Customs, Excise and Gold Tribunal - Mumbai
Sahakari Khand Udyog Mandal Ltd. vs Commr. Of C. Ex. And Cus. on 11 March, 1999
Equivalent citations: 1999ECR218(TRI.-MUMBAI), 1999(111)ELT924(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. The Commissioner in the impugned order confirmed Central Excise duty amounting to Rs. 21,66,404.32 under Rule 9(2) of the Central Excise Rules,1944 read with Section 11A(2) of the Central Excise Act, 1944. He also imposed a penalty of the same amount under Rule 173Q(1) of the rules read with Section 11 AC of the Act. He also directed the assessee to pay the interest as provided by law in the event of delay in making the payment so ordered. Against this order the assessee has filed an appeal and the present application seeking waiver of deposit of the sums as also stay of recovery thereof.
2. We have heard Shri B.N. Rangwani, Consultant for the applicants and Shri G.B. Yadav, for the Revenue.
3. The assessee had cleared certain quantity of levy sugar on payment of duty during the period 1974-75 to 1979-80. The ex-factory price of such levy sugar was fixed by the Union Government. The fixation of prices of levy sugar in terms of Section 3(3)(c) of the Essential Commodities Act, 1955 were challenged by several sugar manufacturers. The Supreme Court in its judgment in the case of Malaprabha Co-operative Sugar Factory v. Union of India - AIR 1994 SC 1811 observed that for fixing the price of such sugar the minimum price payable for sugar cane, cost of manufacture of sugar, the burden of tax as also a reasonable margin of profit was required to be taken into account. The Supreme Court took cognizance of the recommendations made by certain Committees. The Supreme Court directed the Government to refix the price of the levy sugar and to issue amending notifications. In terms of the judgment the ex-factory price of levy of sugar for the period mentioned above was refixed. As a consequence the Ministry of Food granted subsidies to various sugar factories for settlement of claims arising out of such refixation. The applicant in this case was a recipient of such subsidy. They received subsidy of Rs. 1,34,66,782.30 on 30-3-1996. On 23-3-1998 the Commissioner issued a notice alleging that differential duty calculated on this ground amounting to Rs. 21,66,404.22 was recoverable from assessee in terms of Rule 9(2) read with proviso to Sub-section (1) of Section 11 A. Pursuant to this notice the impugned order was passed.
4. Shri Rangwani relies upon the Supreme Court findings in the case of N.B.Sanjana. It is stated that for this rule to be invoked, the department must show that the goods were surreptitiously removed. The goods in the present case were removed on payment of appropriate duty leviable at the material time and with the knowledge of the department. He also relies upon the judgment of the Supreme Court in the case of MRF Limited v. CCE, Madras -1997 (92) E.L.T. 209 (S.C.). In the judgment the Court have held that where prices fixed by the Government were the basis for levy of duty, any variation therein subsequent to the clearance of the goods, does not effect liability of the goods to Central Excise duty. He further stated that on the same ground similar show-cause notices were issued to a number of sugar manufacturers. He stated that in several cases the jurisdictional Commissioners had dropped the demands on the observation that the demands were barred by limitation. He cited one such case where the Commissioner, Aurangabad had withdrawn the show-cause notices issued to the 18 sugar factories. On this ground he requested for unconditional stay and waiver of the sums confirmed in this case.
5. Shri G.B. Yadav on the other hand defended the Commissioner's order. He stated that the relevant date in terms of Section 11A was the date on which the duty was to be paid. In this case the relevant date should be the date on which the assessee received the subsidy on which he was required to pay duty. He further argued that in terms of Section 11D of the Act the assessee was required to pay Central Excise duty element which definitely constituted a part of the subsidy.
6. We have considered the rival submissions and have seen the citations and the other documents.
7. The show-cause notice invokes the provision of Rule 9(2). The Supreme Court in the case of N.B. Sanjana -1978 (2) E.L.T. (J 399) has held that to attract this provisions the goods should have been removed clandestinely and without assessment. If the goods have been removed with prior permission of the Excise authorities, the rule would not apply. The ratio of the judgment continues to apply to present proceedings also. We also find that in the cited case of MRF Ltd. the facts were identical in the sense that the prices of tyres was fixed by the Government and where the Government had subsequently reduced the prices with retrospective effect the assessee had filed a refund claim. In dealing with that situation the observation was made by the Court that the subsequent reduction in the prices would not adversely affect the interest of the parties for payment of excise duty.
8. We have considered the Commissioner's finding as also the submissions of Shri Yadav about the applicability of the provisions of Section 11 A. We do not find any merit in his submissions especially when we find that the demand was made under Rule 9(2). Rule 9(2) is coupled with the said Section only for calculating the time frame. But the basic requirement is for the department to show surreptitious removal of the goods. In this case the goods were cleared with full knowledge of the department. Nor are we impressed with the invocation of Section 11D because it has not been referred to in the show-cause notice.
9. On perusal of the order and the law cited we are of the opinion that the applicants have made an extremely strong, prima facie, case. We therefore grant unconditional stay and waiver of the duty confirmed and the penalty imposed.