Customs, Excise and Gold Tribunal - Delhi
M/S. Hindalco Industries Ltd., ... vs Cce, Allahabad on 6 November, 2000
Equivalent citations: 2001(76)ECC83
ORDER
P.G.Chacko :
1. The brief facts of the case are as under :
2. The appellants are engaged in the manufacture of aluminium and articles thereof falling under Chapter 76 of the Schedule to the Central Excise Tariff Act. Alumina is extracted from Bauxite ore in the first stage, aluminium metal is extracted from alumina in the second stage and the metal is made into billets thereafter. The aluminium billets are then used for the manufacture of a variety of extruded products in the extrusion plant. The entire quantity of billets manufactured by the appellants are not so captively consumed in the manufacture of final products (extruded products). A part of the billets production is removed from the factory on payment of duty for home consumption. During the period, 1991-92 to 1996-97 (upto 09.07.1996), the appellants manufactured and cleared 138.278 MTs of aluminium billets for captive use in the manufacture of extruded products which were supplied to M/s Artificial Limbs Manufacturing Corporation for use in the manufacture of artificial limbs. The extruded products so supplied to M/s Artificial Limbs Manufacturing Corporation were chargeable to NIL rate of duty under Notification No.180/88-CE dated 13.05.88 as amended. The appellants claimed exemption of the billets from payment of duty under Notification No.217/86-CE dated 02.04.86 for a part of the above period and under Notification No.67/95-CE dated 16.03.95 for the remaining part of the period and hence they did not pay duty of excise on the above quantity (138.278 MTs) of billets cleared for captive use in their extrusion plant. The Department by show-cause notice (SCN) dated 09.04.97 demanded payment of duty on the said quantity of billets and also proposed to impose penalty on the appellants under various provisions of the Central Excise Rules. In reply to the SCN, the appellants informed the Department that they had already deposited Rs.15, 14, 245,.85 on 10.08.96 towards duty on the aforesaid quantity of billets and that Modvat credit to the extent of Rs.1, 42, 003.06 taken earlier on inputs used in the manufacture of extruded products had already been debited in their RG-23A-Pt.II. They claimed that the entire demand stood satisfied by way of the deposit and debit of Modvat credit as above. The jurisdictional Additional Commissioner of Central Excise who adjudicated the matter confirmed the demand of duty to the extent of Rs.16, 58, 681.18 and, by adjusting the amount of Rs.15,14,245.85 already deposited against the confirmed demand, directed the appellants to pay the differential amount of Rs.1,22,435.32. The adjudicating authority, further, imposed a penalty of Rs.20, 2000.00 on the appellants under Rule 173Q. The decision of the additional Commissioner was upheld by the Commissioner (Appeals) in the appeal filed by the assessees. Hence the present appeal of the assessees before the Tribunal.
3. It appears, the Department felt that the penalty imposed on the assessees by the Additional Commissioner was inadequate and that mandatory penalty under Section 11AC of the Central Excise Act ought to have been imposed on the assessees. The Department, therefore, preferred appeal to the Commissioner (Appeals), but the latter rejected the Departmental appeal by holding that any imposition of penalty under Section 11AC would be beyond the scope of the SCN wherein there were no proposal for imposition of mandatory penalty on the assessees under Section 11AC. The department, however, has no grievance against this part of the order of the lower appellate authority, there being no such case in the cross objections filed by the respondent.
