Customs, Excise and Gold Tribunal - Delhi
Amrit Banaspati Co. Ltd. vs Cce on 25 September, 2000
Equivalent citations: 2001(73)ECC318
ORDER
P.S. Bajaj, (J) Member
1. This order will dispose of an application moved by the appellants under Section 35-F of the Central Excise Act seeking stay of the impugned order in original passed by the Commissioner dated 18.4.2000 and waiver of the pre-deposit of the duty and penalty amounts confirmed therein.
2. The facts out of which the present application arises may briefly be stated as under:
3. The proceedings drawn were on the strength of show case notice dated 30.11.98 against the appellants who are engaged in the manufacture of vegetable products falling under Chapter 15 of the Schedule to the CETA vide which they were called upon to explain as to why differential Central Excise duty amounting to Rs. 72,27,073.20 be not recovered from them under Section 11-A of the Act by invoking extended period of limitation as they did not pay duty on the soap stocks manufactured by them w.e.f. 23.7.96 and penalty be also not imposed under Rule 173-Q on the allegation that during the course of manufacture of vegetable products falling under sub-heading 1504 of the CETA, product viz. soap stock classifiable under sub-heading 1507 of the CETA was also produced by them and the same was earlier chargeable to nil rate of duty vide Notification No. 2/94-CE dated 1.3.94, but this exemption Notification was rescinded w.e.f. 23.7.96 by the Government and soap stock was made chargeable to Tariff rate of duty as the rate of 20% ad valorem from that date. They were also advised to file the declaration as required under Rule 173-B of the Rules and to maintain statutory records but instead of complying with that advise of the Revenue department, they through letter dated 9.9.96 addressed to the Superintendent of Central Excise Range, Rajpura, took the stand that they are not manufacturing soap stock as such. They are manufacturing vegetable products and during the process of manufacture of those products, certain chemicals are used for removing the impurities and as a result thereof material which comes out in the form of impurities contains small percentage of oil and the same is further processed for conversion into acid oil. They also avered that the soap stock manufactured and used in the factory for preparing the acid oil is not chargeable to duty and is also not marketable.
4. The Commissioner through the impugned order in original confirmed the duty amount of Rs. 72,27,073.20 and also imposed penalty of that much amount with interest on the appellants.
5. While arguing the stay application, the learned Counsel has assailed the impugned order of the Commissioner on the grounds: (i) the Commissioner has failed to appreciate that the waste/residuary material arising in the course of refining of the vegetable oil was only soapy water which contained 1.5 TFM and could not be described as soap stock which usually contains 20 to 34% TFM, (ii) the true import of Circular No. 21/9/56-CX.MI dated 24.10.56 issued by CBEC which defines' soap stock's as a product with appreciable amount of preformed soap had not been also property appreciated by the Commissioner, (ii) the soapy water formed during the refining of the vegetable oil, is not marketable commodity being not capable of being sold because of low TFM contents. The reports of the analysis has been wrongly ignored by the Commissioner, (iii) the Commissioner has wrongly taken the value of such soap stock manufactured by the appellants for arriving at the assessable value of soapy water captively consumed by the appellants in the manufacture of the acid oil. The soapy water on which the differential duty had been demanded is distinct and different from the soap stock manufactured by the appellants, (iv) there has been inconsistency in calculating the quantity of the alleged soap stock on which duty had been demanded as the total value of the acid oil sold by the appellants during the relevant period was far less than the value of the soap stock, (v) the extended period of limitation under Section 11A could not be invoked as there was no suppression of facts from the Revenue department. The demand for the period July to February 1997 raised through the show cause notice, is time barred and (vi) the provisions of Section 11-AB which came to effect only from 14.5.97, could not be invoked for imposing penalty with interest on the appellants being not retrospective in nature. On the strength of all these grounds the learned Counsel has contended that complete waiver of the pre-deposit of the duty as well as the penalty amounts deserves to be allowed especially when the appellants are facing financial hardship and the unit had been declared sick by the competent authority. He has also referred to the case of Suraj Vanaspati v. CCE Meerut 2000(37) RLT 117 wherein the matter regarding the excisability of soap stock had been referred to the adjudicating authority by the Tribunal.
