Madras High Court
M/S.S.S.D. Oil Mills Company Limited vs Customs on 4 December, 2013
Author: T.S.Sivagnanam
Bench: Chitra Venkataraman, T.S.Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 4-12-2013 CORAM THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN AND THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM CIVIL MISCELLANEOUS APPEAL No.3326 of 2013 and M.P.Nos.1 and 2 of 2013 M/s.S.S.D. Oil Mills Company Limited Represented by its Managing Director D.Ramamoorthy 132, Village Road, Iyyappanthangal Chennai 600 056. .. Appellant vs 1.Customs, Excise and Service Tax Appellate Tribunal South Zonal Bench Shastri Bhavan Annexe, 1st Floor 26, Haddows Road Chennai 600 006. 2.The Commissioner of Central Excise Chennai-II Commissionerate M.H.U. Complex Nandanam, Chennai 600 035. .. Respondent Civil miscellaneous appeal preferred under Section 35G of the Central Excise Act, 1944, against the miscellaneous order No.41613/2013 dated 3.7.2013, on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. For Appellant : Mr.S.Murugappan For Respondent : Mr.P.Mahadevan Senior Central Government Standing Counsel for R2 R1-Tribunal JUDGMENT
(Judgment of the Court was delivered by T.S.SIVAGNANAM, J.) This appeal by the assessee is directed against the Miscellaneous Order passed by the Tribunal in No.41613/2013 dated 3.7.2013. By the said order, the Tribunal rejected the assessee's application for modification of the earlier order dated 6.3.2013, in and by which, the appellant/assessee was directed to make a pre-deposit of Rs.1 crore within a period of eight weeks.
2.The facts, which led to the filing of the appeal before the Tribunal, are that the appellant is a company engaged in the manufacture of crude oils like cotton seed, sunflower, rice bran, etc., and also manufacturing products like vanaspathi, bakery shortening, etc., which were exempted from excise duty. There are three products viz. Fatty Acid, Soap Stock and Spent Earth, which are resultant products of processing of the refining of crude oil. The question was whether excise duty is leviable on these products. The Revenue's contention was that on account of the rescinding of the Notification No.115/75-CE dated 1.3.2006, these products were leviable to central excise duty. The appellant continued to contend that they are eligible for exemption and they are also covered by the Exemption Notification No.8/2003-CE for Small Scale Units and also claiming the benefit of Notification No.89/95-CE dated 8.5.1995.
3.The Revenue issued four show cause notices to the appellant/assessee for the period from March, 2006 to March, 2010; April, 2010 to March, 2011; March, 2006 to March, 2010 and April, 2010 to March, 2011. The duty claimed in the show cause notices, was Rs.1,24,69,314/-; Rs.34,48,773/-; Rs.1,38,41,070/- and Rs.27,73,499/- respectively. On adjudication, the proposals made in the show cause notices, were confirmed. The assessee filed appeals to the Tribunal. The Managing Director also filed appeals and there were four appeals filed against the orders passed pursuant to the issuance of four show cause notices. The appellant/assessee also filed an application for waiver of pre-deposit of the dues arising as a result of the orders passed by the Original Authority.
4.The contention of the appellant/assessee was that they are eligible for exemption under Notification No.89/95-CE dated 8.5.1995. It was also contended that Fatty Acid, Soap Stock and Spent Earth are nothing but wastes, that arise in the process of refining the crude oil, and these products being sold, could not make them dutiable. In this regard, reliance was placed by the assessee on a stay order passed by the Tribunal in respect of an appeal in Appeal No.E/321/2012 dated 17.7.2012, wherein, the Tribunal waived the requirement of pre-deposit.
5.The Revenue resisted the contention raised by the appellant/assessee, by submitting that the Hon'ble Supreme Court in the case of CCE VIZAG V. JOCIL LTD. (2011 (263) ELT 9 (SC)), has held that the Fatty Acid is an excisable product. The further reliance was placed by the Revenue on the decisions of the Tribunal. The Revenue further contended that the stay order granted by the Tribunal on 17.7.2012, in respect of another matter, was made without noticing the decision of the Hon'ble Supreme Court as well as the Delhi Bench of the Tribunal.
