The General Manager Vehicle Vs. Cce

The General Manager Vehicle vs Cce

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided May 01, 2006

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Citation: sooperkanoon.com/42527
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Judge: M T K.C.
Decided On: May 01, 2006
Subject: Excise

Case Summary

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

Excise

Key legal issue: Excise

Parties & Advocates

Appellant / Petitioner

The General Manager Vehicle

Respondent

Cce

Legal References

Reported In: (2006)(110)ECC572

Excerpt

.....accounted for the goods entering these in the statutory records. therefore, show cause notice was issued to them demanding duty of rs. 42,27,499/- and for imposition of penalty under section 11ac of central excise act beside imposition of penalty under rule 9(1), 52a, 53, 173g, 226 and 173q of the central excise rules. the case was adjudicated by the commissioner under the impugned order dropping the demand of rs. 42,27,499/-. he did not impose any penalty under section 11ac of the act. however, he imposed a penalty of rs. 1,00,000/- on m/s. vehicle factory, jabalpur under rule 173q of the rules.2. the contention of the appellants is that under rule 57f(3) or 57f(4), for clearance of the inputs as such or after processing challan in prescribed proforma are required to be issued by debiting an amount equivalent to the amount of credit of duty attributable to such inputs or the inputs contained in such partially processed inputs. all the goods cleared by them were exempt from whole of the duty of excise and additional duties leviable thereon under notification no. 62/95-ce dated 16th june, 1995, notification no. 63/95 and 64/95, both dated 16.3.1995 and notification no. 70/92-ce dated 17.6.92. military vehicles issued by the vehicle factory jabalpur to the armed forces whether or not fitted with weapons and parts thereof falling, under chapter 87 under heading no. 87.10 are specialised and peculiar to the requirement of defence services. the same can not be called as goods since it is completely not known to the market as such and the same can also ordinarily not come to the market for being bought and sold. the claim of the adjudicating authority that non-observation of the procedure has been admitted by vfj do not hold much water since it is settled principle of the law that admission made in ignorance of correct position of law and facts can not take the place of evidence in the course of adjudication of the case.3. it is evident that contracts for supply of.....

Full Judgment

1. This appeal is filed by the G.M. Vehicle Factory, Jabalpur against imposition of penalty of Rs. 1,00,000/- on the appellants. During scrutiny of the record of M/s. G.M. Vehicle Factory, Jabalpur, it was found that during the period from December 1994 to March, 1996, they manufactured and cleared 101 chasis for which no evidence of payment of duty was found. On inquiry, it was informed that these chasis have been sent to various job workers for building bodies thereon. The appellant could not produce any challan as required under erstwhile Rules 57F3/57F4 of the Central Excise Rules, 1944 nor they accounted for the goods entering these in the statutory records. Therefore, show cause notice was issued to them demanding duty of Rs. 42,27,499/- and for imposition of penalty under Section 11AC of Central Excise Act beside imposition of penalty under Rule 9(1), 52A, 53, 173G, 226 and 173Q of the Central Excise Rules. The case was adjudicated by the Commissioner under the impugned order dropping the demand of Rs. 42,27,499/-. He did not impose any penalty under Section 11AC of the Act. However, he imposed a penalty of Rs. 1,00,000/- on M/s. Vehicle Factory, Jabalpur under Rule 173Q of the Rules.

2. The contention of the appellants is that under Rule 57F(3) or 57F(4), for clearance of the inputs as such or after processing challan in prescribed proforma are required to be issued by debiting an amount equivalent to the amount of credit of duty attributable to such inputs or the inputs contained in such partially processed inputs. All the goods cleared by them were exempt from whole of the duty of excise and additional duties leviable thereon under Notification No. 62/95-CE dated 16th June, 1995, Notification No. 63/95 and 64/95, both dated 16.3.1995 and Notification No. 70/92-CE dated 17.6.92. Military vehicles issued by the Vehicle Factory Jabalpur to the Armed Forces whether or not fitted with weapons and parts thereof falling, under Chapter 87 under heading No. 87.10 are specialised and peculiar to the requirement of Defence Services. The same can not be called as goods since it is completely not known to the market as such and the same can also ordinarily not come to the market for being bought and sold. The claim of the adjudicating authority that non-observation of the procedure has been admitted by VFJ do not hold much water since it is settled principle of the law that admission made in ignorance of correct position of law and facts can not take the place of evidence in the course of adjudication of the case.

