Patwari Udyog Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. these are two appeals filed by m/s. patwari udyog and m/s. krishna steel industries against the order-in-original nos. 28/2002 and 26/2002 both dated 8-2-2002 respec- lively. as the issues involved in both the appeals are same, both the appeals are being disposed of by one common order.2. shri r. santhanam, learned advocate, submitted that both the appellants manufacture forged steel grinding media balls; that according to the appellants these goods were classifiable under heading 72.08 of the schedule to the central excise tariff act whereas the department wanted to classify them under sub-heading no. 7308.90 of the tariff; that the appellate tribunal vide final order no. e 1154-1157/1998-b, dated 28-7-98 [1999 (112) e.l.t. 142 (t)] rejected their appeals; that, however, the tribunal vide misc. order nos.122-124/99 b-1, dated 22-10-99 allowed their applications for rectification of mistake as the issue of time bar was not examined; that the tribunal remanded the matter to the jurisdictional commissioner for a fresh decision with regard to the issue of time bar; that the commissioner under the impugned order no. 28/2002 in respect of parwari udyog has held that demand beyond six months prior to the issue of show cause notice is not sus-tainable; that the commissioner has, however, rejected their claim for grant of modvat credit and also the benefit of ss1 exemption without any valid basis or reasons; that the commissioner ought to have followed the binding decisions of the courts and tribunals and he ought to have allowed modvat credit of the duty paid on the inputs; that similarly he should have allowed them the benefit of ssi exemption/lower rate of duty.3. in respect of appeal filed by m/s. krishna steel industries, the learned advocate submitted that the show cause notice dated 15-7-1987 was issued to them for demanding duty for the period from 28-2-1986 to 31-3-1987; that the commissioner under the impugned order no. 26/2002 has confirmed the entire demand of duty holding that the appellants had suppressed the details of goods manufactured and cleared by them. the learned advocate, further, submitted that they had filed declarations in 1982 in respect of steel balls and as such extended period of limitation cannot be invoked, that correspondence was also exchanged between them and the department in 1983 in respect of steel balls, that they had also filed a declaration dated 7-5-1986 and accordingly there was no suppression on their part. he relied upon the decision in the case of blue max sports wear v. cce, new delhi, 2002 (143) e.l.t. 581 (t) and padmini products v. cce, 1989 (43) e.l.t. 195 (s.c) wherein it has been held that "failure to pay duty or take out a licence is not necessary due to fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provisions of the act." reliance has also been placed on the decisions in the case of usha udyog v. cce, kanpur,e.l.t.1031 (t). and garg ispat udyog ltd. v. cce, jaipur, 2001 (136) e.l.t. 918 (t). finally, the learned advocate claimed the benefit of small scale exemption and the modvat credit of the duty paid on the inputs. he also mentioned that the adjudicating authority under order no. 25/2002, dated 7-2-2002 in respect of m/s. commercial steels engineering corporation has held that extended period of time limit is not invocable since the unit was earlier under exempted sector that the adjudicating authority has also extended the ssi exemption.4. countering the arguments. shri jagdish singh learned depart mental representative, submitted that as far krishna steel industries is con cerned, they had not filed any declaration after 1982; that the department came to know about their being engaged in the production of forged grinding media ball only on 18-5-87 when the excise officers visited their factory premises; that no documentary proof has been adduced by them to show that the declaration was filed by them in 1986.the learned departmental representative relied upon the decision in the case of bpl india ltd. v. cce, 2002 (143) e.l.t. 3 (s.c.) wherein the supreme court has held that longer period of limitation is invocable as the appellants had not given necessary intimation to the department before clearing the products manufactured by them. reliance has also been placed on the decision in the case of madras petro-chem ltd. v.cce, madras, 1999 (108) e.l.t. 611 (s.c.). the learned departmental representative finally submitted that as the tribunal had remanded the matter only for considering the time limit aspect, the commissioner was not to consider the aspect of availability of modvat credit and small scale exemption notification.5. we have considered the submissions of both the sides. we observe that the tribunal, vide final order no. e/1154-1157-98-b1, dated 28-7-98, [1999 (112) e.l.t. 142 (t)j has decided the classification of grinding media ball manufactured by both the appellants and dismissed the appeals filed by them. however, the appellants had also filed the applications for rectification of mistake which were disposed of by the tribunal vide misc. order nos. 122-124/99-b1, dated 22-10-1999 by observing that "our orders are recalled in order to deal with" the ground of time bar and as "the issue of time bar was not examined and a finding recorded at the adjudicating stage" the case is required to be remanded for a decision by the commissioner on this issue of time bar.in the rom the question of availability of small scale exemption and the modvat credit were also raised. the tribunal had dealt with them as under: "3. the rom further submits that the appellants should have been allowed the benefit of small scale exemption and also modvat benefit in r/o duty paid on inputs, even though these reliefs were not claimed in the appeal petitions or during arguments. rectification of mistake applications are limited in scope. only mistakes apparent on the face of the records can be corrected through them. eligibility for exemption and modvat credit are to be claimed and permitted after examination of facts of the case. since these claims were not relied before, it is not open for us to deal with them in the rom application." 6. it is thus evident that tribunal has categorically refused to deal with the question of modvat credit and ssi notification in the rom application. the tribunal, therefore, allowed the rom on the issue of time bar and modified the final order "to the extent of remanding the petitioner's case to the jurisdictional commissioner for a fresh decision with regard to the issue of time bar." the scope of de novo adjudication is limited to the directions contained in the order by which the matter was remanded. we do not, therefore, find any infirmity in the impugned orders for not considering the aspect of availability of modvat credit of the duty paid on the inputs used in or in relation to the manufacture of the final products. we, however, observe that the commissioner has given his findings about ssi notification by holding that "the exemption would be available to them. the duty have to be demanded and calculated accordingly." the revenue has neither come in appeal against the said findings nor has filed any cross objection.accordingly the benefit of ssi has to be extended to them and duty amount has to be computed after allowing the ssi exemption.7. the commissioner, in respect of m/s. patwari udyog, has held that "extra limitation period for demanding the duty beyond normal period.... would not be attracted" as "there is no act of mis-declaration or non-declaration or suppression of fact or mis-representation or fraud etc.". the commissioner came to the said findings as patwari udyog was earlier under exempted sector not duly licensed or registered and therefore, they were not filing proper classification list and price list and "the demands were raised in view of the changed circumstances i.e. due to introduction of new tariff." all these factors are present in the case of m/s. krishna steel industries also. it has also not been disputed by the revenue that a declaration was filed by them on 18-6-82 and the department had also taken up the matter of non-submission of declaration in 1983, it cannot be claimed that the fact of manufacture of the impugned goods was suppressed from the department. they were also under the exempted sector and duty had been demanded due to introduction of new central excise tariff with effect from 28-2-1986. we are thus of the view that the extended period of limitation is not invocable for demanding duty from m/s. krishna steel industries. they would be liable to pay duty, if any, in respect of the normal period of six months only. the adjudicating authority is thus directed to re-compute the amount of duty in respect of both the appellants.

