Custom, Excise & Service Tax Tribunal
M/S. Gkn Sinter Metals Pvt. Ltd vs Commissioner Of Central Excise, Pune-I on 28 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/90197/14 [Arising out of Order-in- Original F. No. VGN /(19) 138/ GKN/ 2013 dtd. 24/11/2014 passed by the Commissioner of Central Excise, Pune-I] For approval and signature: Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
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in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
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4. Whether Order is to be circulated to the Departmental: Yes
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M/s. GKN Sinter Metals Pvt. Ltd.
:
Appellants
VS
Commissioner of Central Excise, Pune-I
:
Respondent
Appearance
Shri. T.C. Nair, Advocate for the Appellants
Shri. V.K. Agrawal, Addl. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. P.K. Jain, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 28/4/2015
Date of decision 28/4/2015
ORDER NO.
Per : P.K. Jain
Brief facts of the case are that the appellant is having manufacture unit located in Pune. Appellant vide letter dated 12/7/2003 and 11/8/2014 requested for permission under Rule 4(4) of Central Excise Rules, 2002 to store excisable goods out side the factory premises without payment of duty. The Commissioner after considering various submissions rejected the request of the appellant. It appears that appellant made similar request for their Ahmadnagar units. Aggrieved by the said order, the appellant is before us.
2. Ld. Counsel for the appellant submits that they have shortage of space in the factory and operations have expanded and certain parts of the factory required re-construction, in view of this position, they are finding it difficult to store the finished products which are around 700. Ld. Counsel further submitted that over a period of time customer want the goods just in time with the result that appellant have to keep high inventory and therefore require more space for storing the final goods. In view of this position they have requested the Commissioner to permit them storing goods for the period of two years out side the factory premises without payment of duty. Ld. Counsel placed reliance on this Tribunal decision in the case of Anutone Accoustics Ltd. Vs. Commissioner of C. Ex., Bangalore-I[2010(250) E.L.T.590(Tri. Bang.)].
3. Learned A.R., on the other hand submitted that the Commissioner in his order dated 24/11/2014 has given reasons for rejecting the permission. It was further submitted that the place where appellant want to store the goods is already registered in the name of appellant as registered dealer and therefore cannot be allowed to be used for keeping non-duty paid goods. He further submitted that the period for which appellant was asking for storing the goods is not few days or few months but two year. It was further submitted that Rule 4(4) covers the situation of exceptional nature. Shortage of space for continues period can not considered as situation of exceptional nature. It is clear from the submissions that appellant wants to store goods without payment of duty and therefore they are asking for said permission. Ld. A.R. further submitted that the appellant is free to clear his goods on payment of duty either on provisional assessment or final assessment basis and keep in the same place. It is not unusual for the manufacturer to have depot out side the factory where they store duty paid good and sale the same from there. Even in appellants case, the said place is used to keep duty paid goods as registered dealer. He further submits that Rule 4(4) cannot be used to create the depot out side the factory and store the goods in such depot without payment of duty.
4. We have considered the rival submissions.
5. We find that Rule 4(4) of the Central Excise Rules, 2002 reads as under:
Duty payable on removal.?RULE 4. (4) Notwithstanding anything contained in sub-rule (1), Commissioner may, in exceptional circumstances having regard to the nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods in any other place outside such premises, without payment of duty subject to such conditions as he may specify.?
It would be seen from the said Rule 4 that Commissioner is empowered in exceptional circumstances having regard to nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods to any other place out side such premises, without payment of duty subject to such condition as he may specify. As is clear from the submission of the Ld. Counsel that they want to improve their customer service by storing higher inventory and provide just in time service to their customer. It is also noted that the appellant is noncommittal about the period and would need permission atleast for two year. We note that the Commissioner in his order has observed as under:
6. Your request has been duly reconsidered by the undersigned. In this regard, it may be informed to you that permissions under the Central Excise Rules are given by the Proper Officer under certain rules, to tide over certain difficulties with regard to the nature of the goods manufactured and cleared by a manufacturer. Sub-rule (4) of Rule 4 of the said Rules provides that the Commissioner may, in exceptional circumstances, having regard to the nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store the goods in any other place outside such premises without payment of duty subject to such conditions as may be specified. In order to invoke the provisions of Rule 4(4) of the C. Excise Rules, 2002, it is essential that there exist exceptional circumstances that have arisen against which the specific request of storing of non-duty paid goods outside the factory premises, is made.
7. Rule 4(4) of Central Excise Rules, 2002 (CER) covers situations where shortage of space is caused under exceptional circumstances which are unforeseen. This implies that the circumstances are of temporary nature and these circumstances compel a manufacturer to store, non-duty paid goods outside the factory premises. However, the circumstances under which you are seeking permission are normal business circumstances and difficulties faced can be overcome by storing goods in the proposed storage premises after paying duty in accordance with Rule 4 read with Rule 8 of CER. In your application dated 12.07.2013 as well as subsequent application dated 11.08.2014, no such exceptional circumstances have been stated by you.
