Custom, Excise & Service Tax Tribunal
Daulat Ssk Ltd vs Order-In-Appeal ... on 21 October, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Sl. No. Appeal No. Appellant Respondent Arising out of Order-in-appeal/ order-in-original 1. E/2611/05 CCE Pune II Daulat SSK Ltd. Order-in-Appeal No.PII/BKS/245-250/2005 dated 26.05.2005 passed by Commissioner of Central Excise (Appeals), Pune II) 2. E/2612/05 CCE Pune II Daulat SSK Ltd. Order-in-Appeal No.PII/BKS/245-250/2005 dated 26.05.2005 passed by Commissioner of Central Excise (Appeals), Pune II) 3. E/2613/05 CCE Pune II Daulat SSK Ltd. Order-in-Appeal No.PII/BKS/245-250/2005 dated 26.05.2005 passed by Commissioner of Central Excise (Appeals), Pune II) 4. E/2614/05 CCE Pune II Daulat SSK Ltd. Order-in-Appeal No.PII/BKS/245-250/2005 dated 26.05.2005 passed by Commissioner of Central Excise (Appeals), Pune II) 5. E/2615/05 CCE Pune II Daulat SSK Ltd. Order-in-Appeal No.PII/BKS/245-250/2005 dated 26.05.2005 passed by Commissioner of Central Excise (Appeals), Pune II) 6. E/2616/05 CCE Pune II Daulat SSK Ltd. Order-in-Appeal No.PII/BKS/245-250/2005 dated 26.05.2005 passed by Commissioner of Central Excise (Appeals), Pune II) 7. E/2667/05 CCE Pune II Shri Chhatrapati Rajaram SSK Ltd. Order-in-Appeal No.PII/BKS/251/2005 dated 27.05.2005 passed by Commissioner of Central Excise (Appeals), Pune II) 8. E/2725/05 E/CO/46/06 CCE Pune II Shri Dudhganga Vedganga SSK Ltd. Order-in-Appeal No.PII/BKS/276/2005 dated 28.06.2005 passed by Commissioner of Central Excise (Appeals), Pune I) E/2820/05 CCE Pune II Kumbhi Kasari SSK Ltd. Order-in-Appeal No.PII/BKS/270/2005 dated 15.06.2005 passed by Commissioner of Central Excise (Appeals), Pune II) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
Appearance:
Shri Ajay Kumar, Jt. Commr (AR) for appellant Shri V.B. Gaikwad, Advocate for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing: 21.10.2015 Date of Decision: 21.10.2015 ORDER NO Per: M.V. Ravindran All these appeals are disposed of by a common order as the issue raised in all these appeals are the same, though the respondent assesses are different.
2. The revenue has filed all these appeals and one of the assessee has filed a cross objection.
3. Both sides agree that the issue is the same in all these appeals and for brevity sake we take the facts from appeal number E/2611/05.
3. Heard both sides and perused the records.
4. The issue that arises for our consideration is that the respondents herein are sugar factories and are controlled by the provisions of Essential Commodities Act and the Levy Sugar Supply (Control) Order, 1979 as to the clearances of sugar manufactured in their factories. The respondent assessees are required to clear a particular percentage of sugar as levy sugar which is classified under CSH 1701.31 or 1701.39 and are discharging the specific rate of duty as per tariff. Respondent assessees are also permitted to clear a particular percentage of sugar as free sale sugar on which the Central Excise duty is more. By an order issued by the Central Government of India/State Government, the respondent assessees cleared sugar as Levy sugar in excess of the percentage of Levy sugar that can be cleared by them at concessional rate. It is a case of the revenue that quantity of sugar cleared in excess as Levy sugar of the allotted Levy sugar, the duty liability has to be discharged as a free sale sugar. The adjudicating authority confirmed the demands raised along with interest and also imposed penalties. The first appellate authority set aside the impugned orders.
5. Learned departmental representative would draw our attention to the provisions of Essential Commodities Act 1955 as also to the order issued under the Levy Sugar Supply (Control) Order 1979 and submit that an order issued under Section 3 of the Essential Commodities Act cannot be considered for the clearances at a lower rate of Central Excise duty. He would further submit that the release order issued under Levy sugar supply order is not equivalent to the levy sugar to be procured by the Central government hence the classification of the free sale sugar as a Levy sugar is incorrect. He would reiterate the grounds of appeal.
6. Learned Counsel would submit that the issue is now well settled by the judgement of the Tribunal in the case of Perambalur Sugar Mills Ltd 2010 (262) ELT 396. It is his further submission that the clearance of free sale sugar as Levy sugar, in excess of allotted Levy sugar, is as per the directions of the State Government or the Central Government, hence the respondent assessee should not be put to a disadvantage by holding that they are liable to pay Central Excise duty at higher rate.
7. On consideration of the submissions made by both sides, we find that the impugned orders are correct and legal and no interference is called for more than one reason.
7.1. Firstly, the clearance of free sale sugar by the respondent sugar factories are as per the direction and order of the State or the Central Government, which is covered under the tariff heading number 1701.31 and the Central Excise duty is payable as per the tariff entry. This conclusion of ours is after considering the order issued by the competent authority, in exercise of the powers delegated under Section 3 of Essential Commodities Act. It is nobodys case that the said Act is not Central act. The tariff heading 1701.31 is applicable in the cases in hand. We find that the first appellate authority has correctly set out the reasonings for setting aside the orders in original. We reproduce the findings which are recorded at paragraph number 4.
