AHM-EXCUS-003-COM-024-029-16-17 dated 29/11/2016 passed by Commissioner of Central Excise, AHMEDABAD-III) C.C.E. & S.T.-Ahmedabad-III .........Appellant Custom House... 2nd Floor, Opp. Old Gujarat High Court, Navrangpura, Ahmedabad,Gujarat-380009 VERSUS Gujarat Ambuja Export Ltd. .........Respondent Unit II Thor Road Kadi, Mehsana-Gujarat AND Excise Appeal No.10888 of 2017 (Arising out of OIO-AHM-EXCUS-003-COM-024-029-16-17 dated 29/11/2016 passed by Commissioner of Central Excise, AHMEDABAD-III) C.C.E. & S.T.-Ahmedabad-III .........Appellant Custom House... 2nd Floor, Opp. Old Gujarat High Court, Navrangpura, Ahmedabad,Gujarat-380009 VERSUS Gujarat Ambuja Export Ltd. .........Respondent Unit II Thor Road Kadi, Mehsana-Gujarat APPEARANCE:
Shri. Sharad Airan, Assistant Commissioner (AR) for the Appellant Shri. Anand Nainawati (Advocate) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. A/ 12278- 12280 /2021 DATE OF HEARING: 17.03.2021 DATE OF DECISION: 14.07.2021
2|Page E/10884,10885,10888/2017-DB RAMESH NAIR The brief facts of the case are that the respondents are engaged in the manufacture of De-Oiled cakes of soyabean rapeseed and castor. The Respondent are a 100% EOU holding private bonded warehouse license No. 01/2003 dated 23.09.2003 and 02/2003 dated 23.09.2003 under section 58 of the Customs Act, 1962 and permission to manufacture the goods issued under section 65 of the Customs Act, 1962. The Respondent had also obtained necessary permission from the Assistant Commissioner of Central Excise Mehsana Region-II for availing the benefit of self-removal. In the course of manufacture of the final product as mentioned above raw grade oil is also obtained from the solvent extraction process of edible oils seeds. The respondent did not pay excise duty on the DTA Clearances of such raw oil. The Respondent clear the said raw grade oil at nil rate of duty under Serial No. 20 of Notification No. 23/2003-CE dated 31.03.2003 which exempts "Waste of Castor Oil Seed, Waste of Castor Oil Derivatives; Wastes of Sesame Seed, and Waste of Any Other Oil Seed". Show cause notices were issued to the respondents proposing demand of excise duty on the raw grade oil under Serial No. 4 of Notification No. 23/2003-CE dated 31.0.2003 on the ground that the respondent have wrongly availed benefit of Serial No. 20 of the Notification No. 23/2003-CE since raw oil cannot be considered as a mere waste even though it may be of no use to the Respondent but it is a main raw material used for manufacture of refined oil. The Learned Commissioner of Central Excise-(Ahmedabad-III) vide impugned order dated 28.11.2016 adjudicated all six show cause notices issued to the Respondent and dropped the demand both on merits and limitation following the judgment of Hon'ble Supreme Court in the Respondent's own case. Hence, the present appeal filed by the Department challenging the dropping of demand only on merits.
2. Shri Sharad Airan, Learned Assistant Commissioner (Authorized Representative) appearing on behalf of the Revenue appellant reiterates the
3|Page E/10884,10885,10888/2017-DB grounds of appeal and also submitted a detailed submission dated 16.03.2021 and subsequently on 17.03.2021 submitted some case laws.
3. Shri Anand Nainawati, Learned Counsel appearing on behalf of the respondent submits that the department's appeal is not maintainable as the revenue again seek to challenge the issue of eligibly of serial No. 20 of Notification No. 23/2003-CE dated 31.03.2003 which has already been settled in favour of Respondent by this Hon'ble Tribunal vide order dated 29.06.2009 and the matter was remanded with very specific direction. The only issue was to be considered by the Learned Commissioner in remand proceedings, which has been rightly considered by him is whether any duty is liable to be paid or not on clearance of raw oil and if cleared in DTA. The Learned Commissioner has rightly held that no duty is payable as when oil is cleared in DTA no duty required to be paid.
