Custom, Excise & Service Tax Tribunal
M/S. Kayji Polymers (India) vs Commissioner Of Customs & Central ... on 30 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/2958, 2959/06 (Arising out of Order-in-Original No. 02/Commr.Goa/CX/2006-07 dt. 30.6.2006 passed by the Commissioner of Customs & Central Excise, Goa ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, Member (Technical) =======================================================
1. Whether Press Reporters may be allowed to see : No
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 : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. Kayji Polymers (India)
:
Appellant
M/s. Emkay Elastomers
VS
Commissioner of Customs & Central Excise, Goa
:
Respondent
Appearance
Shri H.P. Kanade, Advocate for Appellant
Shri V.K. Shastri, Asstt. Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
Date of hearing : 30/11/2016
Date of pronouncement : 05/01/2017
ORDER NO.
Per : Ramesh Nair
The case of the Revenue is that the Appellant M/s. Emkay Elastomers (for brevity Emkay) manufactured and cleared Compounded Rubber and Cushion Compound without payment of duty and the other appellant M/s. Kayji Polymers (India) (for brevity Kayji) manufactured and cleared Tread Rubber without payment of duty. Accordingly the adjudicating authority vide order-in-original No. 02/COMMR/GOA/CX/2001 dt.31.1.2001 confirmed the demand of duty on both the appellants and imposed penalties. Being aggrieved by the said order-in-original, the appellant filed appeals before the Tribunal. On the ground that the intermediate goods i.e. Compounded Rubber and Cushion Rubber manufactured by M/s. Emkay Elastomers was sent to M/s. Kayji Polymers (India) for job work purpose thereafter the job work goods i.e. Trade Rubber after manufactured by the M/s. Kayji Polymers (India) returned back to M/s. Emkay Elastomers and in turn M/s. Emkay Elastomers has cleared the Tread Rubber on payment of appropriate excise duty. Therefore the entire transaction was in the nature of supply of the intermediate goods to the job worker and manufacturing by job worker. Since the duty was paid on the final stage no duty can be demanded on the intermediate stage. The Tribunal after considering the theory of job worker remanded the matter to the adjudicating authority to verify the claim of the appellant regarding the job work transaction. The adjudicating authority once again adjudicated the matter whereby the demand of duty was confirmed and penalty/interest was imposed therefore the appellant, in the second round, are before us.
2. Shri H.P. Kanade, Ld. Counsel for the appellant submits that the Tribunal in the first round remanded the matter specifically to verify the statement showing movement of goods for job work and return. However the Commissioner has brushed aside the statement, documents and Chartered Accountants Certificate mainly for the reason that the same was not produced either at the time of inquiry of the case or before the adjudicating authority. In this regard, he submits that thereafter documents were produced before the Honble Tribunal has been prima facie accepted by the Tribunal and for this reason the matter was remanded to the adjudicating authority for considering the same, therefore the Commissioners finding that the same was not produced during the inquiry of the case, is the case of contempt of direction given by the Tribunal. He submits that the entire transaction of supply of semi-processed goods by Emkay to Kayji and return of processed goods by Kayji to Emkay and subsequently clearance of the final product by Emkay is covered under the job work procedure as permitted under erstwhile Rule 57F (2/4) of Central Excise Rules, 1944. He fairly accept that the proper procedure was not followed such as giving intimation to the department and issuance of prescribed challan for job work under Rule 57F (2/4) of Central Excise Rules, 1944, however the entire transaction is permitted under the law. Though the prescribed challan was not issued but the internal pre-printed challan for movement of the goods were issued and the same was produced before the Commissioner. It is his submission that since after the job work the final product has been cleared on payment of duty no further duty demand can be confirmed either against the Emkay or Kayji.
3. On the other hand, Shri V. K. Shastri, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that since no prescribed procedure was followed the duty is payable at every stage of manufacturer. Therefore the lower authority correctly demanded duty from Emkay on clearance of Rubber Compound and Cushion Rubber also on Kayji on manufactured and clearance of Tread Rubber.
