Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs Deepak Spinners Ltd on 13 May, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
COURT-III
Excise Appeal No.E/5000/2004-EX[DB]
[Arising out of Order-in-Appeal No.531/CE/CHD/2004 dated 14.07.2004 passed by the Commissioner (A), Central Excise, Chandigarh].
For approval and signature:
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
1. Whether Press reporters may be allowed to see the
order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
authorities?
__________________________________________________
CCE, Chandigarh Appellant
Vs.
Deepak Spinners Ltd. Respondent
Present for the Appellant : Shri.M.S.Negi, DR
Present for the Respondent: Shri.Rakesh Kumar Khanna, CA
Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing/Decision: 13/05/2015
FINAL ORDER NO. 51684/2015
PER: RAKESH KUMAR
The facts leading to filing of this appeal by the Revenue are in brief as under:-
1.1 M/s. Deepak Spinners Ltd. (hereinafter referred to as respondent) are manufacturers of blended spun yarn falling under heading 5509 of the Central Excise Tariff. Exemption Notification No.4/97-CE dated 01.03.1997 (Sl.No.113) and Notification No.5/99-CE dated 28.02.1999 (Sl.No.129) provided for full duty exemption in respect of yarn of polyester staple fiber containing cotton but not containing any other textile material and in which the proportion of polyester staple fiber is less than 70% by weight of total fiber content if the yarn is supplied to registered Apex Handloom Cooperative Society, National Handloom Development Corporation or State Handloom Development Corporation and the payment of the yarn supplied is made by cheque drawn by such cooperative society or corporation, as the case may be, on its own bank account. The exemption was further subject to the condition that the manufacturer supplying the yarn has to produce at the time of clearance of the yarn, a certificate from the authorized officer of the Handloom Co-operative Society, National Handloom Development Corporation or State Government Handloom Development Corporation, as the case may be, Certifying that the yarn is going to be used only on the handloom. In the present case, during the period from January, 1998 to December, 1999, the respondent supplied quantity of certain spun yarn declared to be yarn of polyester staple fiber containing cotton but not containing any other textile material and in which the proportion of polyester stable fiber is less than 70% by weight of the total fiber content to the Punjab National Handloom Apex Cooperative Society Ltd., Chandigarh which is Punjab Government Partnership Undertaking. The respondent, however, had produced only a certificate issued by the above mentioned cooperative society certifying that Punjab State Handloom Weavers Apex Co- Operative Society, Chandigarh is a registered cooperative society and the society is exempt from the excise duty by the Government of India. The total duty involved on the yarn supplied was Rs.8,02,691/-. Subsequent investigations revealed that though the yarn had been supplied by the respondent to Punjab State Handloom Weavers Apex Co-Operative Society and the payment for the yarn had also been made by the Apex Co-Operative Society by Cheque drawn on its own Bank Account, the Apex Cooperative Society of the Govt. of Punjab had not used the duty free yarn supplied by the respondent for handloom, but the yarn had been illicitly diverted to the Power Loom Units. It is on this basis that the proceedings were initiated against the respondent for recovery of Central Excise duty of Rs.8,02,691 under proviso to section 11A (1) of Central Excise Rules, 1944 and also interest on this duty under section 11AB and imposition of penalty on them under section 11 AC. The SCN was adjudicated by the Additional Commissioner vide Order in Original dated 16.01.2004 by which the above duty demand was confirmed against the respondent alongwith interest on it under section 11AB and while penalty of equal amount was imposed on the respondent under section 11AC, another penalty of Rs.1,00,000/- was imposed on them under Rule 173Q of the Central Excise Rules, 1944. This order also appropriated an amount of Rs.7,93,072/- already paid by the respondent prior to adjudication. There is no dispute that the balance amount of Rs.9,620/- which the respondent had been ordered to pay forthwith by the Additional Commissioners order has also been paid.
2. The respondent filed an appeal before the Commissioner (Appeals) wherein they only challenged the imposition of penalty on them and also the levy of interest under section 11AB on the ground that during the period prior to May, 2001 the interest on duty under section 11AB could be demanded only in the cases where the non-payment/ short payment of duty was due to fraud willful misstatement, suppression of fact or contravention of provisions of Central Excise Act, 1944 or of the Rules made there under with intent to evade the payment of duty and in this case these elements are not present, as there was no mis-declaration, suppression of fact or contravention of provisions of Central Excise Act 1944 or of the rules made there-under with intention to evade payment of duty. The appeal filed by the respondent was allowed by the Commissioner (Appeals) vide Order-in-Appeal dated 14.07.2004. Against this order of the Commissioner (Appeals) this appeal has been filed by the Revenue. The appeal filed by the Revenue was decided by the Tribunal by Final Order No.256/2009-EX dated 20th March, 2009 by which the Tribunal set aside the Commissioner (Appeal)s order on the point of penalty and interest and restored the lower authoritys order dated 16.01.2004 on these points. This order was an ex-parte order, as on the date of hearing none representing the respondent had appeared.