6. On the other hand, the learned JDR has disputed all the grounds raised by the counsel for challenging the validity of the impugned order and contended that no prima facie case is made out for allowing the waiver of the pre-deposit of the duty and penalty amounts.
7. We have heard both the sides and gone through the record.
8. The duty demand has been raised from the appellants in respect of soap stock produced by them during the manufacture of the vegetable products and which had been used by them for further manufacturing acid oil, which is a marketable commodity. Before 23rd July 1996, soap stock was cleared by them for home consumption as well as captive consumption and at that time it was chargeable to nil rate of duty under Notification No. 2/94-CE dated 1.3.94. However, after 23rd July 1996 when soap stock was made chargeable to tariff rate of duty at the rate of 20% ad valorem by the Government in Budget 1997, the appellants started describing this product, 'soap stock' as waste/residuary substance or soapy mass, in order to contend that soapy mass is not marketable. The plea of the appellants regarding the non-marketability and excisability of 'soap stock' had been fully discussed in paras 35 and 36 of the impugned order. The reasons given by the Commissioner for rejection of their plea, on the face of it, cannot to be said to be without logic.
9. The stand of the appellants that the value of the acid oil sold during the relevant period shown in the show cause notice as Rs. 1,81,84,471 and of soap stock as Rs. 3,68,52,366 out of which the former (acid oil) was manufactured, had been wrongly worked out for raising the duty demand of the disputed period, had been also fully discussed in para 38 of the impugned order. The perusal of this para shows that the value of soap stock had been worked out on the basis of past clearances of this product as per the available record. The appellants themselves gave quantity 1834.915 MT of acid oil which was cleared by them during the relevant period and of manufactured soap stock as 8962.500 MT. The view taken by the Commissioner in arriving at the quantity of the soap stock manufactured and used captively for the manufacture of acid oil or for home consumption cannot be prima facie said to be in any manner incorrect. The details of the figures had been given by the Commissioner in para 8 of the impugned order. The invoices issued during the relevant period regarding the soap stock products, had been also detailed in that order and taken note of by the Commissioner, while working out the duty demand.
10. Perusal of the impugned order also shows that the appellants from December 1997 onwards on their own started paying duty on the soap stock. They paid duty on 5032.00 MT of soap stock cleared/consumed captively for the manufacture of acid oil during 23.7.96 to 30.11.96. Similarly, they paid duty from December 1996 to February 1997, on 3920 MT of soap stock which was manufactured and captively used by them during this period. However, it revealed that they had not paid the duty on the correct total value of the 'soap stock'. The differential duty amount had been demanded from them. Having paid the duty on the soap stock voluntarily, the plea of the appellants prima facie that their product, soap stock is not marketable and not excisable, cannot be said to have been wrongly rejected by the Commissioner.
11. All the grounds put forth by the counsel (detailed above) for questioning the correctness of the confirmation of the duty demand and imposition of penalty, on the appellants, have been fully discussed in detail by the Commissioner in the impugned order and the reasons given by him while rejecting those grounds, prima facie, cannot be said to be factually or legally incorrect.
12. For the extended period of limitation detailed reasons have been given by the Commissioner in the impugned order. The appellants did not file any RT. 12 Returns for the relevant period in respect of manufacture and captive consumption of soap stock and clearance of acid oil and this fact was even admitted by their representative, Shri B.S. Verma in his statement. In this regard reference can be made to para 41 of the impugned order wherein the Commissioner has so discussed.
