Customs, Excise and Gold Tribunal - Delhi
Winsome Yarns Ltd. vs Commissioner Of Central Excise on 1 October, 1999
Equivalent citations: 2000(115)ELT153(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. In the impugned order ld. Commissioner (Appeals) observed :
"Charging Section for clearance to DTA in the Central Excises & Salt Act, 1944 is the Proviso to Section 3 of the Act. This charging Section does not speak of Central Excise Tariff at all. It only speaks of the Customs duty chargeable on like goods produced or manufactured outside India and the import duty chargeable under Section 12 of the Customs Act, 1962. Therefore, the classification list @ 12.5% under Notification No. 2/95-C.E., dated 4-1-1995 read with Notification No. 40/93-Cus., dated 28-2-1993 has rightly been approved by the Asstt. Collector and the refund claim has also been rightly rejected by the above impugned Order-in-Original appeals against. This is immaterial whether the refund claim has been filed with proper documents or not. This would have been relevant provided the refund had been admissible to the ap-pellants. I, therefore, confirm both the Order-in-original. Apples are rejected".
Being aggrieved by this order the appellants have filed this appeal.
2. The facts of the case briefly stated are that the appellants are 100% Export Oriented Unit and engaged in the manufacture of Cotton Yarn made out of indigenous cotton. For clearing the goods into the Domestic Tariff Area, the appellants filed a Classification List on 18-7-1994 claiming Nil rate of duty for Soft Cotton Waste under CET sub-heading 5202.02. The Department alleged that Cotton Waste under Customs Tariff read with Notification No. 40/93-Cus., dated 28-2-1993 as amended is chargeable to duty @ 25% Adv. When such Cotton Waste is cleared from 100% E.O.U. it was, therefore, alleged that Cotton Waste cleared by the appellants to the Domestic Tariff Area should pay duty @ 12.5% Adv. The appellants agreed to pay the duty but sent a letter to Range Officer stating that the duty is being paid under protest. The Asstt. Collector by his Order-in-original decided the issue rejecting the refund claim filed by the appellants. In appeal the Commissioner (Appeals) held as above.
3. Shri Balbir Singh, ld. Counsel appearing for the appellants submits that no duty was chargeable on Soft Waste of Cotton. He submitted that Soft Waste of Cotton comes under Chapter heading 5202.02. He submits that during the period July, 1984 to February, 1995 no duty was payable on Soft Waste of Cotton. He submitted that the Apex Court in the case of Commissioner of Sales Tax, Bombay v. Bharat Petroleum Corpn. Ltd. reported in 1995 (77) E.L.T. 790 held that -
"16. We have given deep thought to these contentions and we have come to the conclusion that, plausible and attractive as the argument urged on behalf of the State, the conclusion arrived at by the High Court and the Appellate Tribunal has to be upheld. But before dealing with this aspect, we may dispose of two minor questions. The first which arises in the Bharat Petroleum case is whether Rule 41 contemplates that the goods purchased by the dealer should be used for manufacture of taxable goods for sale by him. The High Court has given good reasons, with which we are inclined to agree, for holding that no such restrictions can be read into his rule but this contention is of no significance in view of our conclusion that the assessee would be entitled to the set off claimed even on the basis of the taxable sales of acid sludge effected by it. The other point is whether the assessee can be said to manufacture "acid sludge" and "cotton waste" respectively. It is suggested for the State that the assessees are purchasing acid and cotton for the manufacture of kerosene and yarn/cloth respectively and it is ludicrous to suggest that the assessees are purchasing sulphuric acid and cotton for manufacturing acid sludge and cotton waste. Put like that the assessee's contention seems a little artificial. But the contention is not really absurd. For, the assessees do purchase sulphuric acid and cotton for use in a manufacturing process which yields not only kerosene and yarn/cloth but also acid sludge and cotton waste. As pointed out in State of Gujarat v. Raipur Manufacturing Co. Ltd. (1967-19 STC 1), where a subsidiary product is turned out regularly and continuously in the course of a manufacturing business and is also sold regularly from time to time, an intention can be attributed to the manufacture to manufacture and sell not merely the main item manufactured but also the subsidiary products. There is also no evidence on record to suggest, at least so far as acid sludge is concerned, that it is not a commercial commodity with a market but an item of waste. The contract with Dharmsis speaks to the contrary and moreover, as pointed out by the High Court, the assessee had been practically compelled by the Department to apply for and obtain a recognition certificate for the manufacture of sludge and it has also paid tax as dealers in acid sludge. These two contentions have, therefore, to be rejected."