Judgment:
1. These are two appeals filed by M/s. Patwari Udyog and M/s. Krishna Steel Industries against the Order-in-Original Nos. 28/2002 and 26/2002 both dated 8-2-2002 respec- lively. As the issues involved in both the appeals are same, both the appeals are being disposed of by one common order.

2. Shri R. Santhanam, learned Advocate, submitted that both the Appellants manufacture forged steel grinding media balls; that according to the Appellants these goods were classifiable under Heading 72.08 of the Schedule to the Central Excise Tariff Act whereas the Department wanted to classify them under sub-heading No. 7308.90 of the Tariff; that the Appellate Tribunal vide Final Order No. E 1154-1157/1998-B, dated 28-7-98 [1999 (112) E.L.T. 142 (T)] rejected their appeals; that, however, the Tribunal vide Misc. Order Nos.

122-124/99 B-1, dated 22-10-99 allowed their applications for rectification of mistake as the issue of time bar was not examined; that the Tribunal remanded the matter to the jurisdictional Commissioner for a fresh decision with regard to the issue of time bar; that the Commissioner under the impugned Order No. 28/2002 in respect of Parwari Udyog has held that demand beyond six months prior to the issue of show cause notice is not sus-tainable; that the Commissioner has, however, rejected their claim for grant of Modvat credit and also the benefit of SS1 exemption without any valid basis or reasons; that the Commissioner ought to have followed the binding decisions of the Courts and Tribunals and he ought to have allowed Modvat credit of the duty paid on the inputs; that similarly he should have allowed them the benefit of SSI exemption/lower rate of duty.

3. In respect of Appeal filed by M/s. Krishna Steel Industries, the learned Advocate submitted that the show cause notice dated 15-7-1987 was issued to them for demanding duty for the period from 28-2-1986 to 31-3-1987; that the Commissioner under the impugned Order No. 26/2002 has confirmed the entire demand of duty holding that the Appellants had suppressed the details of goods manufactured and cleared by them. The learned Advocate, further, submitted that they had filed declarations in 1982 in respect of steel balls and as such extended period of limitation cannot be invoked, that Correspondence was also exchanged between them and the Department in 1983 in respect of steel balls, that they had also filed a declaration dated 7-5-1986 and accordingly there was no suppression on their part. He relied upon the decision in the case of Blue Max Sports Wear v. CCE, New Delhi, 2002 (143) E.L.T. 581 (T) and Padmini Products v. CCE, 1989 (43) E.L.T. 195 (S.C) wherein it has been held that "failure to pay duty or take out a licence is not necessary due to fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provisions of the Act." Reliance has also been placed on the decisions in the case of Usha Udyog v. CCE, Kanpur,E.L.T.1031 (T). and Garg Ispat Udyog Ltd. v. CCE, Jaipur, 2001 (136) E.L.T. 918 (T). Finally, the learned Advocate claimed the benefit of small scale exemption and the Modvat credit of the duty paid on the inputs. He also mentioned that the adjudicating authority under Order No. 25/2002, dated 7-2-2002 in respect of M/s. Commercial Steels Engineering Corporation has held that extended period of time limit is not invocable since the unit was earlier under exempted sector that the Adjudicating Authority has also extended the SSI exemption.