6.On considering the contentions raised, and taking note of the decision of the Supreme Court in the case of JOCIL LTD. (cited supra), the Tribunal held that the Hon'ble Supreme Court has observed that "Palm Stearin" emerging as a by-product during the manufacture of crude oil, is a dutiable product and classifiable under Chapter 38 of the Central Excise Tariff Act. After noticing the decisions of the Tribunal, which were relied on by the appellant/assessee, the Tribunal observed that there is no specific finding in respect of "Palm Fatty Acid", which is the main disputed item giving rise to most part of the amount confirmed against the assessee. Further, the Tribunal, in respect of the demand for Spent Earth, had concluded that prima facie, it is a waste product and the demand against the assessee in respect of that product, was only very minimum. That apart, the Tribunal pointed out that the earlier stay order in some other assessee's case, was granted without noticing the decision of the Hon'ble Supreme Court. Thus, by recording the above finding, the Tribunal exercised discretion and directed pre-deposit of Rs.1 crore within a period of eight weeks.
7.Thereafter, the assessee did not comply with the order within the time permitted by the Tribunal, but filed a miscellaneous application for modification of the said order, the reason being that the assessee came to know about the decision of the Mumbai Tribunal in the case of MAHESWARI SOLVENT EXTRACTION LTD. V. COMMISSIONER OF CENTRAL EXCISE, NAGPUR, reported in 2013-TIOL-978-CESTAT-MUMBAI and therefore, sought for modification of the condition imposed in the said order, and total waiver of pre-deposit.
8.The Tribunal, after taking note of the submission, observed that it had exercised the discretion in the case of the appellant, after noticing that in the earlier case, stay was granted without reference to the decision of the Hon'ble Supreme Court in the case of JOCIL LTD. (supra). Therefore, the Tribunal held that there was no ground to modify the earlier order. Aggrieved by the same, the appellant/assessee has filed this appeal.
9.Mr.S.Murugappan, learned Counsel appearing for the appellant/assessee, while reiterating the stand taken by them before the Tribunal, laid emphasis on the decision of the Mumbai Tribunal and submitted that the Tribunal ought to have considered the same, since in respect of the very same product, the Tribunal held that it is a waste and the appellant therein was entitled to the benefit of the exemption Notification No.89/95-CE dated 8.5.1995.
10.We have heard the learned Senior Central Government Standing Counsel, appearing for the first respondent, on the above submissions.
11.Firstly, it is to be noted that the decision of the Mumbai Tribunal was in respect of a case, where the residues were in the form of Gums/Waxes and Recovered Oil/Fatty Acids and those goods are marketable, and considering the factual situation and considering the Notification, the Tribunal granted the relief. But, so far as the case on hand is concerned, the Tribunal held that in the case of the appellant/assessee, palm fatty acid is the main disputed item and in the decision of the Mumbai Tribunal, there was no specific reference to the said point, whereas, in the decision of the Hon'ble Supreme Court in JOCIL LTD. Case (cited supra), the Hon'ble Supreme Court held that palm stearin emerging as a by-product during the manufacture of crude oil, is a dutiable product and classifiable under Chapter 38 of the Central Excise Tariff Act. Therefore, this issue has to be decided only at the final adjudication of the appeal filed by the appellant before the Tribunal. The Tribunal while considering the prima facie case, has taken note of the product, which is in dispute viz. Palm fatty acid, and exercised discretion and directed the pre-deposit of Rs.1 crore as against the total demand of Rs.1,24,69,314/- as duty and equivalent amount as penalty and Rs.1 crore as penalty on the Managing Director.
12.The learned Counsel for the appellant/assessee submitted that considering the conflicting views of the Tribunal, the assessee prays for reduction in deposit amount. Taking note of the reasons stated by the learned Counsel for the assessee, and the decisions cited supra, we find that interest of justice would be served and the interest of the revenue would also be protected by directing the assessee to deposit a sum of Rs.75,00,000/- within a period of six weeks from today as against the direction of the Tribunal to deposit Rs.1 crore. As regards the applicability of the decision of the Mumbai Bench of the Tribunal, the same has to be thrashed out by the appellant/assessee only at the time of the final hearing of the appeal before the Tribunal.
13.In the light of the above view taken by us, the order of the Tribunal is modified that the appellant/assessee shall deposit a sum of Rs.75,00,000/- (Rupees seventy-five lakhs only) within a period of six weeks from today. With the above modification, this civil miscellaneous appeal is dismissed. No costs. Consequently, connected MPs are closed.
(C.V.,J.) (T.S.S.,J.) 4-12-2013 Index: yes/no Internet: yes nsv To:
1.The Customs, Excise and Service Tax Appellate Tribunal South Zonal Bench Shastri Bhavan Annexe, 1st Floor 26, Haddows Road Chennai 600 006.
2.The Commissioner of Central Excise Chennai-II Commissionerate M.H.U. Complex Nandanam, Chennai 600 035.
CHITRA VENKATARAMAN, J.
AND T.S.SIVAGNANAM. J.
nsv C.M.A.No.3326 of 2013 DT: 4-12-2013