Custom, Excise & Service Tax Tribunal
M/S Loknath Prasad Gupta vs Cce, New Delhi on 16 January, 2012
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Court No.III
E/Stay No.214/2010 in E/Appeal No.211/2010
(Arising out of order in original No.49-52/PKJ/CCE/Adjn/09 dated 1.11.09 passed by the Commissioner of Central Excise (Adj),New Delhi)
Date of Hearing: 16.1.2012
M/s Loknath Prasad Gupta Appellants
Vs
CCE, New Delhi Respondent
Appeared for the Appellant: Shri S.K. Bagaria, Sr. Advocate
Shri Gopal Prasad, Advocate
Appeared for the Respondent: Shri B.K. Singh, Jt CDR
Shri Nitin Pathak, DR
Coram: Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Mr. Mathew John, Member (Technical)
ORDER
Per Archana Wadhwa:
The prayer in the application is to dispense with the condition of pre-deposit of duty of Rs. 14,55,88,277/- confirmed against the applicant for the period 1.4.2006 to 29.2.08 along with imposition of penalty of identical amount under Section 11AC of the Act.
2. After hearing both sides, we find that the appellants are engaged in the manufacture of Chewing Tobacco (Khaini) under the brand name of Raja falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985. The demand of duty stands confirmed against the appellants on the findings that one of the raw materials i.e. lime used by them is first dissolved in the water and after filtration of dissolved limestone, the filtered lime water is further put to use for making khaini by dissolving other raw materials in this end.
3. The Revenues contention is that by dissolving the lime in water, limewater came into existence and the subsequent addition of other raw material in the same results in much more production of final product than what stand reflected in the RGI register. As such, the Revenue has discarded the production as recorded in RG.I and have increased the same by 50% of the production so recorded on the ground that addition of water results in 50% of excess production on account of addition of water. Accordingly, duty stands confirmed against them on the findings of excess production and clearance.
4. It may be necessary here to refer to the background of another case made against the appellant for the period immediately prior to period involved in the present case. It is a common factual ground by both sides in another matter demand of around Rs. 57 crores stand raised against the appellant, inter-alia, on the above ground. The show cause notice was taken up by the appellant to Settlement Commission who vide their order held that addition of limestone of 50% of the production on account of water addition was not appropriate. They accordingly enhanced the production by 10% of the total production shown by the appellant. Accordingly, they held the appellant liable to pay duty to the tune of Rs. 57 crores. In addition, penalty of Rs. 40 crores was also imposed upon them.
5. Learned Advocate Shri S.K.Bagaria appearing for the appellants submits that the entire amount of Rs. 57 crores confirmed by the Settlement Commission was not on this ground alone. He clarifies that the confirmation of demand on this issue was around Rs. 17 crores and the balance confirmation of demand was on clandestine removal which in turn were based on evidences showing excess receipt of raw material as also the transportation of the final product.
6. The learned Advocate further submits that the said order of the Settlement Commission does not stand accepted by the appellant and a Writ Petition against that order has been filed before the Honble Delhi High Court which stands admitted and listed for hearing. However, he fairly admits that the petitions before the Honble Delhi High Court and subsequently before Honble Supreme Court for staying the operation of the stay order of Settlement Commission have not succeeded and the Honble Supreme Court has directed them to deposit the amount in installments.
7. Learned Joint CDR Shri B.K. Singh appearing for the Revenue insists on pre-deposit of entire amount of duty by submitting that addition of water in lime which is nothing but Calcium Oxide, converting the same in to Calcium Hydroxide and subsequently with the atmospheric reaction of carbon dioxide to calcium carbonate, admittedly results in higher production of end product. As such, he submits that impugned order of the Commissioner enhancing the production to 50% is just, proper and appellant be directed to deposit the entire amount.
8. After appreciating the submissions made by both sides, we at this prima facie stage, find that there is an order of the Settlement Commission laying down that such water addition to lime and the other material results in 10% excess production of final product. The said order of Settlement Commission has not been stayed by the higher forum, though we note a writ petition against the same is admitted by the High Court of Delhi pending final decision. As such, we deem it fit to adopt the criteria affixed by the Settlement Commission. Both sides agree that if excess production is taken to the extent of 10%, the same would result in confirmation of demand of duty of around Rs. 4.80 crores. We further note that appellants have not pleaded any financial hardship except to say that to pay is always hardship and that learned Advocate submits that there are losses but he fairly agrees that he has no evidence to substantiate the same.
9. As such by taking note of Settlement Commissions order and also the fact that writ petition stands admitted by the Honble High Court of Delhi, we direct the appellant to deposit Rs. 3.50 crores within a period of 12 weeks from today. Subject to pre-deposit of the said amount, pre-deposit of balance amount of duty and entire amount of penalty shall stand waived and its recovery stayed during pendency of the appeal. Matter to come up for ascertaining compliance on 16.5.2012.
(Order dictated and pronounced in the open Court.)
(MATHEW JOHN) (ARCHANA WADHWA)
Technical Member Judicial Member
MPS*
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