4. Countering the arguments. Shri Jagdish Singh learned Depart mental Representative, submitted that as far Krishna Steel Industries is con cerned, they had not filed any declaration after 1982; that the Department came to know about their being engaged in the production of Forged Grinding Media Ball only on 18-5-87 when the excise officers visited their factory premises; that no documentary proof has been adduced by them to show that the declaration was filed by them in 1986.

The learned Departmental Representative relied upon the decision in the case of BPL India Ltd. v. CCE, 2002 (143) E.L.T. 3 (S.C.) wherein the Supreme Court has held that longer period of limitation is invocable as the Appellants had not given necessary intimation to the Department before clearing the products manufactured by them. Reliance has also been placed on the decision in the case of Madras Petro-Chem Ltd. v.CCE, Madras, 1999 (108) E.L.T. 611 (S.C.). The learned Departmental Representative finally submitted that as the Tribunal had remanded the matter only for considering the time limit aspect, the Commissioner was not to consider the aspect of availability of Modvat credit and small scale exemption notification.

5. We have considered the submissions of both the sides. We observe that the Tribunal, vide Final Order No. E/1154-1157-98-B1, dated 28-7-98, [1999 (112) E.L.T. 142 (T)J has decided the classification of grinding media ball manufactured by both the Appellants and dismissed the appeals filed by them. However, the Appellants had also filed the applications for rectification of mistake which were disposed of by the Tribunal vide Misc. Order Nos. 122-124/99-B1, dated 22-10-1999 by observing that "Our orders are recalled in Order to deal with" the ground of time bar and as "the issue of time bar was not examined and a finding recorded at the Adjudicating stage" the case is required to be remanded for a decision by the Commissioner on this issue of time bar.

In the ROM the question of availability of small scale exemption and the Modvat credit were also raised. The Tribunal had dealt with them as under: "3. The ROM further submits that the Appellants should have been allowed the benefit of small scale exemption and also Modvat benefit in r/o duty paid on inputs, even though these reliefs were not claimed in the Appeal petitions or during arguments. Rectification of Mistake applications are limited in scope. Only mistakes apparent on the face of the records can be corrected through them.

Eligibility for exemption and Modvat credit are to be claimed and permitted after examination of facts of the case. Since these claims were not relied before, it is not open for us to deal with them in the ROM application." 6. It is thus evident that Tribunal has categorically refused to deal with the question of Modvat credit and SSI Notification in the ROM application. The Tribunal, therefore, allowed the ROM on the issue of time bar and modified the Final Order "to the extent of remanding the petitioner's case to the Jurisdictional Commissioner for a fresh decision with regard to the issue of time bar." The scope of de novo adjudication is limited to the directions contained in the Order by which the matter was remanded. We do not, therefore, find any infirmity in the impugned orders for not considering the aspect of availability of Modvat Credit of the duty paid on the inputs used in or in relation to the manufacture of the final products. We, however, observe that the Commissioner has given his findings about SSI Notification by holding that "the exemption would be available to them. The duty have to be demanded and calculated accordingly." The Revenue has neither come in Appeal against the said findings nor has filed any Cross Objection.

Accordingly the benefit of SSI has to be extended to them and duty amount has to be computed after allowing the SSI exemption.

7. The Commissioner, in respect of M/s. Patwari Udyog, has held that "extra limitation period for demanding the duty beyond normal period.... would not be attracted" as "there is no act of mis-declaration or non-declaration or suppression of fact or mis-representation or fraud etc.". The Commissioner came to the said findings as Patwari Udyog was earlier under exempted sector not duly licensed or registered and therefore, they were not filing proper classification list and price list and "the demands were raised in view of the changed circumstances i.e. due to introduction of new Tariff." All these factors are present in the case of M/s. Krishna Steel Industries also. It has also not been disputed by the Revenue that a Declaration was filed by them on 18-6-82 and the Department had also taken up the matter of non-submission of declaration in 1983, it cannot be claimed that the fact of manufacture of the impugned goods was suppressed from the Department. They were also under the exempted sector and duty had been demanded due to introduction of new Central Excise Tariff with effect from 28-2-1986. We are thus of the view that the extended period of limitation is not invocable for demanding duty from M/s. Krishna Steel Industries. They would be liable to pay duty, if any, in respect of the normal period of six months only. The Adjudicating Authority is thus directed to re-compute the amount of duty in respect of both the Appellants.