3.1 Raw oil in the present case falling under Chapter 15.07, is chargeable to nil rate of duty in view of serial no. 1 of Notification no. 4/2005-CE dated 1.03.2005 and predecessor Notification No. 6/2002-CE dated 01.03.2002 as amended by Notification no. 37/2003-CE dated 30.04.2003. He submits that department in the present appeal again seeks to re-open the issue as to whether raw oil generated in the facts of the present case can be considered as waste or not without challenging the order dated 29.06.2009 passed by this Hon'ble Tribunal. Therefore, the present appeal on the grounds which have already attained finality is not maintainable and appeal deserves to be quashed and set aside and the impugned order passed by the Learned Commissioner is required to be upheld in totality. 3.2 The LOP granted to the Respondents is only for manufacture of De- Oiled cakes and the Respondents were never an EOU (Exports Oriented Undertaking) for the purpose of manufacture of raw oil in as much as the respondents were never allowed to export oil from India. The Department's contention is that the respondents manufactured and cleared oil in the DTA as an EOU and proposed to demand excise duty under Serial No. 4 of
4|Page E/10884,10885,10888/2017-DB Notification No. 23/2003-CE dated 31.03.2003 read with Section 3(1) of the Central Excise Act, 1944. It is his submission that since the question of duty, DTA entitlement and demanding excise duty under Serial No. 4 of Notification no. 23/2003-CE dated 31.03.2003 would arise only on the goods manufactured by an EOU whereas for the purpose of raw oil, the respondents were not granted EOU permission for the same. Consequently, the said raw oil was required to be treated as manufactured by any other DTA Unit. In the DTA Unit the oil is exempted from Central Excise duty hence, the Learned Commissioner has rightly dropped the demand in the impugned order. He submits that the Learned Commissioner has rightly followed binding decision of Hon'ble Supreme Court dated 07.10.2015 in the Respondents' own case wherein the similar dispute on identical facts for Notification No. 8/97-CE, the department raised demand on the ground that raw oil cleared as waste is a by-product and excise duty equal to 30% of customs duty. The Commissioner (Appeals) in the said case set aside the demand holding that the oil was not covered under the EOU scheme and such oil was subject to nil tariff rates applicable to any other DTA units. The Revenue had filed an appeal against the said order before the Tribunal at Mumbai. The Tribunal vide its order dated 22.09.2006 reported at 2007 (207) ELT 132 (Tri- Mum) dismissed the appeal filed by the department. Following the aforesaid order of the Tribunal matter was remanded with the specific direction. However, the adjudication in remand proceedings were kept in abeyance as the said Tribunal order passed by Mumbai bench was challenged by the Department before the Hon'ble Supreme Court. The Hon'ble Supreme Court vide order dated 07.10.2015 dismissed the appeal filed by the department. He submits that in view of the aforesaid order passed by Hon'ble Supreme Court the issue whether the respondents are liable to pay excise duty on oil cleared to DTA is settled and it has been held that no duty is payable in terms of Proviso to Section 3(1) of the Central Excise Act, 1944.
5|Page E/10884,10885,10888/2017-DB 3.3 He further submits that as per the ground raised in the department appeal, it tries to distinguish the applicability of the judgment. Firstly, the adjudication in the remand proceedings was kept pending only awaiting the outcome of revenue's appeal pending with the Supreme Court that itself shows that the facts of case which was before Supreme Court is identical to the present case, therefore, no question arises to distinguish the Hon'ble Supreme Court Judgement.
3.4 He further submits that there is no distinction even in Notification No. 8/97-CE dated 01.03.1997 and the amended Notification No. 23/2003-CE dated 31.03.2003. The department's contention that expression extraction in LOP includes the raw oil is not correct on the grounds that it cannot be read stands alone but has to be read with corresponding documents wherein the respondents were clearly not allowed to export oil. 3.5 As regard the contention of the department that raw oil cannot be considered as waste since it is a main raw material in the manufacture of refined oil, he submits that what is waste has to be determined from the perspective of each manufacturer and that cannot be a general rule defining which product is waste and which is not waste. He placed reliance on the decision in the case of Indian Aluminium Co. Ltd. & Another Vs Collector of Central Excise, Bangalore -1987 (33) ELT 58 which was affirmed by Hon'ble Apex Court in order reported at 1999 (111) ELT A200 (SC). 3.6 He further submits that LOP dated 10.06.2003 wastage norms letters dated 11.07.2003 and 10.02.2005 and legal agreement dated 08.08.2003 consider de-oiled cakes as the only product permitted for production by the respondents' EOU. Thus, raw oil is not manufactured by EOU. In the present case, Development Commissioner has approved only de-oiled cakes as the items of production. Therefore, an item in the present case raw oil which is not approved as item of production by the development Commissioner in the LOP cannot be considered an item produced by EOU. He submits that the term manufacture in context of EOU has to be given broad meaning and not