8. The circumstances faced by you as enumerated in your application dated 12.07.2013 and 08.11.2014 do not qualify to be considered as exceptional circumstances in nature which are unforeseen and therefore on this count alone the permission sought for, cannot be considered. Further, the circumstances narrated are not of a temporary nature, implying once the permission is given, the same could continue on a regular inasmuch as the application does not mention the time period for which the permission is sought. This vital ingredient was missing in the request application dated 12.07.2014. On pointing out to you, in the application dated 11.08.2014 you have brought in the time period for which the permission is sought as; for a temporary period till reconstruction of Plant-I at the earliest. A factual report on your request application dated 11.08.2014 was called from the jurisdictional Astt. Commissioner. The jurisdictional Astt. Commissioner vide his letter F.No. VGN(19)30-33/Misc/2012-13, dated 16.09.2014, reported that the unit was visited by the Superintendent Pimpri Range-V to ascertain the position and it has been reported by him that:-
(1) In the course of relocation of their existing machinery from plant-I, (due to demolishing the same), no machinery is proposed to be shifted to the area which is presently used for storing finished goods. Effectively, the restructuring will not in any way affect the area where the finished goods are stored.
(2) The assessee can create additional space by re-organizing the racks on which the finished goods are stored presently for storing the goods, in case of exigency and to meet the requirements that arose due to the estimated growth.
(3) Further, the company also have a piece of vacant land admeasuring 672 sq. meters (24 m x 28 m) (As shown on page 3 in exhibit D of their letter dated 11.08.2014) nearby the existing finished goods area (BSR) which can be constructed and can be utilized for storage of finished goods.
In view of above factual report, your request for permission under Rule 4(4) of the Central Excise Rules, 2002 cannot be considered.
9. Further, the permission sought is not specifically for a given quantum of finished goods. The permission sought is required to envelop all regular clearances from the factory, for all times to come in the future, (on a day to day basis) and such cases are not within the ambit of Rule 4(4) of the Central Excise Rules, 2002. The application dated 12.07.2013 and 11.08.2014, do not make it clear as to what is quantum of excisable goods that would be cleared without payment of duty for storage purpose. On these vital technical counts also the permission sought for cannot be considered.
10. It is further noticed that you have moved a similar application for permission under Rule 4(4) with the Commissioner of C.Ex. Aurangabad, on the same grounds as made before in this Commissionerate that the space in the current manufacturing activity premises at your Ahmednagar Unit is not sufficient. Even the proposed place of storage for such goods is the same as made in present application. The circumstances that compel you to seek permission to keep goods without paying the duty, outside your factory appear to be a fagade rather than a genuine difficulty.
6. We dont find anything wrong in the above reasoning. Permission sought is for very long or endless period. When space is available near the BSR there is no reason not to construct the storage place there itself. Exception circumstances undoubtedly would imply comparing and brief period. It is also to be noted that even now appellant can store the goods in the proposed place but after payment of duty on provisional or final assessment basis appellant has quoted this Tribunals judgment in the case of Anutone Accoustics Ltd(supra). We have gone through the said judment, where the matter was remanded by this Tribunal in view of the facts and circumstances of the case for reconsideration. Facts and circumstances of the present case as elaborated in the Commissioners order are very different. We are therefore o f the view that said decision does not held the appellant.
7. We also note that Rule 20 of Central Excise Rules, 2002 provides warehousing provisions. Under the said provision the notified goods can be removed from the factory to warehouse or from one warehouse to another without payment of duty. The said warehouse provision are applicable only to the goods notified by the government. In the present case, what appellant is trying to seek is to allow clearance of the goods without payment of duty out side the factory i.e. to warehouse and clearance from there. Admittedly goods are not notified under warehousing provisions, thus what appellant is trying to seek is benefit of warehouse provision in respect of goods which are not notified. It may be noted that in customs there is provision wherein importer can store any dutiable goods imported in the county in bonded warehouse without payment of duty. No such scheme exist for the goods produced in India. This is perhaps due to the fact that many outsourcing activity can be regulating quickly compare to imports. It is only in respect of goods which are notified in that warehouse provisions are applicable. Appellant in the present case is trying to get facility of warehouse without goods being notified.
8. We do not find reasons explained as exceptional nature to grant permission under Rule 4(4) of the Central Excise Rules, 2002. The reasons adopted by the Commissioner is correct and in view of above, we reject the appeal.
(Operative part pronounced in court) Ramesh Nair Member (Judicial) P.K. Jain Member (Technical) sk 2