Customs, Excise and Gold Tribunal - Mumbai
M/S Voltas Ltd. vs Commissioner Of Central Excise, ... on 9 May, 2001
Equivalent citations: 2001(138)ELT100(TRI-MUMBAI)
ORDER
G.N. Srinivasan, Member (Judicial)
1. This is an appeal filed by the appellant against the decision of the Commissioner of Central Excise, Mumbai III made in Order-in-Original No 77/95 dated 29.11.1995 whereunder he has confirmed the duty of Rs 10,11,750/- and imposed a penalty of Rs 1.00 lakh for violation of Rule 173Q of the Central Excise Rules, 1944.
2. The appellant is a company engaged in the manufacture of air conditioner and compressors for captively using the same in the air conditioners. They are also manufacturing other engineering goods.
3. The appellant has two divisions, namely cooling appliances business division manufactures and clears room air conditioners and split air conditioners, while air conditioning business division manufactures and clears packaged air conditioners required for use in central air conditioning plants. Its factory is situated at Thane. Whenever the appellant manufactures compressors and utilises the same in the manufacture of air conditioners, the said compressors did not suffer payment of duty in view of existence of a Notification No 217/86. The appellant states that at the time of manufacture of an input it is not known at that time that an input is used in the manufacture of final product, nor can it be ascertained whether the final product would be removed by paying duty or not paying duty. The appellant has been sending the final product to 100% EOU or Free Trade Zone and they were exempted from payment of duty for such supplies. During the period 1989-92 appellant was filing classification lists and price lists. They are collectively mentioned at page 256 (111 of the paper book). In the classification list effective from 7.4.1989 i.e. List No. 17/89-90 mentions "We are manufacturing room air conditioners." In the classification list filed by the appellant, it communicated 3.3.89 (page 20) the compressors have been mentioned at item No 7 at page 25) Semi Hermetic Compressors and they have claimed exemption under Notification No 217/86 as it is indicated in the column 9 thereof. The classification list also indicated at page 45 of the paper book with effect from 20.3.1990 and serial Nos. 7, 8 and 9 indicate compressors in respect of which the benefit of Notification No 217/86 has been claimed. Even for other types of compressors i.e. other model, namely Model 06D-024 and 037, the benefit of Notification 217/86 has been claimed. This has been the practice followed by the assessee for a number of years.
4. The department has issued two Show Cause Notices dated 29.4.1992 charging the appellant that they have failed to inform the department regarding the description of intermediate goods, the classification under the Tariff, the assessable value, rate of duty applicable and the duty payable on this intermediate goods and also charged the assessee that the assessee with an intent to evade payment of duty, wilfully made misstatement in eth classification list regarding their entitlement for intermediate product namely, the gas compressor for exemption under Notification No 217/86 dated 2.4.86 suppressing the fact that such compressors would be used in the manufacture of room/split air conditioners, which are to be cleared to 100% EOU etc, whereby there has been evasion of duty. Show Cause Notice was also issued on 3.5.1994 charging the assessee as mentioned above. The period of dispute is from April 1989 to October 1992. The assessee filed reply to the Show Cause Notice. The case of the assessee is that what all required under law they have given information; they have claimed exemption under Notification 217/86. They have also stated that the notice lacked particulars. There was no quantification of duty. (This is in respect of the first Notice). As far as the second notice is concerned, the assessee replied that the Notification 217/86 had been amended by Notification 33/92 and that they are clarificatory in nature and that they have claimed that the notice was barred by limitation, as full facts were known to the department (para 9 of the appeal memorandum).
5. The adjudicating authority, after hearing the parties and after considering the replies had held that the appellant has failed to establish that the claim was barred by limitation and held that the appellant is liable to payment of duty and he imposed a penalty. Hence the present appeal.
6. The learned counsel Shri Manoj Sanklecha, arguing for the appellant, states that he has a strong case on merits. He took us through the classification lists and RT12 Returns to show that all the particulars which are necessary for the department to come to the conclusion regarding the duty liability of the assessee were given. He further states that the assessee claimed exemption under Notification 217/86 for compressors produced, the assessee had also informed the department about the manufacture of air conditioners as their final product. He specifically invited our attention to the RT12 returns for the month of January 1992 where in respect of item 2 A and B which refer to compressors which were cleared to 100 EOU on payment of duty. He further says that the assessee has not failed to inform the department regarding the nature of the activity and also he stressed the point that right from 1986 onwards this is a type of classification list and RT12 returns which have been filed. The assessee has taken for granted that the practice adopted by the assessee was not at all violating any of the provisions of law. He also states that the judgement of the Tribunal in the case of Indian Aluminium Company Ltd vs CCE (79) ELT 111 fully supports the assessee's case (vide paragraph 12 of the said judgement.) He also stated that as far as the longer period of limitation is concerned, the judgement of the Tribunal in Flender Mechniell Gears Ltd Vs CCE 2001 (127) ELT 582 where it has been held that as it evident from the evaluation of the evidence narrated above, prior to the decision of the Larger Bench in L & T case (119 ELT 51) the view held on the issue in a number of decisions was in favour of the appellants. He therefore states that when such is the position in law as found by the Tribunal in respect of the notification before us, namely Notification 217/86 as amended by Notification 32/92, the decision in this case should be decided in favour of the assessee.
