Custom, Excise & Service Tax Tribunal
Cce, Jaipur I vs M/S. Alocme Overseas Pvt. Ltd on 17 January, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Excise Appeal No. 3627/2005-EX(DB)
[Arising out of Order-In-Appeal No. 245(MPM)CE/JPR-l/2005 dated 01.09.2005 passed by CCE, Jaipur-I]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
Honble Me. Manmohan Singh, Technical Member
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
CCE, Jaipur I Appellant
Vs.
M/s. Alocme Overseas Pvt. Ltd. Respondents
Coram: Honble Ms. Archana Wadhwa, Judicial Member Honble Me. Manmohan Singh, Technical Member Appearance:
Shri M.S. Negi, DR for the Appellant Shri S.S. Dabas, Advocate for the Respondent Date of Hearing: 12.09.2013 Date of Decision: 17.01.2014 FO ORDER NO._50129/2014_ Per Ms. Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), revenue has filed the present appeal.
2. Brief facts of the appeal are that the respondents are engaged in the manufacture of EAU De Perfume containing alcohol 78% exempted under the condition of chapter Note 1(d) of Chapter 33 of the first schedule to Central Excise Tariff Act, 1985 and registered under Rule 9 of the Central Excise Rules, 2002 for the purpose of procuring duty free inputs used in the manufacture of exempted goods under Notification No. 43/2001-CE(NT) dated 26.06.2001 read with Notification No. 34/2001-CE(NT) dated 21.06.2001. During the course of scrutiny of monthly returns in Annexure-46 for the period August, 2003 to March, 2004 filed by the appellant under Rule 12 of the Central Excise Rules, 2002 read with Notification No. 43/2001-CE(NT) dated 21.06.2001, read with Notification No. 34/2001-CE(NT) dated 21.06.2001, it was noticed that the appellant did not pay Central Excise duty on inputs amounting to Rs. 3,74,557/- on the quantity of shortage/wastage generated during the process of finished exempted goods.
3. Accordingly, a Show Cause Notice C. No. V(72)58/Dem/2004/7096-97 dated 03.09.2004 was issued by the Deputy Commissioner, Central Excise Division, Bhiwadi asking the respondent as to why:-
(i) Central Excise duty amounting to Rs. 3,74,557/- should not be recovered from them under Section 11A of the Central Excise Act, 1944.
(ii) Interest at appropriate rate should not be recovered from them in terms of Section 11AB of the Central Excise Act, 1944.
(iii) Penalty should not be imposed upon them under Rule 25 of the Central Excise Rules, 2002.
The adjudicating authority confirmed the demand and imposed penalty and ordered for recovery of interest.
4. Being aggrieved with the order, respondent filed an appeal before Commissioner (Appeals) and contested the matter on various grounds. The appellant authority, accepted the assessee stand and by taking note of various decisions of the Tribunal allowed the appeal. Hence the present appeal by the Revenue.
5. We have heard Shri M.S. Negi, learned DR appearing for the revenue, and Shri S.S. Dabas, learned advocate appearing for the respondent.
6. It is seen that the Appellants manufacture EAU DE Perfume containing alcohol 78%, exempted under the condition of Chapter Note 1 (d) of Chapter 33 of the first schedule to Central Excise Tariff Act, 1985 and registered under Rule 9 of the Central Excise Rules, 2002 for the purpose of procuring duty free inputs in the manufacture of exempted goods under Notification No. 43/2001-CE(NT) dated 26.6.2001 read with Notification No. 34/2001-CE(NT) dated 21.6.2001. The Appellants contended that they fulfilled the conditions, safeguards & procedures laid down under the Notification for procurement of the excisable goods without payment of duty for the purpose of use in the manufacture of processing of export goods and their exportation out of India to any country except Nepal and Bhutan. However, it was alleged that the conditions no. 2 specified in the Notification No. 43/2001 CE(NT) and Rule 6 of the Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods.) Rules, 2001 have not been followed, condition 2 stipulates that provisions of the Rules 2001 shall be followed mutatis mutandis. The Rule 6 of the Rules, 2001 stipulates that where subject goods are not used by the manufacturer for the intended purpose, the manufacturer shall be liable to pay the amount equal to the difference between the duty leviable on such goods but for the exemption and that already paid, if any, at the time of removal from the factory of the manufacturer of the subject goods, alongwith interest and the provisions of Section 11A and Section 11AB of Central Excise Act, 1944 shall apply mutatis mutandis for effecting such recoveries.
