Grasim Industries Ltd. and A.S. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:

.....of rs.1.00 lakh.3. the applicant was engaged in the manufacture of various commodities at nagda. it decided to set up, in 1993, a new plant for manufacture of caustic soda from sodium chloride. in the process, hydrochloric acid emerges as a by product. this required setting up for four plants, for the manufacture, of salt handling plant, secondary brine plant, electrolyser plant and chlorine plant. applicants intimated the jurisdictional superintendent vide its letter dated 21.1.1994 of its intention to set up these plants and by letter of 9.6.1994 requested for a new personal ledger account. in the order impugned in the appeal, the commissioner has found that the three plants are each classifiable under heading 84.79 of the tariff as a machine having individual functions not elsewhere specified, liable to duty.4. after hearing both sides, we find that the applicant has prima facie case on merits as well as on limitation. the total weight and dimensions of each of these plants is stated to be as follows: (i) total weight of all machines, equipments, cables, pipes, accessories, etc-892 metric tonne (ii) piping connecting various sections, processes, machineries, equipments,.....

Judgment:

1. Appeal of M/s Grasim Industries is permitted to be retained here for the reason that its head office is in Mumbai. Therefore, the connected appeal of A.S. Kothari, Vice President of the company also permitted to be retained here.

2. Application by Grasim Industries is for waiver of deposit of duty of Rs 12.47 crores, and a penalty of Rs 12.57 crores. Application by Kothari is for waiver penalty of Rs.1.00 lakh.

3. The applicant was engaged in the manufacture of various commodities at Nagda. It decided to set up, in 1993, a new plant for manufacture of caustic soda from sodium chloride. In the process, hydrochloric acid emerges as a by product. This required setting up for four plants, for the manufacture, of salt handling plant, secondary brine plant, electrolyser plant and chlorine plant. Applicants intimated the jurisdictional Superintendent vide its letter dated 21.1.1994 of its intention to set up these plants and by letter of 9.6.1994 requested for a new personal ledger account. In the order impugned in the appeal, the Commissioner has found that the three plants are each classifiable under Heading 84.79 of the tariff as a machine having individual functions not elsewhere specified, liable to duty.

4. After hearing both sides, we find that the applicant has prima facie case on merits as well as on limitation. The total weight and dimensions of each of these plants is stated to be as follows: (i) Total weight of all machines, equipments, cables, pipes, accessories, etc-892 metric tonne (ii) Piping connecting various sections, processes, machineries, equipments, constituting the plant;-1616 sq. mtrs Weight in Ground space Floors PipingSecondary 265 863 3 5.8 kilometresChlorine 320 1125 2 7.8 kilometres 5. From these dimensions and sizes, it is difficult for us believe prima facie that these plants can be taken to the market for being bought and sold and are otherwise movable. This is not to mention the length of cabling, tubing etc which would have to be removed. The Commissioner has placed considerable reliance upon a panchanama drawn on 20.7.1999 at the plant site. This panchanama attest to the opinion that every part of the plant was fixed to the earth by bolts and nuts.

The reliability of this panchanama is extremely doubtful. The two persons who have signed this panchanama are not stated to have any technical qualification. Whether in the space of two hours in which the panchanama is stated to have been concluded, they could have gone round the entire plant and satisfied themselves that it is not movable is also extremely doubtful. We are therefore not at this stage inclined to attach any credence to the contents of the panchanama, notwithstanding that it has been signed by an officer of the applicant. He is a sales officer not shown to be technically competent in any manner.

6. Apart from this, the applicant has a prima facie case on limitation for more than one reasons. Assuming that putting together of the components resulted in a new product liable to duty, the manufacturer would be entitled to take modvat credit of that duty under Rule 57Q towards discharge of duty of the finished product that he makes. In other words, whatever he pays as duty would come back to him in the form of credit. In that event, he has nothing to gain by not paying that duty and hence non payment will not be with the intention to evade duty. This is the view that has been taken in Essel Packaging Ltd vs CCE 2000 (117) ELT 466 which has been taken note of by the decision of the larger bench in Jay Yuhshin Ltd vs CCE 2000(119) ELT 718 which appears to reiterate the same finding.

7.Apart form the intimation that we have already referred to of setting up of the plants, applicant had furnished to the jurisdictional officers details of the various components imported by it or obtained by it from elsewhere taking caredit under Rule 57Q. The contention of the counsel for the applicant that the jurisdictional range's office is situated in the premises of the factory which was made available by the applicant and therefore the officers could not have failed to see the emergence of the plant bit by bit in the course of their daily activities during a period exceeding two years also has to be taken into account.

8. We therefore waive deposit of the duty demanded and penalty imposed on both applicants and stay their recovery. Having regard to the amount involved, we accept the prayer for early hearing and list the appeals for hearing on 29.8.2001.