7. As against this Shri T.D. Bodade, the learned D.R. would argue that in the classification lists and RT12 returns nowhere can the department find the nature of the activity of the assessee in clear terms. He states that the Show Cause Notice has been clearly brings out the case of the department. He therefore states that the case is to be viewed in a proper perspective and he reiterates the adjudicating authority's orders.
8. We have considered the rival submissions. The nature of the activity of the assessee, it is very clear, that they were manufacturing compressors which were captively consumed in the manufacture of other final product namely air conditioners. The assessee has cleared the air conditioners to 100% EOU and also to local parties. Whenever such event happens namely sale to customers other than 100% EOU, it pays duty claiming exemption for compressors under Notification 217/86. He however concedes that as far as supplies to IMF and Skylark appellant is prepared to pay the duty. As far as the other clearances namely prior to March 1992 is concerned he relies heavily on what is contained in the affidavit by Mr Salunkhe, who is the Senior Excise Executive. In the said affidavit paragraph 4, it is stated that the compressors which are captively consumed is removed from the factory without payment of duty under Notification 217/86, and it was further stated that when it was captively consumed it was not known or can it be ascertained whether the final products would be removed without payment of duty. It was specifically stated in the said affidavit in paragraph 5 thereof that at that time also the excise authority was aware of the fact that the final products being removed without payment of duty which contained compressors on which no duty had been paid in view of Notification 217/86. He invited our attention to paragraph 6 of the said affidavit which mentions about CT3 certificates and also intimation sent by the assessee to the jurisdictional Superintendent intimating date of removal of the final product without payment of duty. The affidavit also refers to AR3A forms and also the RT12 Returns. The stress made by the learned counsel that invocation of the larger period in this case is not correct.
9. We have considered this aspect for a considerable time. In the case of Indian Aluminium Company Ltd Vs CCE, Cochin 1998 (79) ELT 111, in paragraph 12 the Tribunal held as follows:
"We also agree with ld Sr. Advocate that the following words added by amending Notification No 33/92-CE dated 1.3.1992 in bracket namely "other than those cleared either to a unit in a Free Trade Zone or to a 100% Export Oriented Unit", is clarificatory in nature and such clarificatory notification has retrospective effect. (See CC v Shaw Wallace & Co Ltd 1990 (50) ELT 143) in view of the clarification issued by Ministry Finance referred to the ERB's order (supra)."
10. The subsequent judgement, namely Flender Mechniell Gears Ltd Vs CCE 2001 (127) ELT 582 at 854 goes to show as follows:
"However, as is evident from evaluation of the evidence narrated above, prior to the decision of Larger Bench in L & T case (supra) the view held on the issue in a number of decisions in favour of appellants. Therefore, one cannot say ..... the appellants had suppressed the facts or violated the provisions of the Central Excise Law with intent to evade payment of duty etc., calling for invocation of larger period for the payment of duty under proviso to Section 11A. In this view of the matter, the demand is barred. (Emphasis is supplied)."
11. As against this, we find that there is a specific reference to claiming of exemption under Notification 217/86 in respect of the compressors. As far as the RT12 returns are concerned, it contained packaged type air conditioners and also compressors. This has been assessed to tax. No objection has been raised. In the classification lists, when we go through it establish at pages 45-95 even in respect of the reply to the Show Cause Notice dated 29.4.1992 and in their letter dated 27.5.1992, there has been a reference of Modvat declaration. This is normally given in respect of the goods which are being sold to non EOUs. More over, in the decision cited even, namely in the Flender Mechniell Gears Ltd Vs CCE (supra) there is a finding given by the Tribunal to the effect that suppression under the circumstances cannot be held. We are therefore of the view that under the peculiar circumstances in which we are in, namely judgement of the tribunal with which we do not want to disagree, following the same, we hold that invoking of the larger period of limitation under the circumstances is not warranted in law. Therefore, on this basis we hold except for supplies to IMF and Skylark, no demand can be made. In view thereof, the penalty is also set aside. For requantification, the matter is sent back to the jurisdictional Commissioner.
12. Appeal allowed except with regard to the suppliers to IMF and Skylark, the other amount is not to be levied. The appeal is allowed to that extent.
13. The appeal is disposed of in the above terms.