Customs, Excise and Gold Tribunal - Delhi
Ester Industries Limited vs Cce., Meerut-Ii on 7 June, 2001
Equivalent citations: 2000(122)ELT127(TRI-DEL)
ORDER K.K. Bhatia, Member (T)
1. The appellants M/s. Ester Industries Limited manufacture Polyester Chips, Polyester Films an Polyster yarn. they availed modvat credit on the inputs used in the manufacture of chips which are intermediate products in the further manufacture of the polyester films and Polyster Yarn. Polyster chips are also cleared outside the factory by availing complete exemption from the payment of duty under Notification No. 132/86 dated 1.3.86 and subsequent notification No. 53/88 dated 1.3.88. Further the end product viz. Polyester yarn was not specified under Notification No. 177/86-CE dated 1.3.86 as one of the items in respect of which the benefit of the modvat credit could be available on the duty paid on the inputs.
2. They were issued a show cause notice dated 4.6.92 by the Additional Collector of Central Excise, Meerut in which apart from stating the above facts, it was also alleged that during the course of manufacture of polyster chips, polyster film and polyster yarn waste, rejects and scrap in considerable quantity was generated. The party had duly accounted for the waste/reject in their RG-1 register. A part of the waste/reject was found cleared free of duty by availing exemption under Notification No. 53/88 dated 1.3.88. It is alleged that as per the provisions of rule 57-F(4), "Any waste arising from the processing of inputs in respect of which credit has been taken, may be removed on payment of duty as if such waste is manufactured in the factory. Such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such inputs under rule 57A." It is stated that the said waste and scrap of plastic falling under heading NO. 3915.00 though excisable but was exempted from payment of duty under Notification No. 53/88-CE dated 1.3.88 and polyster chips were also exempted from payment of duty under the same notification. It is stated that modvat credit under rule 57-A is admissible on the inputs for polyster chips only to the extent the chips are used in the manufacture of polyster films. Under rule 57-C input credit of duty is not allowed if final product is exempt. So modvat credit on the inputs of chips and rejects is not admissible to the factory except on the quantity of chips actually used in the manufacture of films. The party was reversing the incidence of input duty credit on polyster chips issued to yarn plant & sold as such. Similarly the incidence of input duty credit on waste and scrap of chips, film and yarn was also required to be paid back. It is alleged that the party had availed modvat credit on the exempted varieties of goods. It is further alleged that to evade the duty or reversal of modvat credit on the said goods, the party wilfully suppressed the facts in as much as in their reversal formula they did nt include the quantity of scrap generated to arrive at the incidence of modvat credit per Kg of chips as is evident from the calculation chart of modvat reversal during the period June 87 to June 88 submitted by the factory. It is further stated that the party did not account for disposal of 154546 Kgs. of polyster chips. Accordingly they were called upon to show cause why the Central Excise duty amounting to Rs. 1,08,489.40 by way of non-reversal of inadmissible credit of input duty in respect of 154546 Kgs. of chips on which input duty credit was availed, should not be demanded from them under Rule 57-I read with the proviso to Section 11A of the Central Excise Act, 1944. They were further asked to show cause why a penalty should not be imposed on them under Rule 173-Q.
3. The party filed reply to the show cause notice and on consideration of the submissions made by the notice-party, the Additional Collector of Central Excise vide his order dated 15.12.97 confirmed the aforesaid amount of duty on the appellant apart from imposing al penalty of Rs. 50,000/- on them.
4. The party filed an appeal but the same stood rejected by the Commissioner (Appeals), Ghaziabad vide his order dated 22.10.98.
5. The present appeal is against the above order of the Commissioner (Appeals). I have heard Shri R. Santhanam, Advocate for the appellants and Shri M.D. Singh, SDR for the respondents. The learned advocate has raised a number of issues in the appeal which were also raised before the Original as well as the lower appellate authority. It is submitted by him that on the same ground and for the same amount an earlier show cause notice dated 10.3.89 was issued by the Superintendent of Central Excise Division-Rampur. This show cause notice was made answerable to the Assistant Collector of Central Excise, Rampur. The learned counsel submits that the party had filed a written reply to the show cause notice and they were also asked to appear for personal hearing on 11.8.97 before the Assistant Commissioner. It was also pleaded that no concurrent jurisdiction is vested in more than one authority under the Central Excise law to issue a show cause notice and to adjudicate the same subject matter in more than one proceedings. However, this plea of the party is dismissed by the original authority by observing that after the issue of show cause notice by the superior authority, the show cause notice answerable to the lower authority had become inoperative as per law of jurisprudence. It is observed by the original authority in his order that previous show cause notice dated 10.3.89 is accordingly redundant, infructuous and had not legal bearing, whatsoever. The party further submitted that show cause notice dated 4.6.92 was time barred in as much as yet another show cause notice dated 2.8.92 was issued to them requiring them to show cause as to why the modvat credit amounting to RS. 5,80,252.46 wrongly availed by them during the period form June 1987 to Feb. 1990 should not be recovered from them. These proceedings culminated in the Collector of Central Excise, Meerut passing an order dated 8.2.95 in which the entire demand was ordered to be dropped on the grounds of time bar. It is contended that when the higher amount of demand covering he larger period has been held to be not sustainable on the ground of time bar, how a part of it covering the same period could be sustained on the ground of suppression of facts?. This contention of the party has also been rejected by the original authority with the observation that the order passed by the then Collector or Central Excise, Meerut covered totally different matter and the demand was thus held time barred on those grounds but in the instant case, the allegation of suppression of facts are clearly borne out from the manner accepted by the assessees in as much as they did not account for the disposal of polyster chips and waste & scrap etc. These findings of facts arrived at by the original authority were challenged by the appellants before the lower appellate authority but I find from the order passed by the Commissioner (Appeals) that issues raised by the appellants have not adequately been analysed by the Commissioner (Appeals) in his order. To wit, the operative portion of the order passed by Commissioner (Appeals) is reproduced below:-
"I have considered the submission made by the appellant and find that the Addl. Commissioner was well within his jurisdiction to issue SCN by virtue of Section 109(i) of Finance Act 1992 which states:
"Collector of Customs", excepts for the purpose of Chapter XV includes an Addl. Collector of Customs".
The Addl. Commissioner is also competent to adjudicate the case by virtue of Board's Circular No. 299/15/97-CX dt. 27.2.97 involving cases of suppression of fact. Thus the question of limitation of 6 month will not arise when the suppression of fact has been established in the adjudication order. These views find support from M/s Asia International Wire Ltd. Vs CCE 1996 (68) ECR 479 (T).
The modvat credit will not be admissible on the input, polyester chips used in the manufacture of polyester yarn which was outside the purview of modvat admissibility by virtue of Notfn. No. 177/86 dt. 1.3.86 as amended at that relevant time. I also find that the by product (waste and scrap) is exempted from payment of duty and purketab. The modvat credit on the inputs have been availed and the final product is exempted from duty then modvat credit has to be reversed as per the condition of the rule 57C and rule 57F(4) of CERs 1944. The provisions of rule 57D will not be applicable in this case as the by product is clearly falling under the separate heading 39.15 and also marketable. These views has been confirmed by the following judicial pronouncements of the Tribunal."
6. The above order of the Commissioner (Appeals) in my view is non-speaking and is passed without adequately considering the issues raised before him. This order, therefore, cannot be sustained. Consequently, the order passed by the Commissioner (Appeals) is set aside and the matter is remanded to him for passing a de-novo order on each and every issue raised before him by the appellants. The party shall be afforded a reasonable opportunity of hearing before taking a final view in the matter.
7. The appeal is thus allowed by way of remand in the above terms.