Customs, Excise and Gold Tribunal - Calcutta
Creative Wares Limited, Arun Kumar ... vs Commissioner Of Central Excise And ... on 8 November, 2001
JUDGMENT
Archana Wadhwa
1. The prayer in the main Application is for dispensing with the condition of predeposit of the duty amount of Rs. 3,64,76,373.00 (Rupees three crore sixty-four lakh seventy-six thousand three hundred and seventy-three) and penalty of Rs. 3,83,00,192.00 (Rupees three crore eighty-three lakh one hundred and ninety -two) confirmed against and imposed upon the applicant company, M/s. Creative Wares Ltd. vide the impugned Order of the Commissioner.
2. Shri S.K. Bagaria, learned Advocate for the applicants submits that they engaged in the manufacture of disposable cups and glasses falling under Chapter 39 of the Central Excise Tariff Act. There is no dispute that the said cups and glasses are exempt from payment of duty. The starting raw material of the applicant company is granules and during the course of manufacture of their final product, an intermediate sheet-like material comes into existence, which is captively consumed in the applicants factory within a short span of three to four days. It is this sheet which has been held by the adjudicating authority, as High Court Impact Polystyrene (HIP) Sheet and duty demanded there on, for the period from April, 1995 to June, 1999.
3. Shri Bagaria, learned Advocate assails the impugned Order on merits as also on limitation. As regards the merits, he submits that the said intermediate product does not have shelf-life inasmuch as if the same is not used within a short span of three to four days, the same becomes problematic and unworthy of use on account of its contamination with the dust particles or other foreign materials. He also submits that this plea was specifically raised before the Commissioner, who has disposed of the same by observing that shelf-life of a product is irrelevant and any of there manufacturer similarly situate, could have got the said goods and utilised the same in the same manner is which the applicants have done it. Shri Bagaria, learned Advocate also submits that the applicants have another factory in Kolkata and the said issue of marketability of the so-called HIP Sheets also came up before the Kolkata Central Excise Authorities. After issuing a show cause notice, the Adjudication Order was passed by the Commissioner of Central Excise, Kolkata on 2.7.96 holding that the said Sheet is not marketable on account of it short shelf-life. The said decision of the Commissioner of Central Excise, Kolkata was accepted by the Chief Commissioner and was not reviewed by the Board. In this connection, he draws our attention to a letter written by the Assistant Commissioner, Chief Commissioner' Unit, Kolkata disclosing that the said Order passed by the Commissioner of Central Excise, Kolkata has been accepted by the Chief Commissioner and no filing of appeal against the Order has been contemplated by the Department. He argues that the said facts were placed before the adjudicating authority, who instead of following the said Order, has referred to the allegation made in the show cause notice in the case and has come to a different conclusion. As such, he submits that the issue on merits having been decided in his favour by the Commissioner of Central Excise, Kolkata and having not been reviewed by the appropriate authority, the same had become final.
4. Assailing the Order on the point of limitation, Shri Bagaria draws our attention to the correspondence exchanged between the applicants and its jurisdictional Central Excise Authorities. He submits that as far back as in March, 1995 and May, 1995 the entire facts including the fact of emergence of sheet-like product at the intermediate stage, was placed before the Revenue Authorities. The applicants stand that the said product is not marketable and hence not excisable, was also placed before its jurisdictional Central Excise Authorities with a request that if they still do not agree with the applicants' contention, they may be issued a show cause notice so that the matter can be taken up before the higher appellate authority. Instead of disclosure of this fact, the show cause notice in the present case has been issued only on 25.4.2000 raising demand of duty for the period from April, 1995 to June, 1999. As such he submits that the demand is clearly barred by limitation and the reasoning adopted by the adjudicating authority for invoking the longer period of limitation, is not convincing. He also draws our attention to the Tribunal's earlier Order passe din the case of the applicants/appellants's factory at Kolkata, vide which the demand was held to be barred by limitation (Order No.A-163-164/KOL/2001 15.2.2001).
5. Shri Bagaria also submits that the applicant company is in a poor financial condition inasmuch as the company in question is registered with the B.I.F.R. For this, he draws our attention to a letter, dated 31.1.2001 written by the Board of Industrial and Financial Reconstruction intimating the applicant/appellant company about the registration of their case.
6. Shri D.K. Bhowmick, learned J.D.R. for the Revenue reiterates the reasoning adopted by the adjudicating authority and submits that the applicant/appellant company's own representative at Kolkata, during the course of investigations conducted by the Central Excise Officers, had admitted purchase of HIP Sheets from the market. However, he fairly admits that based upon t he said allegation, the Commissioner had ultimately dropped the case against the applicant/appellants.
7. As regards the limitation, he submits that the applicant/appellant company in their Classification List, had not disclosed the factum of emergence of the HIP Sheets in their factory at an intermediate stage. As such, he submits that the applicants/appellants be directed to deposit the duty and penalty amounts in question.
8. After giving our careful consideration to the contentions raised by both sides, we find that the applicants/appellants have a prima-facie case in their favour so as to dispense with the condition of predeposit of the duty and penalty. It is seen from the letter dated 8.5.95 addressed to the Assistant Commissioner of Central Excise, which has been taken not of by the adjudicating authority that the applicant/appellant company right from the beginning, has been contending that the HIP Sheets coming into existence in their factory at the intermediate stage was not a marketable product. In the said letter they have referred to the various decisions of the Honourable Supreme Court as also the other judicial and quasi-judicial authorities, in support of their contention that marketability is the decisive factor for excisability of the product and the goods in question being note marketable, no duty is leviable on the same. We also find from the said letter that at the end, the applicants/appellants had made a prayer to the Assistant Commissioner to the effect that if the above contention of the applicants/appellants is not agreeable, they may be issued a show cause notice for adjudication, so that the matter can be agitated before the higher appellate authority. From the other correspondence exchanged between the applicants/appellants and its jurisdictional Central Excise Authorities during the period from 1995-96, we also not that the entire manufacturing process including the coming into existence of the said sheet, was disclosed by the applicants/applicants to the Revenue Authorities. As such, it cannot be said that there was any suppression or misstatement on the part of the applicant/appellant company with an intention to evade payment of duty. As such, taking into consideration all these factors including the fact that the applicant/appellant company is registered with B.I.F.R., we allow the Stay Petition unconditionally.
9. The other Stay Petitions praying for dispensing with the condition of personal penalties imposed upon the Managing Director and an employee of the applicant/appellant company, are also allowed unconditionally.
Dictated in the open court.