Customs, Excise and Gold Tribunal - Tamil Nadu
Bapl Industries Ltd. vs Cce on 25 November, 2003
Equivalent citations: 2004(164)ELT54(TRI-CHENNAI)
ORDER
1. This appeal arises from Order-in-Original No. 36/2001 (Commr. ) dated 20.09.2001 passed by the Commissioner of Central Excise, Coimbatore. The appellants are manufacturers of cotton yarn. They also procure raw material of cotton from local market as well as import from the foreign countries. The cotton yarn so manufactured were cleared to Domestic Tariff Area (DTA) by availing Notification 8/907 CE dated 1.3.1997. The said notification provides for concessional rate of duty for clearance of goods manufactured in a 100% EOU exclusively out of indigenous raw material. For the units who use imported as well as indigenous raw materials, the Government had prescribed certain procedures in various circulars wherein it was emphasized by one circular F. No. 442/8/99 Cx. dated 4.3.1999 that the unit should satisfy the jurisdictional Central Excise authorities by way of maintenance of records, physical scrutiny / verification and the process etc. and that the goods were to be manufactured out of indigenous raw materials only and that they had not used the imported material. On such verification, the benefit was to be given. In the instant case, the department proceeded to issue show cause notice on the ground that appellants had not maintained separate manufacturing unit for the purpose of utilizing domestic indigenous cotton for clearances through domestic area. On the said premise, the demands were confirmed. Hence this appeal
2. Ld. Advocate submitted that the Commissioner has not applied Board's clarification issued time and again in this matter. He referred to circular No. 85/2001-Cus. dated 21.12.2001 wherein it was clarified that there is no need for the unit to have a separate manufacturing line and it was directed to the Central Excise authority not to insist upon separate machinery, separate godowns, and separate branches of manufacturing process which would amount to establishing separate factory within the factory for the purpose of extending the benefit of Notification No. 8/97-CE dated 1.3.97. He pointed out that this circular has not been given effect to and therefore the order is not proper. He also submitted that the rate of duty has been not properly calculated and benefit of Notification 2/95 dated 4.6.1995 which lays down duty at 15% of Customs has not been granted and wrong rate of duty has been arrived at. So also the penalty is not imposable under Rule 173 Q as the said Rule applies to SRP unit under Chapter VII. He also submitted that their unit comes under Chapter V. A. Therefore, penalty is not imposable under Rule 173 Q of Central Excise Rules.
3. Ld. SDR submitted that the appellants are required to maintain separate records batchwise for manufacture of goods in terms of imported and indigenous cotton in terms of Circular No. 85/2001-Cus. dated 21.12.2001. She submitted that this fact is required to be verified and only thereafter the benefit can be extended. She agreed with the Counsel that there was no need to have separate manufacturing line as has been clarified by circular No. 85/2001. She prayed for remand of the matter for verification of the records.
4. In counter, the learned Counsel submitted that they had maintained separate records and manufacture was batch wise. The batch indicated the raw material utilized. He had no objection for remand of the matter for verification of these facts.
5. On a careful consideration of the submissions, it is seen that the Commissioner has erred in not applying the Circular No. 442/8/99-Cx dated 4.3.99. Even in terms of this circular the authorities were required to see the fact that indigenous and imported items were separately used for manufacture and clearance. It was clearly directed that there was no need to have separate manufacturing line. However, as the departmental officers were continuing to commit mistake in the matter, a fresh circular was issued by Board vide circular No. 85/2001-Cus. dated 21.12.2001 clarifying to the officials that they insist upon separate machinery, separate godown and separate batches of manufacturing process. It was clarified that only they were required to see that indigenous raw material and imported raw material were separately utilized batch wise. The Commissioner has committed an error in interpreting the circular and the notification in question and has not taken into consideration the fresh circular No. 85/2001 dated 21.12.2001. Therefore, the order impugned suffers from infirmity and requires to be set aside and matter remanded for de novo consideration for the purpose of examining the records and to see as to whether the appellants had independently used indigenous inputs without mixing with the imported units batch wise and had maintained the records and accounted for the same. The appellant's contention that benefit of Notification No. 2/95 is required to be extended is required to be examined. The appellants have also taken a correct stand that penalty is not imposable under Rule 173 Q as it applies to SRP unit under chapter VII and the present clearances were under chapter V. (A). The impugned order is set aside and matter remanded for de novo consideration for determination in the light of observations made above. The appeal is disposed of accordingly.