3. The respondent filed an appeal before Honble Himachal Pradesh High Court against this order of the Tribunal. The Honble High Court vide Order dated 04.03.2015 set aside the Tribunals final order dated 20th March, 2009 and remanded the matter to the Tribunal for denovo decision after hearing the respondent. By this order, the respondent were directed to appear before the Tribunal on 08.04.2015 and the Tribunal was directed to decide this appeal in accordance with the law within a period of two months thereafter. Accordingly, on 08.04.2015, when the respondent appeared before the Tribunal with the High Courts order the matter was directed to be listed for final hearing today.
4. Heard both the sides.
5. Shri M.S. Negi, the ld. DR assailed the impugned order by reiterating the grounds of appeal and pointed out that as mentioned in the Tribunals final order, in respect of one consignment of yarn valued at Rs.2,13,260/- polyester content was 80% instead of less than 70% and thus, there was mis-declaration of the description. Shri Negi also pointed out that the exemption was subject to the assessee producing a certificate from the cooperative society regarding use of the yarn on handloom, while in the present case the goods have been cleared and supplied to Cooperative Society at nil rate of duty only on the basis a letter issued by a Cooperative Society mentioning that the Society is exempt from excise duty. Shri Negi, therefore, pleaded that there was deliberate contravention of the Rules with intent to evade payment of duty and hence interest on duty under section 11AB was chargeable and penalty has been correctly imposed on the respondent under section 11 AC.
5. Shri R.K. Khanna, Chartered Accountant, the ld. Counsel for the respondent, pleaded that while the respondent are not contesting the duty demand, they are contesting the levy of interest under section 11AB and imposition of penalty on them under section 11AC and Rule 173 Q, that yarn had been supplied to the Apex Handloom Cooperative Society constituted by the Government of Punjab, that letter head of the society itself mentions it as Punjab Government Partnership Undertaking, that in view of this, the respondent could not even imagine that the yarn supplied by them to the Punjab State Handloom Weavers Apex Cooperative Society would be diverted to Power Loom Units and would not be supplied to the handloom units more so, when the payment for the yarn supplied had been received by them from Punjab State Handloom Weavers Apex Co-operative Society by Cheque drawn on its own Bank Account, that difference in the composition of Polyester Fiber is only in respect of one consignment valued at Rs.2,13,000/- as against the total goods valued at about Rs.43,00,000/- supplied by the respondent to the Cooperative Society and, therefore, merely on the basis of Polyester content in respect of one consignment being 80%, it cannot be inferred that there was mis-declaration of polyester content in all the consignment, that the Tribunal in another case involving the respondent, wherein identical issue was involved from the period from March, 1998 to May 1998 vide final order No.954/2011-Ex dated 14.10.11 has dismissed the Revenues appeal praying for levy of interest under section 11AB and imposition of penalty, that ratio of this judgement of the Tribunal is squarely applicable to the facts of this case and that in view of the above, there is no infirmity in the impugned order.
6. We have considered the submissions from both the sides and perused the records. The respondent during the period of dispute, that is, during the period from January 1998 to December, 1999 had supplied polyester cotton blended yarn to Punjab State Handloom Weavers Apex Co-operative Society at nil rate of duty under Notification No.4/97-CE and 5/99-CE. These exemptions were available subject to conditions that certain type of spun yarn has been supplied to Apex Handloom Cooperative Society, National Handloom Development Corporation or a State Government Handloom Development Corporation, the payment for the yarn has been made by the Cheque drawn by such Corporative Society or corporation, as the case may be, on its own bank account and that a certificate issued by authorized officer of the Handloom Cooperative Society, National Handloom Development Corporation or State Government Handloom Development Corporation, as the case may be, has been produced certifying that the yarn would be used only on the handlooms. In the present case, the goods were supplied to Punjab State Handloom Weavers Apex Cooperative Society which as its letter head shows, as Punjab Government Partnership Undertaking. Though the supplies at nil rate of duty to the cooperative society had been made against letters issued by Punjab State Handloom Weavers Apex Cooperative Society simply stating that the society is exempt from Central Excise duty leviable under Chapter 55 by the Govt. of India, and as such, there was no specific certificate certifying that the yarn received would be supplied to handloom units, the fact remains that merely from this it cannot be inferred that the respondent were aware of the illicit diversion of the yarn by the Punjab State Handloom Weavers Apex Co-operative Society to Power Loom Units. In view of this, we agree with the judgment of co-ordinate Bench of the Tribunal (Final Order No.954/2011-EX dated 14.10.2011) holding that no malafide can be attributed to the respondent and hence the levy of interest under section 11AB and imposition of penalty under section 11 AC or Rule 173 Q (1) (d) would not be called for. In view of this, we do not find any merit in the Revenues appeal. The same is dismissed.
[Dictated & Pronounced in the open Court].
(S.K.MOHANTY) (RAKESH KUMAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) Anita ?? ?? ?? ?? 0 4