Collector of C. Ex. Vs. Shree Bagavathi Tea Estates Ltd.

Collector of C. Ex. vs Shree Bagavathi Tea Estates Ltd.

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Feb 03, 1997

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Citation: sooperkanoon.com/10737
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On: Feb 03, 1997
Subject: Service Tax

Case Summary

AI-generated summary - not the official court judgment text.

Service Tax

Key legal issue: Service Tax

Parties & Advocates

Appellant / Petitioner

Collector of C. Ex.

Respondent

Shree Bagavathi Tea Estates Ltd.

Legal References

Reported In: (1997)(92)ELT240TriDel

Excerpt

1. the respondents in this case manufactured bulk tea. they had sought permission from the department to remove tea coming out of the drier mouth to another factory belonging to them under rule 56b of the central excise rules, 1944 for further processing. they availed of this facility during the period 27-6-1987 to 26-8-1987. at a later date the jurisdictional authorities held that tea coming of the drier mouth was finished product and should not be called semi-finished product. on the allegation that duty was evaded a show cause notice dated 25-9-1987 was issued seeking recovery of rs. 20,917/- leviable on the goods mistakenly cleared under rule 56b. the asstt. collector confirmed the demand. the collector observed that since the department had permitted the movement under rule 56b, the goods could not be said to have been cleared in contravention of that rule. he further observed that the recipient factory had paid duty on the sorted goods and as such there was no cause to demand duty from the consignor factory. he set aside the lower order resulting in the present appeal from the revenue.2. we have heard shri m. haja mohideen, ld. jdr, for the appellant -collector and shri c.n. sreekumar, advocate for the respondents.3. bulk tea coming out of the drier is required to be entered in the rg 1 register. such tea although it is fully manufactured, is not capable of being marketed unless it is sorted into the various grades by which the buyers recognise the tea. this was the basis for the argument of the ld. advocate in this case. it is his claim that without sorting the tea is not marketable and thus not dutiable. he also refers to note with in chapter 9 wherein activity of sorting has been declared to be amounting to manufacture.4. we find that the issue before us is quite narrow and does not require us to go into the question whether sorting is necessary for the bulk tea to become dutiable. the issue is whether the goods were cleared by the respondents in.....

Full Judgment

1. The respondents in this case manufactured bulk tea. They had sought permission from the department to remove tea coming out of the drier mouth to another factory belonging to them under Rule 56B of the Central Excise Rules, 1944 for further processing. They availed of this facility during the period 27-6-1987 to 26-8-1987. At a later date the jurisdictional authorities held that tea coming of the drier mouth was finished product and should not be called semi-finished product. On the allegation that duty was evaded a show cause notice dated 25-9-1987 was issued seeking recovery of Rs. 20,917/- leviable on the goods mistakenly cleared under Rule 56B. The Asstt. Collector confirmed the demand. The Collector observed that since the department had permitted the movement under Rule 56B, the goods could not be said to have been cleared in contravention of that Rule. He further observed that the recipient factory had paid duty on the sorted goods and as such there was no cause to demand duty from the consignor factory. He set aside the lower order resulting in the present appeal from the Revenue.

2. We have heard Shri M. Haja Mohideen, ld. JDR, for the appellant -Collector and Shri C.N. Sreekumar, Advocate for the respondents.

3. Bulk tea coming out of the drier is required to be entered in the RG 1 register. Such tea although it is fully manufactured, is not capable of being marketed unless it is sorted into the various grades by which the buyers recognise the tea. This was the basis for the argument of the ld. Advocate in this case. It is his claim that without sorting the tea is not marketable and thus not dutiable. He also refers to note with in Chapter 9 wherein activity of sorting has been declared to be amounting to manufacture.

4. We find that the issue before us is quite narrow and does not require us to go into the question whether sorting is necessary for the bulk tea to become dutiable. The issue is whether the goods were cleared by the respondents in contravention of Rule 56B or not.

Collector has observed that once the department had permitted such a movement, no allegation of contravention of that rule could be levelled against the assessee. In holding so he is quite correct. The department may have made an error in extending the facility, but having extended it, the department's right to question the removal following the permission is lost. The Collector is also correct in observing that since the duty was paid by the consignee unit, the same cannot be demanded from the consignor unit again. We find no infirmity in the Collector's order and therefore reject this appeal from the Revenue.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Collector of C. Ex. vs Shree Bagavathi Tea Estates Ltd. Same Subject Service Tax

Service Tax Belonging to chapter 9 set aside Has been Out of