Custom, Excise & Service Tax Tribunal
(I) Stemcore Alloys And Ispat Limited vs The Commissioner Of Customs & Central ... on 7 March, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, BANGALORE SOUTH ZONAL BENCH AT BANGALORE COURT - I Stay Application Nos.: E/Stay/1162 & 1795/2011 in Excise Appeal No: E/1838 & 2894/2011 (Arising out of (i) Order-in-Appeal No: 49/2011 (H-III) CE dated 19.5.2011 and (ii) Order-in-Appeal No.: 69/2011 (H-III) CE dated 29.7.2011 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals-III), Hyderabad.) 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? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes (i) Stemcore Alloys and Ispat Limited (ii) Ravi Organics Limited Appellant Versus The Commissioner of Customs & Central Excise (Appeals-III) Hyderabad-III Commissionerate Hyderabad. Respondent
Appearance Mr. Lalit Mohan Chandna, Advocate for the appellants.
Mr. N. Jagdish, Superintendent (AR) for the Revenue.
CORAM SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL) SHRI B.S.V. MURTHY, HONBLE MEMBER (TECHNICAL) Date of Hearing: 07.03.2013 Date of decision: 07.03.2013 FINAL ORDER Nos. 25168 & 25169 / 2013 [Order per: P. G. Chacko]. These applications filed by the appellants seek waiver and stay in respect of the respective adjudged dues. On a perusal of the records and hearing both sides, we are of the view that the appeals filed by the applicants also can be finally disposed of at this stage. Accordingly, after dispensing with pre-deposit, we take up the appeals.
2. The appellant in the first appeal worked as job worker for the appellant in the second appeal during the material period. The former manufactured excisable goods out of the raw materials supplied by the latter and cleared such goods without payment of duty under Notification No.214/86 dated 25.3.1986. The job workers grievance is against demand of duty of Rs.4,31,392/-, confiscation of goods, imposition of penalty, etc. The other party, raw material supplier, is aggrieved by denial of CENVAT credit, imposition of penalty, etc. In both the cases, the impugned demands have stemmed from a crucial fact found by the adjudicating authority which is to the effect that the raw material supplier did not have a factory.
3. Aggrieved by the orders of adjudication, both the parties had preferred appeals to the Commissioner (Appeals) and had also filed therein applications for waiver of pre-deposit under Section 35F of the Central Excise Act. The appellate authority directed them to pre-deposit 50% of the respective amounts of duty, which they did not deposit within the prescribed time. In the absence of evidence of pre-deposit, the learned Commissioner (Appeals) dismissed their appeals on the sole ground of non-compliance with Section 35F ibid. The present appeals are directed against the orders of the appellate Commissioner.
4. After hearing both sides and considering their submissions, we find that the focus of debate is on the terms of Notification No.214/86-CE. It has been argued by the learned counsel for the appellants that, in the scheme of the above notification, the raw material supplier need not have a factory. The proposition is that the said scheme itself is meant for a person without factory who would like to have excisable goods manufactured through job workers. These arguments have been vehemently contested by the learned Superintendent (AR) who also points out that, in a case of another job worker of the second appellant, this Bench directed pre-deposit of 25% of the amount of duty demanded vide Stay Order No.800/2012 dated 15.5.2012 in appeal No. E/2497/2011 (M/s. Rayalseema Steel Re-Rolling Mills (P) Ltd. vs. CCE, Hyderabad-III).
5. In his rejoinder, the learned counsel has referred to a few decisions viz., Amul Industries Pvt. Ltd. vs. Commissioner: 2006 (206) E.L.T. 1043 (Tri.-Mum.), S.G. Zaveri Pharmapack vs. Commissioner: 2007 (217) E.L.T. 591 (Tri.-Mum.), Bata India Ltd. vs. Commissioner: 2006 (199) E.L.T. 847 (Tri.-Bang.), Kay Cee Electricals vs. Commissioner: 2005 (182) E.L.T. 136 (Tri.-Del.), etc. It is claimed that, in all the cited cases, the benefit of the above notification was allowed to job workers even in the absence of a factory for raw material supplier.
6. After giving careful consideration to the submissions, we have not found prima facie case for the appellants for the following reasons:
(a) Notification No.214/86-CE on the very face of it requires the raw material supplier to have a factory. In fact, almost all references to raw material supplier in the notification are accompanied by mention of factory.
(b) It is not in dispute that the second appellant (Ravi Organics Ltd.) did not have a factory as defined under Section 2(e) of the Central Excise Act during the material period.
(c) The cited decisions have been perused and it is found that, in any of those cases, there is no categorical view expressed by this Tribunal to the effect that a raw material supplier working under the scheme of the above notification need not have a factory. Therefore the reliance placed by the learned counsel on the cited decisions is misplaced. Before the lower appellate authority, these applicants ought to have made reasonable pre-deposits.
6.1 The CENVAT credit denied to the second appellant is to the extent of Rs.22.6 lakhs. The learned counsel has submitted that, as they had supplied the finished goods to SEZ units during the material period, they claimed refund of the unutilized CENVAT credit to the extent of Rs.19 lakhs. It is submitted that this refund claim was rejected by the original authority and its decision was upheld by the Commissioner (Appeals) and further that the appeal filed against the appellate Commissioners order is pending before this Tribunal. Obviously, in that case, there is no stay application. In the facts and circumstances of this case, we are inclined to proceed on the premise that M/s. Ravi Organics Ltd. are entitled to the above refund. If that be so, in the instant case, they should pre-deposit the differential amount viz. Rs.3/- lakhs (Rs.22 lakhs less Rs.19 lakhs). They shall pre-deposit this amount of Rs.3,00,000/- (Rupees Three Lakhs Only) with the Commissioner (Appeals) to enable him to dispose of their case on merits.
6.2 Insofar as the job worker is concerned, we have the benefit of Stay Order No.800/2012 dated 15.5.2012 which was passed by this Bench against another similarly situated job worker viz. Rayalseema Steel Re-Rolling Mills (P) Ltd. We had asked them to pre-deposit 25% of the total amount of duty demanded. Consistently, we direct the job worker before us (Stemcore Alloys and Ispat Limited) to pre-deposit an amount of Rs.1,00,000/- (Rupees One Lakh Only) with the lower appellate authority to enable it to dispose of their appeals on merits.
6.3 Both the appellants shall pre-deposit the respective amounts within six weeks from today and report compliance to the Commissioner (Appeals) forthwith, whereupon the latter shall dispose of the appeals (filed against orders-in-original) on merits without insisting on any further pre-deposit and in accordance with law, after giving the parties a reasonable opportunity of being heard.
7. Both the appeals stand allowed by way of remand.
8. The stay applications also stand allowed.
(Pronounced and dictated in open Court) (B.S.V. MURTHY) Member (T) (P. G. CHACKO) Member (J) rv 7