Custom, Excise & Service Tax Tribunal
M/S. P.R. Industries vs Cce, Delhi-I on 22 December, 2015
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:22.12.2015
Excise Appeal No.E/1415/2007-EX(DB)
[Arising out of Order-in-Original No.01/2007 dated 31.01.2007 passed by the Commissioner of Central Excise, Delhi-I ].
M/s. P.R. Industries .Appellants
Vs.
CCE, Delhi-I Respondent
Appearance:
Rep. by Shri J.P. Kaushik and V.R. Sethi, Advocates for the appellants.
Rep. by Shri Govind Dixit, DR for the respondent.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1 Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?3
Whether Their Lordships wish to see the fair copy of the Order?4
Whether Order is to be circulated to the Departmental authorities?
Coram: Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No.53895/2015 dated:22.12. 2015 Per Ashok Jindal:
The appellant is in appeal against the impugned order confirming the demand of duty of Rs.50,10,034.30 along with interest and a penalty of Rs.50 lakhs.
2. The facts of the case are that a show cause notice was issued to the appellant on 7.6.1993 on account of clandestine removal of manufactured goods viz. Nickel Alloy, Tin Alloy and Lead Alloy during the period 1988-89 to 1991-92 to demand duty of Rs.1,21,07,034.70 and to propose penalty under Rule 9(2) and 173 Q of the Central Excise Rules, 1944. The matter was adjudicated, charge of clandestine removal of dutiable goods was confirmed vide order dated 30.03.1998 and demand proposed in the show cause notice was confirmed and penalty of Rs.1 crore was imposed under Rule 9(2) and 173Q of the Central Excise Rules, 1944. The said order was challenged by the appellant before this Tribunal, vide order dated 7.12.1999, this Tribunal confirmed the charge of clandestine removal and also upheld the demand of Rs.11,15,593.30 for the period 1988-89 for clearance of Nickel Alloy, Tin Alloy and Lead Alloy. For the payment of subsequent period, the matter was remanded for de novo adjudication to the Adjudicating Authority for re-calculation of the demand as contested by the appellant. In remand proceedings vide order dated 29.09.2000, the adjudicating authority confirmed the demand of Rs.1,01,13,919/- in addition to the demand already confirmed by this Tribunal and imposed a penalty of Rs.1,12,29,515/- under Rule 173 Q of the Central Excise Rules, 1944. The said order was challenged by the appellant before this Tribunal and again this Tribunal remanded the matter to the appellate authority vide order dated 19.09.2001. Thereafter, by the impugned order, the adjudicating authority confirmed the demand of Rs.38,94,439/- in addition to the demand already confirmed by the order dated 7.12.99 and imposed a penalty of Rs.50 Lakhs under Rule 173 Q of the Rules.
3. Ld. Counsel for the appellant submits that initially the charge of clandestine removal was proposed on three metals viz. Nickel, Tin and Lead alloys but the adjudicating authority has confirmed the demand for six metals viz. Nickel, Lead, Tin, Copper, Zinc and Cadmium alloys. It is the contention of the ld. Counsel that there is no allegation against the appellant for clandestine manufacture and removal of copper and zinc and cadmium alloys, therefore, demand cannot be confirmed against the clearance of Copper, Zinc and Cadmium Alloys as is same beyond the scope of show cause notice.
3.1 He submits that as the charge of clandestine removal is not contested on merit, therefore, the inputs used in manufacture of their final products which have been cleared clandestinely they are entitled to take cenvat credit thereon as held by this Tribunal in the case of CCE, Coimbatore Vs. S.S. Radiators reported in 2002 (49) RLT 210 (CEGAT-Chennai).
3.2 He also submits that the appellant is entitled to avail benefit of SSI exemption for the period 1989-90 onwards as their clearance during 1988-89 was 81,52,454.13. Therefore, as per notification no.174/86-CE dated 1.3.86 they were entitled for the benefit of SSI exemption as held by this Tribunal in the case of Premier Rubber Factory Vs. CCE reported in 1990 (47) ELT 125 (Tribunal).