4. We have carefully examined the records and heard both sides.
5. Ld. Advocate Shri A.R. Madhav Rao for the appellants submitted that the entire demand was barred by limitation. He submitted that since the Department was aware of the appellants' process of manufacture and of all the facts relevant for the purpose of a demand of duty as raised in the SCN there was no justification for the allegation in the SCN that the appellants had suppression of facts, the extended period of limitation provided under the proviso to Section 11A(1) of the Central Excise Act was not invokable and hence the demand raised in the SCN dated 09.04.97 for the period 1991-92 to 09.07.1996 was barred by limitation. Ld. Counsel also submitted that the appellants had reversed the Modvat credit of Rs.1, 42, 003.06 in their RG-23A Pt.II, long before the issuance of the SCN, on the bona fide belief that the billets captively consumed were exempt from duty under Notification No.217/86-CE. Since the billets were later found to be chargeable to duty, the Modvat credit reversed as above ought to have been accepted by the Department as part of payment of duty on the billets captively consumed. Therefore, the decision of the lower authorities not to reckon the above reversal of Modvat credit as part of payment of duty on the billets cleared for captive consumption during the period of dispute was erroneous. Ld. Counsel, further, submitted that since the entire amount of duty had been paid up before the issuance of the SCN, there was no justification for imposition of any penalty.
6. Ld. JDR Shri Sanjeev Srivastav reiterated the cross-objections as well as the findings of the lower authorities.
7. We have carefully examined the submissions. We find that there is no dispute, at this stage, on the question whether duty of excise was payable on the aluminium billets cleared by the appellants for captive consumption in the manufacture of extruded products. We also note that an amount of Rs. 15,14,245.85 was deposited by the party towards duty of excise on the billets cleared by them for captive consumption in the manufacture of extruded products during the relevant period. Such deposit was made before the issuance of the SCN and the same was not under protest. It was made voluntarily by the party following discovery, by Central Excise officers, of evasion of duty on the billets cleared for captive consumption. Apart form the above deposit, the party had also debited an amount of Rs.1,42,003.06 in their RG-23A Pt.II before the issuance of the SCN. In the facts and circumstances of the case, we have no reason to disbelieve the appellants' submission that the reversal of credit was made on the bona fide belief that the billets captively consumed were exempt under Notification No.217/86. Such reversal of credit was accepted by the Department also. The Department has no case that the inputs on which the credit had originally been taken were not utilised for the manufacture of the billets. It was reversed subsequently by the assessees on the bona fide belief that the billets were exempt from duty. The position subsequently changed when the Department impressed upon the assessees that duty was payable on the billets. The assessees paid such duty also. Therefore, they wee entitled to take Modvat credit of the duty paid on the inputs utilised for the manufacture of the billets. Thus Modvat credit to the extent of Rs.1,42003.06 was available to the assessees and the debit of the said amount in their RG.23 Pt.II must be treated as payment towards duty on the billets.
8. Since the assessees had paid, without protest, the entire amount of duty on the billets captively consumed, by way of deposit of Rs.15,14,245.85 and reversal of credit of Rs.1,42,003.06 before the issuance of the SCN in acknowledgement and acceptance of liability for payment of duty on the goods, their plea of limitation cannot be sustained.
9. IN the context of considering the question of imposability of penalty, we find that the appellants albeit working under SRP, had not filed any declaration under Rule 173B for availing exemption of duty on billets captively used in the manufacture of extruded products meant for use in artificial limbs. They also did not maintain statutory records for such billets and did not issue invoice as required under Rule 52A for clearance of the billets for captive consumption. The omissions/lapses were not satisfactorily explained to the lower authorities, nor are we impressed by the appellants' submissions on the point. We have particularly noted that the appellants' plea that the process of manufacture (starting with the ore and ending with the extrusions) was a continuous process was rightly rejected by the lower authorities and such a plea has not been reiterated before us in the present appeal. That was a plea raised apparently in a desperate attempt to explain the above omissions. Now that the plea stands abandoned the explanation stands reduced to a lame excuse. We would, in these circumstances, hold that the lower authorities were perfectly right in imposing penalty on the appellants under Rule 173Q. The amount of penalty imposed is only Rs. 20,000.00 and the same cannot be considered to be excessive by any standards. We, therefore, uphold the penalty.
10. In view of the findings recorded above, the appeal is allowed only to the extent of allowing the Modvat credit of Rs. 1,42,003.00. The appeal stands rejected on all other counts. The cross-objections are also disposed of accordingly.
(Operative part of this order has already been pronounced in open Court.)