6|Page E/10884,10885,10888/2017-DB the strict interpretation as provided for in the Central Excise Law. CBEC vide Circular 314/30/97- CX dated 06.05.1997 has clarified that exemption under Notification No. 1/95-CE may not be restricted to cases where manufacture under section 2(f) of the Central Excise Act 1944 is involved. It is settled position that EOU related provisions are to be interpreted in the light of EXIM Policy and not according to strict interpretation under the Central Excise Law. In this regard he placed reliance on the decision in the case of Oracle InfoTech Pvt Ltd Vs CCE reported in 2003 (152) ELT 142 (Tri.). 3.7 He further submits that the expression waste in Serial No. 20 Notification No. 23/2003-CE dated 31.03.2003 providing exemption to waste of oil seed has to be construed in the same manner as that of the authorities mainly concerned with the implementation of EOU scheme namely Development Commissioner. The Central Excise department is estopped from taking contrary stand than that of Development Commissioner. He relies upon the decision of Hon'ble Tribunal in the case of Fair Exports (India) Pvt. Ltd. vs CCE 2003 (158) ELT 385 (Tri.) wherein the Tribunal has set aside the demand of excise duty raised by disallowing the benefit of exemption under Notification No. 8/97-CE after observing that the bones obtained as waste during the process of manufacture of boneless meat, it cannot be treated as finished product. The said decision stands affirmed by Hon'ble Supreme Court vide order reported at 2015 (321) ELT A274 (SC). 3.8 Without prejudice to the above submission, he also submits that clearance of oil is also covered under Serial No. 3 Notification No. 23/2003- CE dated 31.03.2003 as the condition NO. 3(iii) is not being violated by the Respondent. This is because raw oil and the De-oiled cakes are merely produced from the oil seeds. He submits that the present appeal filed by the department liable to be set aside.
4. We heard both the sides and perused the records. The issue involved in the present case are as under:
7|Page E/10884,10885,10888/2017-DB • Even though the respondent being 100% EOU, since any LOP, raw oil was not allowed for export, can the said raw oil be treated as if manufacture in a DTA Unit and can be cleared under exemption Notification No. 4/2005- CE dated 01.03.2005 and predecessor Notification No.6/2002-CE dated 30.04.2003 as amended by Notification No.37/2003-CE dated 30.04.2003 which is applicable to a DTA Unit 4.1 The respondents has heavily relied upon the judgment of Tribunal Mumbai in their own case which was upheld by Hon'ble Supreme Court and remand order of this Tribunal drawing a conclusion on the basis of above decision. It is necessary to appreciate the facts and circumstances of this case whether it is same as of the earlier case which was decided in favour of the respondents. In the relevant period of the present case certain documents which give recognition to the respondent as 100% EOU are scanned below:-
4.2 From the above letter it is clear that the Government has not given the permission for 100% EOU to the respondent Unit on the ground that export of edible oil is not encouraged. Thereafter the respondent made fresh
8|Page E/10884,10885,10888/2017-DB representation vide letter dated 8 July, 1997 wherein the respondent has clarified that they do not intend to and will not export edible oil or raw oil to any country outside India. It further clarified that production of De-oiled Cake i.e. Oil cake which extracted is only sought to export out of India.
Further in letter dated 28.07.1997 address to the Chief Director of Ministry of Civil supplies, New Delhi reiterates the same that De-oiled cake would be their main product and edible oil would be by-product and also stated that they are not going to export edible oil out of India as export of edible oil is banned. Thereafter letter dated 04.02.1998 was issued by Government of India, Ministry of Industry, Department of Industrial Policy and promotion whereby the respondent's unit has been permitted to be converted into 100% EOU. The said permission letter dated 04.02.1998 is scanned below:-
9|Page E/10884,10885,10888/2017-DB 4.3 From the above letter in para 2(vii) a clear condition stipulated that by-product (viz-edible oils) may be sold in DTA for which no tariff concession may be available. We find that considering the above identical facts Tribunal Mumbai in the order dated 22.09.2006 reported at 2007 (207) ELT 132 (Tri.
Mumbai) dismissed the appeal filed by the department and held as under:-
"3.We have considered the arguments from both sides and the case records. In view of the fact that the respondents were not allowed to export vegetable oil produced by them and were permitted to export only de-oiled cake, it is very clear that there was no objection 10 | P a g e E/10884,10885,10888/2017-DB whatsoever to their selling the vegetable oils in the domestic market. Normally EOUs are required to export all their products and for any sale in the domestic market they are required to obtain specific permission after fulfilling export obligation. In a case like this where no customs and central excise duty benefits have been obtained by the respondents and the oil seeds as well as the oil produced from the same are fully exempted, the view taken by the lower appellate authority that such vegetable oil manufactured and cleared by the respondent would be treated at par with any other DTA unit appeal's t be reasonable. It is evident that the government has specifically not allowed the respondents to export vegetables oils on account of scarcity of such oil in the country. Hence they should not be burdened with a duty liability merely because they are exporting the by- product viz. De- oiled cake when other units in the DTA are totally exempted from paying a duty. Hence, we are of the view that in the circumstances of the case, the order pass by the lower appellate authority setting aside the demands does not require any interference. Accordingly, the department's appeals are dismissed."
