Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise, ... vs M/S Nepc Agro Foods Ltd., M/S Flow Tech ... on 24 August, 2001
ORDER
Shri S.L. Peeran
1. The Commissioner of Central Excise, Coimbatore is aggrieved with the respective Orders-in-Original, ie. O-In-O No.133/96 dated 20.8.96 in the case of NEPC Agro Foods Ltd. O-in-O No.136/96 dated 26.8.96 in the case of Flow Tech Power and O-in-O No.118/96 dated 27.7.96 in the case of ACC Ltd.
2.The issue in all the three appeals being common, they are taken up together for disposal as per law.
3.The Commissioner in all the three appeal has upheld the assessee's contention with regard to eligibility of Modvat credit claimed by them and has directed the authorities to grant the same. However, he has confirmed duty demand raised in respective orders under Rule 9(2) of Central Excise Rules read with proviso to Section 11A of CE Act and has also imposed penalties in each of the cases.
4. The Revenue is aggrieved in so far as the findings given by the Commissioner with regard to the appellants claim of Modvat credit. The ground taken up by the Revenue is that the assessees had not registered themselves with the department and had not filed necessary declaration under Rule 56G to avail credit of duty paid on inputs in the manufacture of final products and also since the suppression of facts alleged was confirmed by the Commissioner in the adjudication order. Therefore, the Commissioner ought not to have accepted their plea for grant of Modvat credit on the eligible inputs. The Revenue in the appeals have taken a view that in the case of PARO FOOD PRODUCTS VS. CCE [1989 (43) ELT 595-CEGAT], it has ben held that the manufacturer who had not filed a declaration under 57G would not be entitled to take credit of duty on inputs received. It is also pleaded that filing of declaration is a substantive requirement and not merely a procedural requirement and therefore, the order of the Commissioner holding that the assessee is entitled to the benefit of Modvat credit in respect of their orders is required to be set aside.
5. Heard Ld. DR Shri Jayachandran and Shri Soundararajan for the Revenue. Shri A. Vijayaraghavan Ld. Consultant appears for Flow Tech power and Shri J. Shankarraman, Ld. Advocate appears for NEPC Agro Foods Ltd. Ld. Advocate submits that he appears for Shri R. Raghavan, Ld. Advocate, in the case of ACC Ltd. and arguments are common. Ld. Consultant and Ld. Advocate made a common submission that they had challenged the orders-in-original in the case of Flow Tech Power and NEPC Agro Foods Ltd. against the impugned order of the Commissioner confirming the demands and imposing penalties. The Tribunal in Final order No.1262/2000 dated 5.9.2000 in the case of Flow Tech Power, after detailed consideration of their pleas pertaining to non leviability of duty and penalty, set aside the impugned order of the Commissioner and allowed their appeal. Ld. Consultant submits that once their plea with regard to the classification and non excitability has been accepted and the impugned order has been set aside on merits, the present appeal of the Revenue against grant of Modvat credit doesnot survive and the Revenue's appeal is required to be rejected. Like-wise, Ld. Counsel Shri Shankarraman submitted that in the case of NEPC Agro Foods Ltd. the matter was decided by Final order No.661/2001 dated 11.5.2001 and the impugned order in question has been set aside on merits and therefore, question of grant of Modvat credit does not arise and the Revenue's appeal has become infructuous. He further submits that in so far as the ACC Ltd. case is concerned, he has no information as to the decision on merit is concerned. However, it is his contention that the counsel on record has instructed him to say that the Modvat credit which the Commissioner has granted after scrutiny of the documents in legal and proper order. The judgments cited by the Revenue in the grounds of appeal are not longer a good law in the light of the Apex Court judgment rendered in the case of FORMICA INDIA DIVISION VS. CCE [1995(77) ELT 511-SC] wherein the Apex Court held that once the question of excitability of the product has been decided, then the benefits of Modvat credit are set-off, in such case Modvat cannot be denied and that has to be given to the assessee.