13. No capital out of the order of the Tribunal in the case of Suraj Vanaspati (supra) referred by the counsel, can be taken by the appellants at this stage. In that case, the Tribunal remanded the matter to the adjudicating authority for re-examination of the excisability of the product, soap stock, on the ground of marketability, as no specific finding to that effect appeared to had been recorded by the adjudicating authority. In the instant case, as observed above, specific finding had been given regarding excisability and marketability of the 'soap stock' by the Commissioner in the impugned order. The appellants themselves had paid duty on soap stock during the period 23.7.96 to 30.11.96 and this circumstance goes long way to show that they themselves accepted it as a manufactured, marketable and excisable product. The differential duty had been claimed from them as they did not pay the duty or the correct value of the product manufactured and consumed by them.
14. In the light of the discussion made above, in our view no prima facie case is made in favour of the appellants for allowing them total waiver of the pre-deposit of entire duty amount. The equity and balance of inconvenience are also not in favour of allowing the total waiver of the duty amount.
15. Regarding financial hardship, the counsel has, no doubt, drawn our attention to the order passed by the Bench I of the Board for Industrial and Financial Reconstruction, dated 30.9.98, to contend that the appellants factory had been declared sick unit. But the perusal of that order shows that the factory of the appellants had never remained closed at any stage. Every still their factory is working. The Bench in September 1998 while declaring the appellants factory as a sick unit gave certain directions which are detailed in para 4 of its order, but there is nothing or record to suggest that those had been complied with. The factory is still working and engaged in the manufacture of the vegetable products including the product, soap stock. The appellants-company, have got sufficient source of funds, land, building, plant and machinery, raw material as is clear from the copy of the Annual Report for the years 1998-99 & 1999-2000 placed on record. The sister concern of the appellants, M/s. Amrit Pulp & Paper Industries had shown profits in its balance-sheet upto 31.3.99 is clean from those Reports.
16. Moreover, on the simple plea of the appellants that their unit has become a sick unit, it would not be legally justiciable and proper to allow them total waiver of the duty amount which is quite substantial and heavy. They had evaded the payment of duty, prima facie intentionally. They had been manufacturing and clearing the soap stock and manufacturing acid oil out of that and marketing the same. They had been earning from the sale of acid oil. They were under legal obligation to discharge the duty liability, but failed to do so without any sufficient cause. They cannot be permitted to play with the Government money. The Government also needs money for the implementation and execution of its public and welfare schemes/projects. If the Government recoveries in the form of the tax, duties are stayed in routine on the simple asking of the assessees, it would jeopardise financial health of the Government and execution of the welfare schemes meant for the benefit of the poor people, by its. The public interest will also suffer immensely. It would not be out of place here to make reference to the observations of the Apex Court in Assistant Collector CE Chandan Nagar v. Dunlop India Ltd. 1985 (SC) 330. In that case the Apex Court depreciated the practice of the Courts/Tribunals staying recovery of the Government dues and taxes on the mere asking of the assessee and was pleased to observe as under:
the collection of public revenue has been serious jeopardised and budgets of Governments, and Local Authorities affirmatively prejudiced to the point of precariousness consequent upon interim orders made by the Courts. There are several other vital considerations apart from the existence of prima facie case. There is a question of balance of convenience. There is the question of irreparable injury. There is the question of public interest and many other such factors are worthy of consideration. Where matters of public revenue are concerned, it is of utmost importance to realise that interim orders sought are not to be granted merely because a prima facie case has been shown. Something more is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be slightest indication of a likelihood of prejudice to the public interest.
17. Therefore, in the light of the discussion made above, in our view, no case for total waiver of the pre-deposit of the duty amount is made out. However, the total waiver of the penalty amount deserves to be allowed as the provisions of Section 11-AB under which interest has been also imposed on the appellants came into operation from 14.5.97 and the appellants have fairly an arguable case in that regard.
18. Consequently, keeping in view the facts, circumstances and the discussion made above, the appellants are directed to deposit Rs. 35 lakhs (Rupees thirty five lakhs only) out of the total duty amount of Rs. 72,27,073.20 and on the deposit of the same the balance duty amount and the entire penalty amount shall stand waived and stayed till the disposal of the appeal. This deposit shall be made within six weeks from the date of communication of this order failing which their appeal will be liable to be dismissed without further notice to them. To come up for noting compliance and further orders on 23.11.2000.