Customs, Excise and Gold Tribunal - Calcutta
Indian Polypipes And Ors. vs Cce on 25 March, 2003
Equivalent citations: 2003(89)ECC249, 2003(157)ELT652(TRI-KOLKATA)
JUDGMENT Smt. Archana Wadhwa, Member (J)
1. In all the Miscellaneous Applications, the prayer is for modification the earlier Stay Orders vide which the main manufacturing units were directed to deposit a part of demand confirmed against them for the purposes of Section 35F of the Central Excise Act, 1944. Arguing on these applications, Ld. Advocates appearing on behalf of the appellants, submit that all the cases are identically situate and in the earlier decisions given by this Bench, the disputed issue has been resolved in favour of the appellants. As such submits the Ld. Advocate that their appeals are likely to succeed and there is no justification for deposit of dues in question. Shri S.K. Bagaria, Ld. Advocate specifically draws our attention to the following decisions wherein the earlier stay orders were modified in view of the subsequent order of another Bench of the CEGAT on identical issues and after such modification, the appeals were allowed. Reliance has been placed on the following decisions:
"12 RLT 327 ECR Industries v. CCE Stay Order modified in view of subsequent order of another Bench of CEGAT, 12 RLT 335 E.LD. Parry v. CCE Stay order modified and Appeal itself allowed due to subsequent judgment in favour of the assessee.
1995 (79) ELT 273 Eagles Sales Corporation v. Collector of Customs Stay Order modified in view of the subsequent favourable case law.
1995 (75) ELT 470 (M.I. Metal Sections Pvt. Ltd. v. CCE, (Kerala High Court) If there has been any change in legal position due to subsequent decision, the appellant can move the Tribunal for modification of the Stay Order.
1993 (68) ELT 771 (Deora Wires v. Union of India (M.P. High Court) In view of subsequent favourable decision of CEGAT, the High Court directed the CEGAT to hear the main appeal itself without enforcing the condition of predeposit as per the Stay Order."
6. 1995 (78) ELT 74 (Shri Krishna Keshav Lab. Ltd. v. CCE) Stay Order modified taking note of the subsequent favourable judgment.
7. 6 RLT 696 (Intercity Cables Systems (P) Ltd. v. CCE) In view of the subsequent decisions the Stay Order was modified.
3. After hearing Shri N.C. Roychowdhury, Ld. Sr. Advocate appearing on behalf of the Revenue, we agree with the contention of the appellants that this Tribunal in earlier identical cases of M/s Delta Plastic and as also in the case of M/s Brijmohan Sheokishan has held in favour of the appellants. Accordingly, we allow all the Miscellaneous Applications and dispense with the condition of predeposit of duty and penalty and take up the appeals itself for hearing.
4. We have heard the Ld. Advocates appearing on behalf of the various appellants and Shri N.C. Roychowdhury, Ld. Sr. Advocate on behalf of the Revenue.
5. All the appellants are engaged in the manufacture of HDPE Pipes out of Polyethylene granules. The HDPE pipes so manufactured by the appellants are being supplied by them to the Department of Telecommunication under a contract entered with them. The appellants had availed modvat credit of duty paid on various grades of HDPE granules which have not allegedly been used by them in the manufacture of pipes. The dispute in the present appeal relates to the admissibility of modvat credit of duty paid on the granules. Such granules have been procured by the appellants from the various manufacturers of primary granules and the credit has been availed by them after following the due procedure laid down under the modvat rule.
6. The proceedings were initiated against the appellants as a result of investigation vide which it was held that the various grades of granules procured by the appellants from their manufacturer have not been actually used by them in the manufacture of HDPE pipes inasmuch according to the specification contract entered with the Department of Telecommunication, only a particular grade of HDPE granules could be used for the manufacture of HDPE pipes. As such, the notices were issued proposing disallowance of modvat credit. Such show-cause notices culminated into the impugned orders passed by the authorities below.
7. After giving our careful consideration to the submissions made by both the sides, we find that the identical cases were heard by the Bench earlier in the case of Delta Plastic v. CCEx., the Tribunal vide its Order No. A-2-3/Kol/03 dated 13.1.2003 held as under:
"3. We have considered the rival submissions and perused the records. We have also gone through the findings of the Ld. Commissioner and also submissions made by the Ld. S.D.R. We find that the Department has not been able to produce any evidence that the granules purchased by them were sold in the market. They have also not been able to produce any evidence to show that the granules which were allegedly used in the manufacture of the HDPE pipes were purchased by the appellants from a particular person, specifically the small-scale industries, which are exempted from payment of duty. In any case, they would have got the modvat credit on all types of granules. Therefore, we do not find any motive which could be attributed to the appellants for using the granules of a grade different from the one specified by the DOT. However, the Department of Telecommunication has not rejected any of the consignments on the ground that the pipes were not made as per the specification of the DOT and which was inspected by the inspectors of D.G.S. & D. We also find from the letter of the manufacturers as well as from the letter dt. 15.2,2002 of the Central Institute of Plastics Engineering and Technology given to the Plastics concern, Kolkata, wherein it has been stated by the Institute of Plastics that it is possible to produce the HDPE Material for pipe purpose conforming to DOT specification (G/CDS-05/2001 Dec. 94) by mixing/blending of granules of the other grades. The whole case is based on assumption and conjectures and there is no evidence that the HDPE granules were either sold in the market as such or they had purchased some other granules which were allegedly used in the appellant company.
