Madras High Court
M/S.Mathura Polymers Private Limited vs The Customs Excise & Service Tax ... on 14 September, 2018
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam, V.Bhavani Subbaroyan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.09.2018 CORAM THE HON'BLE MR.JUSTICE T.S.SIVAGNANAM AND THE HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN C.M.A.No.8 of 2017 M/s.Mathura Polymers Private Limited B-18, E-SIPCOT Industrial Estate Gummidipoondi 601 201 rep.by its Managing Director M.Elangovan .... Appellant Vs 1.The Customs Excise & Service Tax Appellate Tribunal South Zone Bench, Shastri Bhawan Annexe 1st Floor, 26, Haddows Road, Chennai 600 006. 2. Commissioner of Central Excise Chennai II Commissionerate MHU Complex, 692, Anna Salai Nandanam, Chennai 600 036. .... Respondents For Petitioner : Mr.J.Sankararaman For Respondents : Mrs.R.Hemalatha Prayer : Civil Miscellaneous Appeal filed under Section 130 of the Customs Act, 1962 to set aside the impugned common final order No.40345 of 2016 dated 29.02.2016 passed by the Hon'ble CESTAT, Chennai in Appeal No.E/549/2005. JUDGMENT
(Judgment of the Court was delivered by T.S.SIVAGNANAM, J.) This appeal filed by the assessee, is directed against the order passed by the Customs Excise and Service Tax Appellate Tribunal, South Zone Bench, Chennai (hereinafter referred to as Tribunal) in the final order No.40345 of 2016 dated 29.02.2016. The appeal has been admitted on the following substantial questions of law.
" 1. Whether the Tribunal is right in deciding the issue by only considering the averments made by the 2nd respondent but ignoring both ground of appeal and oral submissions made by the appellant in complete violation of principles of natural justice?
2. Whether the Tribunal is right in deciding the issue based on the statements of witnesses who did not appear for cross examination despite summons?
3. Whether the Tribunal is right in rejecting the prayer of the appellant to grant benefit bestowed under statute?
4. Whether the Tribunal is right in holding that fraud nullifies everything when statute bestows the certain legal right to the appellant?
5. Whether the Tribunal is right in discriminating the appellant not allowing certain legal right when the same right is enjoyed by others in violation of fundamental rights of the appellant?
6. Whether the order passed by the Tribunal is sustainable who is the last fact finding authority without verification of any documents?
2. The assessee was issued a show cause notice date 03.09.1999 that they are liable to pay central excise duty to the tune of Rs.5,95,721/- on the allegation that they have clandestinely removed excisable goods and also liable to pay equal amount of penalty and interest. The assessee filed a reply to the show cause notice on 15.03.2001 and 05.03.2002. The adjudicating authority passed the order in original dated 31.03.2005, rejecting the claim made by the assessee and confirmed the proposal in the show cause notice. The assessee preferred an appeal before the Tribunal and the Tribunal, by an order dated 29.02.2016 dismissed the appeal. Challenging the same, the assessee has preferred the present appeal.
3. Heard Mr.Sankararaman, learned counsel for the appellant and Mrs.R.Hemalatha learned counsel for the respondent.
4. The only point canvassed before us is that the adjudicating authority as well as the tribunal did not consider the benefit of the Notification No.8/98-Central Excise dated 02.06.1998, by which the assessee is exempted from payment of excise duty, since their clearances, even as per the amount mentioned in the show cause notice is only Rs.23,82,886/-, which is well below the threshold limit.
5. We had perused the order passed by the original authority as well as the Tribunal. The original authority has considered the assessee's claim for the benefit of Notification No.8/98 and rejected the contentions raised by the assessee by rendering the following finding, 59.2. Regarding their eligibility for the benefit of Notification No.214/86 dated 25.3.86, the benefit is available only if the conditions stipulated therein ie., the supplier of the raw materials gives an undertaking to the Assistant Commissioner having jurisdiction over the jobworker (in this case MPPL) that the said goods shall be used in or in relation to the manufacture of final products in his factory. In the case on hand, VAP as not given any such undertaking to the department and MPPL has not produced any evidence to this effect. Hence MPPL are not eligible for the benefit of Notification 214/86 Central Excise as amended.
