Custom, Excise & Service Tax Tribunal
M/S. Eastern Metallizing Ltd vs Commr. Of Central Excise, Kolkata-Ii on 13 May, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Excise Appeal No. : 450/2007
(Arising out of the Order-in-Appeal No. 35/Kol-II/2007 dated-28/03/2007 passed by the Commissioner(Appeal-II), Central Excise, Kolkata-II)
For approval and signature of:
SHRI H.K. THAKUR, HONBLE TECHNICAL MEMBER
SHRI P.K. CHOUDHARY , HONBLE JUDICIAL MEMBER
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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 ?
M/s. Eastern Metallizing Ltd.
APPELLANT(S)
VERSUS
Commr. of Central Excise, Kolkata-II
RESPONDENT(S)
APPEARANCE
Sri M.K. Guha Neogy, Consultant
FOR APPELLANT(S)
Sri S. S. Chatterjee, Supdt. (A.R.
FOR THE RESPONDENT(S)
CORAM:
SHRI H.K. THAKUR, HONBLE TECHNICAL MEMBER
SHRI P.K. CHOUDHARY , HONBLE JUDICIAL MEMBER
DATE OF HEARING/DECISION : 13/05/2016
ORDER NO. : FO/A/75412/2016
PER SHRI H.K. THAKUR
This appeal has been filed by the appellant against Order-in-Appeal No. 35/Kol-II/2007 dated-28/03/2007 passed by CCE, (Appeal-II), Kolkata as first appellate authority.
2. Shri M.K. Guha Neogy (Consultant) appearing on behalf of the appellant argued that two issues are involved in this appeal.That a CENVAT Credit of Rs.1,23,905/- was denied to the appellant on the ground that M.S. Angle, M.S. Channel, G.C. Sheet and Welding Electrodes are used for making support structures for the capital goods and are not admissible as CENVAT Credit on capital goods. Ld. Consultant submitted that the entire amount of CENVAT Credit denied alongwith interest, has been paid by the appellant. That no penalty is imposable upon the appellant for wrongly taking CENVAT Credit because the issue was disputed and larger bench in the case of Vandana Global Ltd. Vs. CCEx., Raipur reported in 2010 (253) ELT 440 (Tri-LB) decided the issue. That once an issue required larger benchs decision then the appellant cannot be held responsible for suppression with intention to evade payment of duty.
3. That the second issue involved is regarding classification of Copper Bonded Grounding Rods exported by the appellant. That according to the Revenue, the product exported is a part of lightning arrester falling under Central Excise Tariff Heading 8538.00. That it is the case of the appellant that the product manufactured by the appellant is classifiable under Section Sub-Heading 7215.40. Learned Consultant relied upon draw back schedule issued by the Department where Copper Bonded Grounding Rods have been classified under 7215.02. He also furnished a list of exporters of similar goods, down loaded from import export data, where Copper Bonded Grounding Rods have been classified under Central Excise Heading 7215 by these exporters. It is thus the case of the appellant that the classification of the product has been correctly claimed under 7215. Ld. Consultant also argued that demand is time barred because 100% quantity of Copper Bonded Grounding Rods have been exported. That even if duty was paid under Tariff Heading 8538.00 then also appellant could have got the rebate claim of such excise duty paid. It was strongly argued by the Ld. Consultant appearing on behalf of the appellant that no malafide intention can be attributed and accordingly extended period of time and penalty cannot be imposed upon the appellant.
4. Shri S.S. Chatterjee, Superintendent (A.R.) appearing on behalf of the Revenue argued that as per the test report, the copper bonded grounding rods have been tapered at one end for a specific use. Ld. A.R. also made the bench go through last para on internal page 2 of the show cause notice to argue that Shri Josh, Director of the appellant in his statements dated 22/9/2004 and 9/9/2005 have specifically admitted that copper bonded grounding rods are specially used for earthing purposes as a part of lightning arrester. It was thus strongly argued by the Ld. A.R. that the classification of the goods Copper Bonded Grounding Rods has been correctly decided under Central Excise Tariff Heading 8538.00 as the same are solely and specifically used as part of lightning arrester.
5. Heard both sides and perused the case records. The issues involved in this appeal are as follows:
i) Whether penalty with respect to CENVAT Credit of Rs.1,23,905/- taken by the appellant is required to be imposed?
ii) What should be the correct classification of Copper Bonded Grounding Rods manufactured by the appellant and whether the demand raised is time barred ?
6. So far as imposition of penalty, with respect to Cenvat Credit of Rs.1,23,905/- is concerned, it is observed that this credit was taken by the appellant with respect to M.S. Angles, M.S. Channels, G.C. Sheet and Welding Electrodes used by the appellant in the making of support structures of the capital goods. There were conflicting judgments regarding admissibility of Cenvat Credit on such items before Larger Bench delivered judgments in the case of Vandana Global Ltd. Vs. CCEx., Raipur (supra). When conflicting judgments with respect to an issue were available then it cannot be said that appellant had malafide intention to fraudulently take inadmissible credit. Accordingly, penalty of Rs.1,23,905/- imposed by the adjudicating authority, and upheld by the first appellate authority, is set aside.
6.1 Second issue required to be deliberated upon is regarding correct classification of Copper Bonded Grounding Rods manufactured by the appellant. It is the case of the appellant that this product is classifiable under Central Excise Tariff Heading 7215 as per the drawback schedule published by the Department and classification claimed by the other exporters who are manufacturing similar goods. On the other hand, the Department is of the view that the goods manufactured are given special processes to make them solely and specifically usable in lightning arrester systems. It is observed from the case records that special processes are done by appellant on a Copper Bonded Grounding Rods and one end of such rods are given special tampering. It is also observed that Shri Josh, Director of the appellant in his statements dated 22/9/2004 and 9/9/2005 has specifically stated that Copper Bonded Grounding Rods are specifically used for earthing purposes as a part of lightning arresters.The said statements have not been retracted by the appellant at any stage.
7. In view of the above factual matrix, product manufactured by the appellant has undergone specific processes to make the same usable solely and principally for lightning arrester system. Reliance placed by the appellant on the drawback schedule published by the Department and export made by other appellants is not of any help because it is not coming out of the list of other exporters whether any specific processes were also undertaken by those exporters on the Copper Bonded Grounding Rods exported.Accordingly, it is held that classification of the goods manufactured by the appellant will be CETH 8538.00 as parts of lightning arrester and to that extent appeal filed by the appellant is required to be rejected.
8. So far as time bar nature of demand and imposition of penalty is concerned, it is observed that appellant has exported the entire quantity of Copper Bonded Grounding Rods manufactured and would have been entitled to 100% rebate of duty paid on the finished goods. There was no reason for the appellant to deliberately mis-declare the classification under CETH 7215.00. Under the existing facts, it cannot be said that appellant had any intention to evade payment of Central Excise duty. Demand is, therefore, required to be restricted within the period of one year from the date of issue of show cause notice and penalty of Rs.14,82,032.00 imposed upon the appellant under Section 11AC is required to be set aside.
9. Appeal filed by the appellant is allowed only to the extent indicate in paras 6 & 8 above.
(Operative part of the order already pronounced in the Court)
Sd/- 17/5/16 Sd/- 17/5/16
(P.K.CHOUDHARY) (H.K. THAKUR) Judicial Member Technical Member
k.b/-
Excise Appeal No. : 450/2007
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