3.1 As regards the clarification by the letter dated 15.2.2002, we find the said opinion has been given by the Central Institute of Plastics Engineering & Technology, after going through the various evidences which must have been produced by the industry in which they have said that by blending/mixing of different grades of virgin HDPE raw materials, it is possible to produce HDPE material for pipe purpose as per DOT specifications. It was, in this background the clarification was given by the Central Institute of Plastics Engineering & Technology, Lucknow and this clarification has got relevance for deciding the issue. Further, the appellants have submitted extract of RG-23A register alongwith their monthly RT-12 returns, therefore the demand is hit by limitation and is time barred. Moreover, all the transactions were genuine and not fictitious and modvat credit has been taken on the quantity of inputs purchased by them and received in the factory. We, therefore, allow the appeals with consequential reliefs, if any, by setting aside the impugned order. Ordered accordingly."
8. The above order was subsequently followed by the Tribunal in the case of Brijmohan Sheokishan and Ors. v. CCEx., Kolkata wherein the details submissions made by the appellants and the Revenue have been noted and after following the earlier order the impugned orders were set aside.
9. Shri S.K. Bagaria, Ld. Advocate, submits that the Tribunal while deciding the earlier cases has taken into account the entire evidences on record and has considered the expert's opinion given in the shape of certificates and various letters. He specifically draws our attention to the letter of M/s Reliance Industries Ltd. dated 8th October, 1999 wherein it has been clarified that on Relene-E-41003 is the resin recommended for producing the pipes for use in Department of Telecommunication. However, most of the customers prefer to use for blending, different grades of HDPE/LDPE and has given some of the grades normally used. Shri Roy Choudhury, Ld, Advocate for the revenue submits that as per the said letter of Reliance Industries only five or six grades have been given whereas the appellants have used various types of grades. Shri Bagaria clarifies that the reference list as disclosed in the said letter is not exhaustive and they have given only the grades of those granules which are normally used. He also draws our attention to the letter dated 25.2.2003 written by the Additional Director General of Central Excise Intelligence to the Technical Manager, Central Institute of Plastic Engg. & Technology, Lucknow and the clarification given by the said Institute vide their Certificate dated 15.2.2002 and the opinion given by the Gas Authority of India dated 29.3.2001. Shri Bagaria submits that the use of raw materials for specified final product is a matter between the manufacturer and its buyer and when the HDPE pipes being manufactured by them have been accepted by the Department of Telecommunication without any objection raised thereto, it was not open to the Department to deny the modvat credit on the ground that the specified raw materials has not been used in the manufacture of such pipes. He also submits that all the manufacturers from whom the appellants have purchased the granules are primarily manufacturers and the goods were cleared from the factory on payment of duty. He submits that even though the Revenue has accepted the two or three of the grades used by them were capable of being used in the manufacture of HDPE pipes, still the modvat credit has been disallowed on the entire inputs. He submits that the expert's opinion and the certificates issued by the manufacturers clearly show that the goods can be manufactured by blending of various polymer resin to improve the processing and quality of the end product.
10. Shri N.C. Roychowdhury, Ld. Sr. Advocate has placed on record a letter dated 5.3.2003 written by the Additional Director on 17.3.2003 to the Technical Manager, Central Institute of Plastic Engg. & Technology, Lucknow and another letter dated 5.3.2003 of Central Institute of Plastic Engg. & Technology. He has also urged that it is not possible to manufacture the HDPE Pipes out of grades received by the appellants.
11. We have considered the submissions made by both the sides. We find that the issue is covered by the earlier order of the Tribunal. The order portion has been reproduced by us. Shri Roychowdhury, Ld. Sr. Advocate appearing on behalf of the Revenue does not advance any new arguments so as to convince us to take a different view than taken earlier. He has referred to letter of M/s Reliance Industries and submitted that the only few grades have been mentioned there, whereas the appellants have used a number of other grades also. We do not find force in the above submissions of the Ld. Sr. Advocate inasmuch as it is clearly written in the said letter that the following grades are "normally" (emphasis provided) used. The list of grades givens by Reliance Industries is not exhaustive. It is made clear from the above letter that the various grades can be blended in various proposition to produce the blend for the pipe conforming to the specification mentioned by the Department of Telecommunication. We also note that in the earlier order, the reliance was not placed not only on the above letter of M/s Reliance Industries but the opinion given by the Central Institute of Plastics Engineering & Technology and the Gas Authority of India were also taken into account. Even in their latest letter dated 5.3.2003, the said Institute has confirmed that the ratio of blending/mixing of different grades of virgin HDPE material depend on parameters like grade, MFI, density, machine specification etc. As far as blending/mixing of following grades of HDPE/LDPE granules for pipes as per DOT specification, the said Institute has opined that the same can be commented without documentary evidence or without trial manufacture. This fact clearly shows that without actual trial of manufacture of pipes, it cannot be said that the raw materials used by the appellants have, in fact, not been used by them.
12. We have also observed in our earlier order that there is no evidence on record to show that the huge quantity of HDPE granules of various grades admittedly received by the appellants has been disposed of by them and the appellants had procured the other grades of granules. Shri Roychowdhury, Ld. Sr. Advocate appearing for the Revenue has also not been able to point out to any such evidences of disposal of the procured granules or the purchase of another grades of granules. He has not been able to answer our queries as to how the appellants were benefited by purchasing different types of granules and showing their use in the manufacture of DOT pipes. As such taking into account the overall facts and circumstances of the case, the Tribunal in the above-mentioned decision have held that there was no case for the Revenue which was only moving in the arena of assumption and presumption.
13. Inasmuch as the issue has already been decided by the above referred judgment, we do not find any justification for taking a different view. Accordingly, we set aside the impugned order confirming demand of duty against the appellants and imposing a penalties upon them and allow all the appeals with consequential relief to the appellants. MAs also get disposed of.