4. I have carefully gone through the case records and the various submissions made by the appellants. The issue to be decided is whether the excess quantity of sugar which was requisitioned by the Central Government under the Levy Sugar Supply (Control) Order, 1979 is classifiable under CSH No. 1701.31 or 1701.39 of the Central Excise Tariff Act 1985. I find that the Adjudicating Authority has held that Release Orders were issued under The Levy Sugar Supply (Control) Order, 1979, whereas tariff entry of CSH NO.1701.31 pertains to sugar required by Govt. to be sold under Section 3(2)(f) . of Essential Commodities Act, 1955; that as per Rules of Interpretation of.
Schedule to the Central Excise Act 1944, classification of excisable goods is to be determined according to the terms of the headings and any related section or chapter notes; that therefore, the quantity of sugar cleared in excess of levy entitlement of the appellant is classifiable under CSH 1701.39 attracting Central Excise duty @ Rs. 85/-
per quintal; that the excess quantity of sugar was out of the free sale quota, and only such percentage of production .of sugar required and ordered by Central Govt. can be classified as "Levy sugar" under CSH 170'1.31 which has been ordered under Section 3(2)(f) of the Essential Commodities Act, 1955 and the remaining even if cleared to State Govt. merits classification under CSH 1701.39. I find that The Levy Sugar Supply. (Control) Order, 191'9 itself has been made by the Central Govt. in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955. It is seen that the release orders under which sugar has been requisitioned were issued under clause 2( 1) of The Levy Sugar Supply (Control) Order, 1979. Now a perusal of the New Clause 2 (1) of The Levy Sugar Supply (Control) Order 1979 shows that as per the said clause, Central Govt. may by order direct any producer or importer or recognized dealer to supply levy sugar to such persons or organizations, State Govt/Union Territory as may be specified in the order. As per Explanation to Clause 2(1) of The Levy Sugar Supply (Control) Order, 1979, 'levy sugar' means the sugar requisitioned by the Central Government under Section 3(2)(f) of the Essential Commodities Act, 1955. This therefore, clearly shows that levy sugar issued for release under clause (2)(1) of the Levy Sugar Supply (Control) Order, 1979 means. the levy sugar requisitioned by the Central Govt. under Section 3(2)(f) of the Essential Commodities Act, 1955. Therefore, when the order is made by the Central Govt. under clause 2(1) of the Sugar Supply (Control) Order, 19('9 for supply of levy sugar then the levy sugar so supplied is levy sugar under Section 3(2)(f) of Essential Commodities Act, 1955. Therefore, any clearances made under Clause 2(1) of Levy Sugar Supply (Control) Order, 1979, even in excess of the levy entitlement of the producer has to be treated as supplied under Section 3(2}(f) of Essential Commodities Act, 1955 only. Therefore, in the present case, as the excess supply of levy sugar has been made under clause 2( 1) of the Levy Sugar Supply (Control) Order, 1979, the same falls under the category of supply requisitioned by Central Government under Section 3(2)(f) of Essential Commodities Act, 1955. The clearance of said levy sugar in this case,; therefore, falls under CSH 1701.31 of the Central Excise Tariff Act, 1985. It is also relevant to mention in this regard that Ministry of Food and Consumer Affairs, Department of Sugar and Edible Oils, Directorate of Sugar, New Delhi has vide F.No. 5-5(Karnataka)/96-SC.1I issued order dated 26.3.1999, wherein it has been clearly stated that in accordance with Section 3(2)(f) of Essential Commodities Act, 1955 and clause (2)(1) 0'( Levy Sugar Supply (Control) Order, 1979, all factories are to comply with the levy sugar release order issued by the Directorate in the first instance, even if the entire quantity/part quantity, so released exceeds the levy entitlement of the factory and non compliance of the order was punishable under Essential Commodities Act, 1955. Therefore, the department's case that excess clearances cannot be treated as clearance under Section 3(2)(f) of Essential Commodities Act, 1955 is not tenable. Therefore, there is no merit in the stand of the department.
7.2 The above reproduced reasoning of the first appellate authority is acceptable and we do not find any merits in the grounds raised by the Revenue in appeals.
7.3 Secondly, we find that the issue is now covered by the judgement and order of the Tribunal in the case of Perambulur Sugar Mills (supra). With respect, we reproduce the entire judgement.
Heard both sides. During the period in dispute, the appellant-sugar mill was directed by the Director (Sugar Control), Ministry of Food and Consumer Affairs to divert impugned quantity of sugar from free sale quota and sell the same as levy sugar purely on loan basis. Subsequently, the appellants were compensated by diversion of equal quantity from the levy sugar quota to free sale sugar quota. It is the case of the appellants that they have paid the appropriate duty as applicable to levy sugar and free sale sugar in respect of the diverted quantities.
2.?Ld. consultant Shri Masillamoney appearing for the appellants also states that they have not received any compensation by way of differential duty from the Govt. of India in respect of the free sale sugar diverted to levy sugar quota.
3.?We find that the original authority after going through the case records has dropped the duty demand in view of adjustment of impugned quantity of sugar transferred from free sugar quota to levy sugar and vice versa.
4.?We have heard the ld. DR. No material has been produced on behalf of the Department to prove the contrary that appellants have either short paid the duty or they have been any way compensated by the Govt. of India and thereby they have enriched themselves at the cost of the Govt. revenue. Hence, we are of the view that the impugned order passed by the lower appellate authority reversing the order of the original authority is not sustainable. Accordingly, we set aside the impugned order and restore the order of the original authority.
5.?Appeal is allowed.
7.4 It can be noticed that the issue is now squarely covered in favour of the respondent assessees. In view of the foregoing, we hold that the impugned orders are correct and legal and there is no infirmity in them. Accordingly, the impugned orders are upheld and the appeals are rejected.
(Dictated in Court) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
??
??
??
1 10Appeals No.E/2611 to 2616, 2667, 2725, 2820/05