3.3 He further submits that as neither in the show cause notice it is proposed to demand interest nor there was any provision in the Statute to demand interest during the relevant period. Therefore, demand of interest is to be set aside.
3.4 Lastly, he submits that as the appellant has paid duty demand confirmed along with 25% of the duty as penalty within a period of one month, therefore, the appellant is entitled for the benefit of reduced penalty as per proviso to Section 11 AC of the Act. In these circumstances, the impugned order is to be set aside and demand of duty and penalty be re-quantified.
4. On the other hand, ld. AR supported the impugned order and contested that the show cause notice is issued to the appellant on the basis of the sales tax figures shown by the appellant in their ST return to the Sales Tax Department which includes the turnover of Copper, Zinc and Cadmium alloys. He also submits that as it is a case of clandestine removal of clandestinely manufactured goods, therefore, input credit is not available on the inputs. He also submits that as this Tribunal has rejected their claim of SSI exemption for the period 1988-89 and the show cause notice is issued for the combined period, therefore, they are not entitled to avail SSI exemption benefit. He also submits that interest is compensatory in nature, therefore, the appellant is liable to pay interest.
5. Heard the parties.
6. On careful consideration of the arguments advanced by both the parties, we find that the impugned order has been challenged by the appellant on the following grounds:-
(a) The show cause notice proposed to demand duty on the clandestinely manufactured and cleared goods viz. Nickel Alloy, Tin Alloy and Lead Alloy and apart from the three metals mentioned hereinabove, that the demand for Copper, Zinc and Cadmium Alloys was not part of the show cause notice as in the show cause notice, the demand of duty has been proposed against the appellant for the clandestine manufacture and clearance of Nickel Alloy, Tin Alloy and Lead Alloy. In that circumstances, the demand of duty on other alloys namely Copper, Zinc and Cadmium manufactured by the appellant during the impugned period are not sustainable as the same is beyond the scope of show cause notice. Therefore, the duty can be demanded on the clandestine manufacture and clearance of Nickel Alloy, Tin Alloy and Lead Alloy during the impugned period. That part of demand is confirmed subject to quantification.
(b) Whether in a case of clandestine removal of the goods the appellant is entitled to avail cenvat credit on the inputs used in manufacture of clandestine clearance or not. The issue came up before this Tribunal in the case of S.S. Radiators (supra) wherein this Tribunal held that the assessee is entitled to avail cenvat credit on the inputs used in the manufacture of clandestinely manufactured and cleared goods and no contrary decision has been produced by the ld. AR. In that circumstances, it was held that the appellant is entitled to avail cenvat credit on the inputs contained in clandestine manufactured and cleared goods on production of relevant documents.