6. Ld. DR Shri Soundararajan distinguishes the Apex Court judgment and submits that the judgment was in the context of set-off of duty subject to following Rule 56A while in the present case, the issue pertains to claim of Modvat for which there has to be declaration before the eligibility is decided and given.
7. Ld. Counsel contends that this decision of the Apex Court has been taken into consideration by the Delhi bench in GARWARE SYNTHETICS LTD. [2000 (125) ELT 740-TRIB.] and has now held hat Modvat credit is required to be granted after the question of dutiability is decided. It is his contention that even in the case of ACC Ltd. the parties had taken a view that the goods manufactured by them was not dutiable and they held a bona fide belief. In such a circumstance, when the decision is rendered by the authorities over rule their belief of non dutiability, then in such circumstances, the Modvat claimed is required to be granted irrespective of their filing a declaration or not. It is the counsel's submission that after the decision of Formica India Division, the Tribunal has been now holding that the judgment of the Apex Court would apply even to Modvat cases. Therefore, the Tribunal's subsequent decision in the case of Garware Synthetics Ltd. (supra) in the light of the Apex Court judgment rendered in the case of Formica India Division holds good and the Revenue's contention is required to be negatived.
8. On a careful consideration of the submission made by both the counsels, we notice that in so far as the case of NEPC Agro Foods Ltd. is concerned the assessee was aggrieved with the impugned order confirming duty and penalty. That appeal came up for consideration earlier and the Tribunal has adjudicated the case in favour of the assessee by holding that the product marketed by them was not eligible for Excise duty and the demands and the penalties raised in the impugned order is required to be set aside. In view of the assessee having succeeded in setting aside the impugned demands and penalty, the present appeal of the Revenue becomes infructuous as question of grant of Modvat credit does not arise and hence the Revenue appeal in the case of NEPC Agro Foods Ltd. is dismissed.
9. In the case of CCE Vs. Flow Tech Power, a similar situation has arisen and the assessee challenged the impugned order of the Commissioner confirming demands and imposing penalty. They had also like-wise taken a plea that they were manufacturing Drip Irrigation/Sprinkler irrigation system and PVC/HDPE/LDPE/LLDPE pipes. They had contended that these items were not excisable and demands cannot be confirmed in view of Exemption Notification for which their claim had been negatived by the Commissioner. The Tribunal after detailed consideration and examining Chapter Note and Section Note including relevant classification, upheld their plea that the items are not irrigation system but plastic pipes and that the Notification No.56/95 dated 16.3.95 would clearly apply to their case as the item fall well within Chapter Heading 84.24 as claimed by them. Therefore, the Tribunal has set aside the confirmation of demands and the penalties against the assessee. Therefore, the present appeal of the Revenue rejecting the modvat claim does not require for considerations the impugned order itself has been set aside. Hence, the Revenue appeal against Flow Tech Power is rejected.
10. In so far as the appeal of the Revenue against ACC Ltd. is concerned, we have no information with regard to the assessee having appealed before the Tribunal and the final order passed by the Tribunal in this regard. The only question required to be decided is as the whether the assessee is entitled to the claim of Modvat credit despite their not having declared the inputs and claim for the eligibility of Modvat credit. It is the case of the assessee that they held the bona fide belief that the goods were not excisable and non dutiable. In such a circumstance, the Apex Court in the case of Formica India Division (supra) while analysing the provisions of Set-off and grant of exemption under the Notification held that the benefit is required to be extended. This view has since been accepted by the Tribunal for grant of Modvat claims in the circumstance where there is clearances of final goods on bona fide belief by the assessee that the same is not liable for duty. The Tribunal has now in Garware Synthetics Ltd. applied the test of grant of Modvat credit and held that Modvat credit cannot be denied in these circumstances. As the issue is no longer res integra, therefore respectfully following the Apex Court and the Tribunal judgments now rendered, the Revenue's appeal challenging the grant of Modvat credit in the case is negatived and their appeal is dismissed.
11. Thus, all the three appeals of the Revenue are dismissed.
(Pronounced & dictated in open Court)