4.4 In the above decision Tribunal has held that Vegetable oil manufactured by the respondent would be treated at par with product of any other DTA unit. Accordingly, the order of Commissioner (Appeals) dropping the demand on the same issue was not interfered and the department's appeals were dismissed. The revenue challenged the aforesaid order before the Hon'ble Supreme Court where the Hon'ble Supreme Court vide order dated 07.10.2015 held as under:
"The aforesaid demand was affirmed by passing Order-in- Original. Aggrieved by this order, the respondent filed appeal before the Commissioner. The Commissioner vide its Order-in-Appeal dated 26.09.1992 allowed the sad appeal holding that by-products Soya bean Solvent Extraction Raw Oil was not covered under 100% EOU Scheme and hence tariff rate applicable in DTA which was nil would be applicable to the by product removed by the respondent. This finding has been upheld by the Customs Excise and Service Tax Appellate Tribunal (herein after referred to as "CESTAT") as well. It has affirmed the order of the Commissioner (Appeals) and dismissed the appeal of the revenue challenging the order of the Commissioner (Appeals).
After going through the order of the CESTAT, we find that all the aspect of the issue regarding classification are discussed in detail 11 | P a g e E/10884,10885,10888/2017-DB arriving at the aforesaid findings. No question of law arises for consideration. The appeal is, accordingly, dismissed."
4.5 In the above judgment of Hon'ble Supreme Court it was affirmed that by-product Soya bean Solvent Extraction Raw Oil was not covered under 100% EOU Scheme and hence tariff rate applicable in DTA which Nil would be applicable to the by-product removed by the respondent. In view of above development this particular case was earlier came before this tribunal wherein this tribunal has passed the following order:
"6. Since this order was not available at the time of passing the impugned order, we agree with the Learned Advocate that the matter requires to be remanded to the Commissioner, who shall consider the clearance of raw oil by the appellants as if cleared by a DTA unit and examine whether any duty is liable to be paid the matter is remanded in the above terms."
4.6 From the above remand order of the tribunal, this tribunal has given clear direction to the Learned adjudicating Commissioner that he shall consider the clearance of raw oil as if cleared by DTA unit and examine whether any duty is liable to be paid. With this clear observation, the Learned Commissioner in de-novo adjudication order bound to decide the duty liability treating the clearance of oil by the respondent as if cleared by the DTA unit. The Learned Counsel for the respondent submits that the remand proceeding was kept in abeyance awaiting the Hon'ble Supreme Court judgment in the revenue's appeal filed against the Mumbai tribunal order. This fact also clearly indicates that revenue was of clear view that the issue in present case and that of revenue appeal in Supreme Court were one and the same but surprisingly even if Supreme Court dismissed the revenue's appeal, revenue has tried to re-open the issue by filing this appeal which was dismissed by the Supreme Court. Learned Commissioner rightly, followed the Supreme Court judgment in the appellant's own case under the same set of facts and law laid down by the Hon'ble Supreme Court. Therefore, we do not find any infirmity in the impugned order. We by following the principles laid down by Hon'ble Supreme Court held that the 12 | P a g e E/10884,10885,10888/2017-DB product vegetable raw oil cannot be treated as product of 100% EOU and the same is eligible to clear as if the same is product of DTA and consequently the duty applicable to the DTA unit shall apply to the clearance of raw oil. In the present case the vegetable oil falling under chapter 15.07 during the relevant period is chargeable to nil rate of duty in view of Notification No.4/2005-CE dated 01.03.2005 (serial no 1) predecessor Notification No. 6/2002-CE dated 01.03.2002 as amended by Notification No 37/2003 dated 30.04.2003. Accordingly, the clearance of Raw oil by the respondent is not liable for any duty.
5. We find that though the revenue in their appeal memo in the column 14(1) which is for amount of duty demand mentioned total duty demand as raised in the Show cause notice. However, in the impugned order the demand for the extended period i.e. beyond one year has been dropped on limitation also. On perusal of the revenue's appeal, we find that there is neither review nor grounds of appeal in respect of dropping demand for the extended period. Therefore, the said dropping of demand attained finality on limitation also.
6. As per our above discussion and finding we find no merit in the Revenue's appeal. Therefore, the impugned orders are upheld. Appeals filed by revenue are dismissed.
(Order pronounced in the open court on 14.07.2021) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Geeta