(c) We find that during the year 1988-89, the total clearance of the appellant is 81,52,454.13. In that circumstances, the appellant is entitled for the benefit of SSI exemption as per notification no.174/86-CE dated 1.3.86 as held by this Tribunal in the case of Premier Rubber Factory (supra), wherein this Tribunal has observed as under:-
5. We have carefully considered the submissions made before us. On going through the records, we find that the quantum of duty has been worked out on the basis of consumption of Sulphur by the appellants, for the period in question with reference to the accounts maintained by the appellants. We find considerable force in the submission of the learned Consultant that the quantum with reference to the applicability of various Small Scale Industries Exemption Notifications applicable to the appellants should have been taken into consideration before quantifying the duty. We find that this has not been done by the adjudicating authority in the impugned order. It was contended before us that if the appellants were given the benefit of various Exemption Notifications as applicable to them under the law, the appellants may not be required to pay any duty even assuming for the purpose of argument that the appellants have removed tread rubber clandestinely without payment of duty. We are not expressing any opinion on the question as to what extent the appellants would be entitled to the benefit of Exemption Notifications in respect of the quantity alleged to have been clandestinely removed by them. Such an exercise is not possible at the appellate stage without reference to the original records. In the Special Bench Ruling in the case of Atlas Radio Electronics Pvt. Ltd. referred to above, it has been held that the concessional rate laid down in the Exemption Notification is not dependent on the condition that it would be applicable to only those manufacturers who had disclosed their manufacturing activity to the Department and would not be applicable to others in whose case the manufacturing activity was detected later by the Department. The Special Bench has held that rate of duty was quite independent of the question of taking out a licence or filing a classification list etc. The concessional rate is applicable to all manufacturers who fulfilled the terms of the Notification. Since a specific plea in this regard has been taken by the appellants with reference to the applicability of various Small Scale Industries Notification and entitlement thereto and since the same has not been adverted to much less considered in the impugned order, without expressing any opinion on merits with reference to the applicability of the various Exemption Notifications and leaving the issue to be decided by the adjudicating authority, we set aside the impugned order and remit the issue for re-consideration by the lower authority as per law in the light of our observations and the contentions canvassed before us, in accordance with law and in the light of the evidence available on record. The appeal is accordingly remanded. We also find that in the case of Collector of Central Excise Vs. Atlas Radio and Electronics Pvt. Ltd. reported in 1989 (39) ELT 123 (Tribunal) against this Tribunal had dealt the issue and observed as under:-
2. On careful consideration, we find no merit in either of the aforesaid grounds advanced by the Revenue. The concessional rate laid down in the exemption notification was not dependent on the condition that it would be applicable to only those manufacturers who had disclosed their manufacturing activity to the department and would not be applicable to others in whose case the manufacturing activity was detected later by the department. The rate of duty was quite independent of the questions of taking out a licence or filing a classification list etc. The concessional rate was applicable to all manufacturers who fulfilled the terms of the notification. The fact of non-disclosure would determine the question whether the demand for duty would be restricted to 6 months or it would extend to 5 years. Once the period of the demand is so determined, the rate of duty applicable to the demand would have to be the effective rate applicable in force. We have not been shown any authority in law which says that every assessee held guilty of unauthorised removals would have to pay duty only at the higher tariff rate and that they would stand debarred from availing of the exempted rate, even though otherwise applicable, by the mere reason of their suppressed activity.
3. We also find no condition laid down in the aforesaid exemption notification to the effect that the grant of set off or reduction in duty would be dependent on Rule 56-A procedure being followed. In the absence of such a mandatory condition, in the notification, the Collector cannot insist on the respondents observing Rule 56-A procedure.
(d) We also find that there is no proposal to demand interest in the show cause notice from the appellant moreover under the provisions of Section 11 A B or of Section 11 A of the Act were not in the Statute Book during the relevant period. Therefore, the demand of interest is set aside.
(e) We further find that as the appellant has paid duty demanded in the impugned order along with 25% of the duty as penalty, the penalty paid by the appellant is sufficient in the facts and circumstances of the case.
7. With these observations, the following order is passed :-
(a) The appellant is entitled to avail cenvat credit on inputs used in clandestine manufactured and cleared goods viz. Nickel, Tin and Lead Alloys for the period 1989-90 on production of relevant documents.
(b) The appellant is entitled to avail benefit of SSI exemption under notification no.173/86-CE dated 1.3.86 for the period 1989-90.
(c) No interest is payable by the appellant on the demand confirmed by way of this order.
(d) After giving the benefit of input credit and SSI exemption, duty is payable by the appellant for the period 1989-90 on clandestine clearance of Nickel, Lead and Tin Alloys (if any) alongwith the demand of duty already confirmed for the period 1988-89.
(e) The appellant has to pay 25% of the duty confirmed as penalty , as discussed above.
8. The appeal is disposed of in the above terms.
[Operative portion of the order already pronounced in the open court] ( Ashok Jindal ) Member (Judicial) ( B. Ravichandran) Member (Technical) Ckp.
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