7. The Adjudicating Authority has held that the norms of the input output at serial no, A1738 of the Exim Policy 2002-07 for the product i.e. EAU DE Perfume has been prescribed 100:100 (Net to Net) but the Appellants have not cleared the goods as per the input-output norms prescribed as per the Exim Policy 2002-07 but the Appellants had shown the wastage arrived beyond notified ratio which can not be treated as quantity having been used for manufacture of goods intended for export purpose and duty is recoverable. In this context the Appellants contended that input output norms under sl. No. A1738 of the Exim Policy 2002-07 (Volume 2) has wrongly been interpreted and relied upon the input output norms only, the Department should have read the para 2.2.2 part VI Chapter 7 of the Central Excise Manual which reads as follows:
It is clarified that for the sake of convenience and transparency, input output norms notified under the Export & Import Policy may be accepted by the department unless there are specific reasons for variation. However, in case, the Input output norms notified under the Export Import Policy do not include all the materials used in export goods, the claims under the scheme should not be denied merely on this ground
8. In this context the appellant authority observed as under:-
8. I further find that it is also on record that input output ratio declared by the Appellants was verified by the Deputy Commissioner through the Range Superintendent and the Deputy Commissioner after due verification had countersigned the application in the manner specified in the Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001. I also find that the Appellants were using such certificate signed by the officers concerned to procure raw materials duty free for use in the manufacture of export goods.
9. He has also further observed as under:-
8. I further find that it is also on record that input output ratio declared by the Appellants was verified by the Deputy Commissioner through the Range Superintendent and the Deputy Commissioner after due verification had countersigned the application in the manner specified in the Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001. I also find that the Appellants were using such certificate signed by the officers concerned to procure raw materials duty free for use in the manufacture of export goods.
9. I also agree with the contention of the Appellants that there is no evidence adduced by the department that any quantity of shortage was found in the Appellants premises. Each & every raw material and inputs procured duty free have been fully utilized in the manufacture of export goods, wastage generated during the process of finished exempted goods has been fully accounted for and the duty has been paid by the Appellants. The duty has been demanded on shortage/wastage whereas shortage of goods would only mean that there has been either clandestine manufacture and utilization of goods not declared to the authorities or that there has been clandestine clearance of raw materials or inputs as such. There is no such charge of either in the Show Cause Notice or in the Order-in-original. I find that this is the case of wastage generated during the course of manufacture of the finished goods out of raw material procured duty free for export with permission of the department, however the Appellants have not proved the input output ratio 100:100 but Appellants have already paid duty on the price of the wastage occurring in the course of manufacturing, hence there is no short payment of duty on this ground. I further find that wastage/shartage occurred during the course of the manufacture of the finished goods for export is also covered under the para 2.2.2. part VI Chapter 7 Central Excise Manual, as the wastage is genuine has to be accepted as unaccounted loss, moreover the Department has not proved anywhere any clandestine removal of raw material or finished goods, therefore the demand is not sustainable under Section 11A of Central Excise Act, 1944.
10. Accordingly he has allowed the appeal, by the referred to various decision of the Tribunal laying down that shortages on account of filing losses and manufacturing losses cannot be held to have been cleared clandestine and credit cannot be demanded on the same.
11. Revenue in their memo of appeal have again retreating their stand that input output ratio is required to be 100:100 And para 2.2.2 part VI Chapter 7 of the Central Excise Manual is not applicable. However no reasons stands given by the Revenue as to why the said para should not be taken into consideration. Admittedly, there is neither any allegation nor any evidence of removal of duty free inputs and keeping in view the nature of the final product, such shortages have to be condoned. We accordingly find no infirmity in the views of Commissioner (Appeals) & revenue appeal is accordingly rejected.
(Pronounce in the open Court on.) (Archana Wadhwa) Member (Judicial) (Manmohan Singh) Member (Technical) Jyoti* ??
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