Customs, Excise and Gold Tribunal - Delhi
Oriental Carbon And Chemicals, Shri ... vs Cce on 19 October, 2004
Equivalent citations: 2005(99)ECC649, 2005(183)ELT412(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in these three appeals, filed by M/s. Oriental Carbon & Chemicals Ltd. and Ors., is whether the duty of excise is payable by them and penalty is imposable on the extra quantity of carbon black filled by them in the bags cleared by them.
2. Shri A.R. Madhav. Rao, learned Advocate, mentioned that the Appellants manufacture carbon black; that the duty has been demanded on the ground that they removed the excess quantity of carbon black deliberately filled in each bag of carbon removed by them. The learned Advocate submitted that the nature of Carbon black in such that it sticks to almost all surfaces with which it comes into contract; that they were dispatching a slightly excess quantity of carbon black than the quantity in M.Ts for which the customer was being charged to avoid any complaints later on of short supply; that for example in an invoice for clearing 10 M.T. of carbon black, the net weight shown in private record 10.240 M.Ts; that as per Department 0.240 M.T. was additional carbon black cleared clandestinely; that in the invoice, the packing material was shown as 0.160 M.Ts. @ 1.6% of the weight of carbon black; that thus slightly excess quantity, namely, 0.080 M.Ts was despatched; that the Department has demanded duty both on 0.160 M.Ts. of packing material as also on 0.080 M.T. of excess carbon black filled in the bags; that the Commissioner under Order-in-Original No. 1/99 dated 5.11.99 confirmed the demand of duty and imposed penalty holding that excess quantity over the standard excess weight was not packing material but carbon black; that this finding has been affirmed by the Tribunal vide Order Nos. A/907-909/2000-NB(DB) dated 19.10.2000; that, however, the Tribunal remanded the matter for de novo adjudication, inter alia, on the grounds that the Commissioner has to ascertain the trade practice of putting slightly more carbon black i.e. in regard to the excess weight; that in de novo proceedings, the Appellants have contended that the standard excess weight was the packing material at 1.6% and in regard to the excess weight held to be carbon black, the same was filled so as to avoid any disputes with the buyers; that the Commissioner in the impugned Order, has relied upon two Reports from M/s. Hi Tech Carbon and M/s. Philips Carbon Black of which copies have not been furnished to the Appellants.
3. The learned Advocate submitted that the Tribunal had confirmed, vide Final Order dated 19.10.2000, the findings in the earlier Adjudication Order to the extent that the quantity was not the weight of bags and wagon liners but was that of carbon black; that thus the Tribunal has no where upheld the finding that the standard excess quantity was not packing material but also carbon black; that once the earlier Adjudication Order was set aside and the matter was remanded, the entire issue was open and the Commissioner was directed to conduct the trade enquiry; that excess carbon was being filled as a trade practice; that in the impugned Order, the Commissioner has shut out their contention that the standard excess weight was packing material. He, further, submitted that the demand of duty is unsustainable inasmuch as the duty has been discharged on ad-valorem basis and even if they have supplied excess carbon black, they have not charged or realized any excess amount in regard to the excess quantity supplied; that as the Department has nowhere shown that any additional amount has been realized by the Appellant, the confirmation of the demand is totally unsustainable. He relied upon the following decisions:
(i) Reckitt & Colman of India Ltd. v. CCE, Calcutta-I, 1993 (44) ECR 33 (T) wherein it has been held that the charge of mis-statement with reference to the quantity packed loses its sting in view of assessments being linked to value.
(ii) Manisha Pharmo Plast P. Ltd. v. CCE, Surat, 1999 (108) ELT 273 (Tri) where a manufacturer in Order to comply with the provisions of other laws, pack excess quantity, there is no clandestine removal if the manufacturer had communicated in the classification list that the goods might contain up to 205 gms. of the powder.
(iii) Deccan Granites v. CCE, Hyderabad, 2003 (85) ECC 194 (T): 2003 (151) ELT 582 (T)
4.1 Countering the arguments, Shri R.C Sankhla, learned SDR, submitted that the present impugned Order has been passed by the Commissioner on remand by the Tribunal vide Final Order Nos. A/907-9/2000-NBC dated 19.10.2002; that it was mentioned in the said Order that "in File No. C-141, a chart showing the excess quantity of carbon black despatched during 1994-95 with month-wise figures was tabulated. The figures shown in the column "quantity despatched" of the said chart are the figures shown in R.G. 1. The other columns of the chart are "total excess quantity" and "standard excess quantity." The above "excess quantity" has not been accounted for in the RG-1 and the same has been clandestinely removed without payment of duty. On the basis of the two other registers which pertain to 1995-96 and 1996-97, it is alleged that during these periods the quantity clandestinely removed works out to 368.325 M.T. and 50.89 M.T. respectively. It is further stated that the invoices issued by M/s. OCCL reflected the weight of paper bags in addition to the weight of carbon black. It is observed that the sum total of paper bags did not conform to the total excess quantity." The learned SDR, further, mentioned that the Tribunal has also observed in the said Final Order as under:
"Therefore, if the contention that the total excess quantity included the weight of standard excess weight of the carbon black and the packing material is correct than the sum of the weight of the packing material and the weight of the carbon black, should conform to the total quantity removed, which, however, is not the case. Based on these facts, the Commissioner has arrived at the conclusion that the quantity over and above the standard excess quantity as mentioned in the Show Cause Notice was not the weight of the bags and wagon liners but was that of carbon black. The Ld. Counsel of the appellants has not been able to counter these findings with any plausible explanation and therefore, we find no infirmity in it. We accordingly confirm these findings."