59.2.1) Regarding their eligibility for the benefit of Notification 8/98 dated 2.6.98, I find that MPPL have not produced any evidence to prove their eligibility to the Notification ie., their aggregate value of clearances of all excisable goods for home consumption is not above three hundred lakhs during the preceding financial year. I also find that they have paid duty in PLA for scrap during the financial year 1998-99 amounting to Rs.81,551/-. As per para 2 of the said Notification.
A manufacturer has the option to not to avail the exemption under notification and to pay the normal rate of duty on the goods cleared by him. Such option, if exercised shall not be allowed to be withdrawn in the remaining part of the financial year 1998-99 59.2.2) I find that by paying duty on scrap cleared during the financial year 1998-99, the MPPL has exercised their option to pay normal rate of duty and they have no option but to pay normal rate of duty for further clearances and the option cannot be withdrawn. Hence they are not eligible for the benefit of Notification 8/98 dated 2.6.98.
6. The correctness of the above contention was tested by the tribunal and it was confirmed. Learned counsel for the assessee pointed out that the tribunal without considering the contention of the assessee, merely stated that that fraud nullifies every solemn act and outcome of the fraud does not entitle the perpetrator of the fraud to claim any benefit under law. On a perusal of the impugned order passed by the tribunal, we find that the tribunal has considered the factual aspects and concurred with the view taken by the adjudicating authority, after perusing the materials placed on record. Therefore, the findings of the tribunal is not restricted to paragraph 20 and 21, as contended by the learned counsel, but other paragraphs as well, wherein the factual matrix has been analysed. By way of this appeal, we cannot review the factual situation, which was considered by the adjudicating authority and re-appreciated by the appellate tribunal. Further more, the adjudicating authority has denied the benefit of Notification No.8/98, not on the threshold limit of clearances effected by the petitioner, but on the ground that the assessee has been paying duty on clearances during the assessment year 1998-99 for which they exercised their option to pay normal rate of duty and they have no option to pay normal rate of duty for further clearances and that the option cannot be withdrawn. In this regard, it is relevant to note the conditions in Notification No.8/98 dated 02.06.1998, which reads as follows.
2. The exemption contained in this notification shall apply only subject to the following conditions, namely:-
(i) A manufacturer has the option to not to avail the exemption under this notification and to pay the normal rate of duty on the goods cleared by him. Such option shall be exercised before effecting clearances at normal rate. Such option, if exercised, shall not be allowed to be withdrawn in the remaining part of the financial year 1998-99. However, if a manufacturer had exercised such option to pay normal duty with reference to notification No.16/97-CE dated 1st April 1997, the manufacturer is barred from availing of exemption under this notification but he need not exercise a fresh option to pay normal duty with reference to this notification.
7. The Constitution Bench of the Honourable Supreme Court in Commissioner of Customs -Vs- M/s.Dhilip Kumar and Company & Ors in Civil Appeal No.3327 of 2007 dated 30.07.1998, examined the correctness of the decision in Sun Export Corporation, Bombay -Vs- Collector of Customs, Bombay (1997) 6 S.C.C.564, namely the question as to what is the interpretative rule to be applied, while interpreting a tax exemption provision / notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied, was answered by the Constitution Bench on the following terms, (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject / assessee and it must be interpreted in favour of the revenue.
(3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands over-ruled.
8. In terms of the above decision, the exemption notification should be interpreted strictly and the burden of proving the applicability would be on the assessee to show that his case comes within the parameters of exemption notification. In the instant case, the asseessee has miserably failed to prove that their case comes within the conditions stipulated in the exemption notification. Therefore, we are of the considered view that the tribunal as well as the adjudicating authority have rightly rejected the case of the assessee.
9. In the light of the above, the appeal is dismissed and the substantial questions of law are answered against the assessee. No costs.
(T.S.S.J.) (V.B.S.J.) 14-09-2018 Index : Yes / No Internet : Yes / No Speaking order / Non speaking order KST To
1. Customs Excise & Service Tax Appellate Tribunal South Zone Bench, Shastri Bhawan Annexe 1st Floor, 26, Haddows Road, Chennai 600 006.
2. Commissioner of Central Excise Chennai II Commissionerate MHU Complex, 692, Anna Salai Nandanam, Chennai 600 036.
T.S.SIVAGNANAM, J.
AND V.BHAVANI SUBBAROYAN, J.
kst C.M.A. No.8 of 2017 14.09.2018