4. We have carefully considered the submissions made by both the sides, we find that this is the second round of appeal before this Tribunal. In the first round this Tribunal vide Order No. A/154-155/WZB/2006/C-III dt. 20.1.2006 had remanded the matter to the original authority with the following observation:
3. After hearing both sides and considering the material on record, it is found M/s. Enkay were availing Modvat credit on inputs used in the manufacture of Cushion Compound and Compounded Rubber and for crediting Trade Rubber manufactured, they were required to follow the procedure under Rule 57F(4) i.e. after debiting 10% of the value of such goods and maintaining account of removal and return. In the instant case, M/s. Enkay or for that matter the appellants have not complied with the said formalities and have removed the goods in violation of the prescribed procedure. They only pleaded that they were not conversant with the requirement of the procedure and they were under the bonafide belief that the procedure followed by them was correct.
4. A statement showing movement of finished goods from M/s. Enkay to M/s. Kayji Polymers (India) and from M/s. Kayji Polymers (India) to M/s. Enkay duly supported by certificates from Chartered accountant, has been produced. We find that these statements are required to be verified by the lower authorities before duty demands on unaccounted intermediate goods not received back by M/s. Enkay and/or Thread Rubber manufactured and not accounted by M/s. Kayji Polymers (India) and to arrive at for the purpose of demand of duties thereto. The matter is, therefore, required to be remitted back for reconsideration of this chart. From the above direction, it can be seen that the claim of the appellant regarding the job work transaction was required to be verified on the basis of Chartered Accountant certificate and the statement submitted by the appellant. Therefore the adjudicating authority in de novo adjudication was supposed to verify the statements in the light of Chartered Accountant certificate and also documents related thereto. The adjudicating authority should not have taken the stand that the documents, which were not produced during the inquiry of the case cannot be submitted later on. Though the documents were not submitted at the time of inquiry but at a later stage, the same verified documents can be rejected only in a case where the adjudicating authority establish that the documents are fabricated, fake or forged which is not the case here. Whether those documents were issued at the time of movement of the goods can be verified from other books of accounts and records of the appellants, which the adjudicating authority has failed to do so. As regard the claim of the appellants, if it is found on the basis of records that the removal of rubber compounded and cushion rubber by M/s. Emkay to M/s. Kayji for job work on returnable basis and not as a sale and M/s. Kayji after manufacture returned the tread rubber back to M/s. Emkay and M/s. Emkay has discharged the excise duty on such goods, then the entire transaction is of job work and no duty either from M/s. Emkay on clearance of rubber compound and cushion compound nor the duty on tread rubber from Kayji can be demanded. In the over all case, we find that the above discussed transaction is established subject to verification by the adjudicating authority than the only lapse is the procedural lapse for movement of goods for job worker however the job work is permissible under Rule 57F (2/4) of Central Excise Rules 1944 and/or notification No. 214/86-CE. The only condition is that the final product is cleared by the principal manufacturer on payment of excise duty. In such case neither excise duty is payable on the removal of semi processed goods by the principal supplier nor on the job work goods manufactured by job worker. In the present case, the appellant has claimed that they have cleared the trade rubber on payment of duty. We find that the adjudicating authority has not verified any of the documents such as challans issued by the M/s. Emkay for sending of rubber compound/cushion rubber for job work to Kayji and the challans of Kayji for return of job work goods to M/s. Emkay and final clearance of the same on payment of duty by M/s. Emkay. This co-relation has to be verified by the adjudicating authority which was not done so. In our view, since the Tribunal had directed to the adjudicating authority to verify the documents and statements than the adjudicating authority should not have avoided such exercise on one or other pretext. Since, the direction of this Tribunals order was not complied with by the adjudicating authority our hands are tight for disposal of this matter finally. Therefore the only option left is to remand the matter once again to the adjudicating authority therefore we do so. The adjudicating authority is directed to consider all the documents produced by both the appellants and statements submitted to ensure the co-relation of the movement of the goods as claimed by the appellants. Thereafter, reasoned de novo adjudication order has to be passed. The appellants deserve for sufficient opportunity of personal hearing before the de novo adjudication. The adjudicating authority shall pass de novo adjudication order within a period of three months from the date of this order. The appeals are allowed by way of remand to the original adjudicating authority in the above terms.
(Pronounced in court on 05/01/2017 ) (Raju) Member (Technical) (Ramesh Nair) Member (Judicial) SM.
2Appeal No. E/2958, 2959/06