3. It is evident that contracts for supply of inputs used in relation to manufacture of 100 Nos. of Chassis were made in the exercise of the executive power of the Union of India by VFJ and an officer of the Union of India does not have any existence independently. Hence penalty on him is not imposable.

4. It was argued for the Revenue that the Commissioner has dropped the demand of duty and did not impose any penalty for evasion of the duty.

The penalty was imposed by him for non-observations of the procedure for sending the goods to job worker without prescribed challan.

Although Notification No. 70/92 dated 17.06.92, as amended, gives exemption to the goods mentioned therein and used by Indian Ordinance Factory belonging to the Central Government, however, such exemption notification prescribes certain conditions. The conditions includes giving undertaking by the manufacturer to the jurisdictional Commissioner or Dy. Commissioner that the inputs shall he used in or in relation to the final products in his factory and in the manufacture of goods by any job workers for further use in or in relation to the manufacture of final products in his factory. The manufacturer shall also produce an evidence that the said goods have been so used. The final products shall be supplied to the Ministry of Defence for official purposes and the said manufacturer shall produce evidence to the effect that the final products have been so supplied; and the said manufacturer undertakes the responsibility of discharging the liabilities in respect of Central Excise Duty leviable on the final products. The conditions prescribed under the notification are for the job worker. If any, penalty was required to be imposed, it was required to be imposed only on the job worker. This plea was taken by applicant in reply to the show cause notice. In the internal pages at 11 and 12 of the reply to the following effects: It is humbly reiterated that although we have not issued proper documents as prescribed in Rule 57-F but all such chasis were issued to job worker under VFJs nominal I/Vrs. And gate passes and their return and entry in VFJ are duly supported by document. (Annexure B1, B2, B3, B4) are enclosed. Since the motor vehicle are manufactured mostly for Defence purposes, the procedure of Rule 57-F is not being followed or can not be followed properly because of paramountancy of Secretary for Defence which is most vital for the safety and security of the country. In this most delicate sector of Defence, it does not meant that sufficient records about manufacture of vehicle and their outer movement are not maintained. In VFJ being Defence Establishment, extreme care is exercised even for minute things. Therefore, no allegation of misleading and intentional evasion of duty can at all be inferred. If all the activities of VFJ are open to others, the secrecy will be wholly eroded and can put the country to un-imaginable problems and difficulties therefore, suffice to say that proper internal records exist fully accounting for the vehicle right from inception to stage of final product and removal thereof to the Defence wings and the Civil trade. There may be procedural irregularities but there is no revenue implication and provision of substantive C. Excise Law or strictly followed and adhered to.

Vehicle Factory Jablapur bags to focus the attention of the Noticing Authority that vide exemption Notification No. 70/92 CE dated 17.6.92 as lastly amended by Notification No. 7/98 CE dated 2.6.98, the Central Government under public interest have exempted goods manufactured in the factory as job work and used in the undertaking specified in the Table annexed thereto, in or in relation to the manufacture of final product for supply to the Ministry of Defence for official purpose.

Vehicle Factory is a unit of Indian Ordinance Factories belonging to the Central Govt. (Sl.No. 6 of the Table of Notification No. 70/92).

This exemption has been granted under the provisions of Section 5-A(1) of CEA 44. This Section 5-A and Section 37 of the Act, in fact declare that the Government is competent to relax the provisions of the Central Excise Act, 1944 and the Rules made thereunder.

5. I find that when a specific defence was taken by the appellants, no findings has been given by the Commissioner on this particular aspect for imposition of penalty of Rs. 1,00,000/- by not following the procedure prescribed for goods sent for job work. Therefore, the order of the Commissioner imposing penalty is set aside and the matter is remanded back to give a specific finding on the claim of the appellant regarding exemption under Notification No. 70/92-CE dated 17.6.92 as amended and then pass an order on the issue of imposition of penalty.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties The General Manager Vehicle vs Cce Same Subject Excise Same Judge M T K.C.

Excise In the manufacture of goods Adjudicating authority In or in relation to Additional duties In the course of executive power Bought and sold