He submitted that according to this decision Cotton Soft Waste was a Waste and was not a manufactured product and since it was not a manufactured product, therefore, it was not liable to duty. He submitted that since the goods were not excisable, therefore, there was no question of levy of any duty on Soft Waste of Cotton. He submitted that Section 3A provides for levy of duty on goods manufactured or produced in India. He submitted, therefore, for levy of duty the goods should be manufactured and since Soft Waste of Cotton was not a manufactured goods, the question of levy of CED did not arise. He, therefore, submitted that refund claim was justified since they had paid duty under protest, there was no limitation of time involved in their case. He, therefore, prayed that refund application may be allowed.
4. Opposing the request for allowing the refund claim Shri A.K. Prasad, Ld. DR submits that Section 3A of C.E. Act, 1944 among other things provides for levy and collection of duty on goods produced or manufactured by 100% Export Oriented Unit. He submitted that this Section provides :
"That the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured by 100% E.O.U. and allowed to be sold in India, shall be an amount equal to the aggregate of duties of Customs which would be leviable under Section 12 of the Customs Act, 1962 on the like goods produced or manufactured outside India if imported into India and where the said duties of Customs are chargeable by reference to their value, the value of such excisable goods, shall, not understanding anything contained in any (sic) in accordance with the provisions of Customs Act, 1962 and the Customs Tariff Act, 1975."
Ld. DR submits that in view of this clear provision of Section 3A of the Central Excise Act in respect of 100% E.O.U., there is no question of non-levying duty on Cotton Waste which is classifiable under Chapter sub-heading 5202.02 and chargeable to duty @ 25%. He submits that when such cotton waste is cleared from 100% E.O.U. to the Domestic Tariff Area it will be chargeable to duty @ 50% of the effective rate of duty under Notification No. 2/95-C.E., dated 4-1-1995. Ld. DR submits that in this view of the matter, there is no legal infirmity in the order passed by the lower Appellate Authorities and therefore, prays that the same may be upheld and the appeal may be rejected.
5. We have heard the rival submissions. We find that there are two issues for determination before us. The first issue is whether Soft Waste of Cotton is not goods and chargeable to nil rate of duty or is not goods for levy of duty and the second issue is whether the refund claim is justified.
6. On the first issue we note that Section 3 of Central Excise Act, 1944 which provides for levy and collection of duty is specific in so far as clearances of goods to Domestic Tariff Area from 100% E.O.U. are concerned. This Section provides that duties of Excise in such cases shall be an amount equal to the aggregate duty of Customs which would be leviable under Section 12 of the Customs Act, 1962 on the like goods produced or manufactured outside India. Thus for levy of duty, we have not to consult the Central Excise Tariff Act but we have to look at the Customs Tariff Act. Customs Tariff Act provides for levy of duty on Soft Waste of Cotton at a rate of 25%. However, Notification No. 2/95-C.E., dated 4-1-1995 reduces the effective rate to 12.5% Adv. Thus, on the first issue, we hold that duty is chargeable @ 12.5% Adv. on Soft Waste Cotton cleared to Domestic Tariff Area by 100% Export Oriented Unit. Further coming to this conclusion; we have considered the case law cited by the appellant. We find that the facts in the two cases are different and hence the case is distinguishable.
7. On the second issue whether the refund claim is justified. As on the first issue, we have already held that duty is payable on soft waste of cotton and therefore, the refund claim is not justified and the same is rejected.
8. Having regard to the above discussions and findings, we do not see any legal infirmity in the impugned order. In the result the impugned order, is upheld and the appeal is rejected.