4.2 The learned SDR contended that once the Tribunal has confirmed the finding that the quantity over and above the standard excess quantity was not the weight of bags and wagon liners but was that of carbon black and the same has not been challenged in appeal by the Appellants, it has attained finality; that the Tribunal has only remanded the matter to ascertain as to whether there exists a trade practice of over filling of bags in respect of carbon black; that enquiries were conducted regarding trade practice of over filling of bags in respect of carbon black; that the report received from the Allahabad Commissioner ate under whose jurisdiction M/s. Hi-Tech Carbon is situated reveals that the precise measurement of carbon black at the time of packing is very well possible and they pack the bags with the net weight of carbon black with the help of electronic packer machine; that similarly the report of Bolpur Commissionerate under whose jurisdiction M/s. Philips Carbon Black Ltd. falls, reveals that carbon black is filled automatically in bulk bags and paper bags from storage tanks and the entire process of filling is an automated process and it continues until the bags attain the desired weight. The learned SDR submitted that the Excise duty is levied on manufacture of goods and the duty is payable when the goods are cleared from the factory and it is immaterial whether any consideration for the same is received or not; that the issue involved is not one of valuation but removal of goods after manufacture.
5. In reply, the learned Advocate mentioned that the Tribunal in the Remand Order has not affirmed that the standard excess weight is not packing material and is only carbon black; that the Tribunal has set aside the earlier Adjudication Order and remanded it for de-novo adjudication; that when the matter is remanded for de novo adjudication, the Commissioner has to adjudicate afresh on all the allegations raised in the show cause notice. He relied upon the decision in the case of Orient Papers & Industries Ltd. v. Tahsildar-cum-Irrigation Officer, (1998) 7 SCC 303.
6. We have considered the submissions of both the sides. In the first round of Appeal, this Tribunal after considering the submissions of both the sides confirmed the findings regarding removal of excess carbon black and found that the observation of the Commissioner that the practice of slightly over filling is not normally adopted in these trade is not tenable as the Department had not conducted any query regarding the said trade practice. The Tribunal, therefore, felt that "this aspect needs to be looked into in depth by the original authority." The Tribunal accordingly set aside the Order of the Commissioner and remanded the matter to him for de novo consideration. It is thus evident that the matter was remanded to ascertain the trade practice of over-filling the bags in respect of carbon black. As it was not an open remand the Commissioner was to adjudicate upon the matter which was remanded to him and nothing more. The Adjudicating Authority has passed by present impugned Order after ascertaining the practice adopted by two manufacturers of carbon black. The Appellants have not countered the same by bringing on record any material/evidence to show that there exists a trade practice of overfilling the paper bags of carbon black. They have merely contended that the copies of the reports were not furnished to them. The matter, as already observed by us, was remanded to ascertain the trade practice of over filling of bags in respect of carbon black. The Appellants should have brought on record some material to show that such a trade practice does exist in respect of the impugned commodity. Even in appeal before us, the Appellants have not adduced any contrary trade practice with reference to the impugned products, namely, carbon black. The learned Advocate has relied on certain decisions to show that there was practice of overlapping in respect of other commodities which is not sufficient as the trade practice is to be ascertained in respect of the impugned commodity only.
7. The Appellants have also contended that as no further consideration has been received by them and duty being ad-valorem, no additional duty is payable by them. In Reckitt & Colman case, the Tribunal has observed that demand for duty on a projected calculation as done by the Department is not justified. In the present matter there is no duty on a projected calculation. In Manisha Pharmo Plast the Tribunal found that (sic that there) was no clandestine removal if the manufacturer had communicated in the classification list that the goods might contain up to 205 gms. of the powder. In Deccan Granites the Tribunal found that the internal documents showing the gross area would not necessarily indicate or confirm that the excess goods have been cleared without payment of duty. The Tribunal also observed that the total monetary realization has to be considered as realization made for the 'complete area' including the 'unserviceable are' (sic, area') i.e. gross area. These decisions were thus passed in view of the special facts. In the present matter usable carbon black in the excess has been packed and cleared. The duty of Excise is levied and collected on manufacture irrespective of the fact whether any value is realized or not. As the excess quantity of carbon black has been removed, Central Excise duty is payable by the Appellants. We, therefore, upheld the demand of duty. Penalty is also imposable on the Appellant Company for clearing the manufactured excisable goods without payment of duty. The Penalty imposed, however, is on the higher side which is reduced to Rs. 20 lakhs only. No Penalty is imposable on other two Appellants, being Director and General Manager (Sales) in absence of any mens rea on their part. We, therefore, set aside the penalties imposed on Shri Anand Arya and Shri A.K. Singh and allow Appeals No. E/3442-43/04-NB(A). The Appeal No. E/3441/04-NB(A) is allowed partly.