Kadi Re-rolling Mills (P) Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. appeal 4291/99 is against the order 1331/99 dated 8.9.99 of the commissioner (appeals). appeal 1056/02 is against the order 1057/02 dated 7.1.02 of the commissioner (appeals). in both these orders each of these, the commissioner (appeals) disposed of an appeal against order 3/addl.commr./98 dated 11.12.97. the commissioner (appeals) passed his first order 1331/99 on the appeal filed by the assessee on this order. he dismissed the appeal for failure on the part of the assessee to deposit entire duty and penalty. the assessee appealed this order and the tribunal, by its order on 12.4.01 allowed the stay application filed by the assessee waiving deposit of the duty and penalty and staying recovery.2. the file of the commissioner (appeals) which has been made available by the departmental representative indicates that thereupon the assessee approached the commissioner (appeals) drawing attention to tribunal's order saying that it had not heard from him the consequence of the order. the commissioner (appeals), thereupon listed the same appeal for hearing and after hearing the parties passed the impugned order in appeal 1057/02.3. it appears that the commissioner (appeals) has quite wrongly interpreted the tribunal's stay order to be one of disposal of appeal and remanding the matter back. nothing else could justify his appeal.whatever the reason the effect remand that his earlier order had not been set aside and the later order (16/02) is non est and is accordingly set aside. so far as appeal 4291/99 is concerned, the tribunal had prima facie found ground fro waiver of deposit of duty and penalty. since the commissioner (appeals)'s order has been passed only on the ground that the assessee had not deposited the duty and penalty, that order is set aside and the appeal allowed and the matter remanded to the commissioner for deciding the appeal on merits without insisting on further deposit.4. we turn next to the remaining appeal before us of the appellant 1056/02. by the order impugned in this appeal, the commissioner (appeals) has confirmed the denial by the asst. commissioner of the benefit of the exemption contained in notification 208/83 to the goods, bars, rounds and angle of the steel manufactured by the appellant. the notification exempts from duty goods specified in column 3 of the table to it "final products specified in column 3 of the goods manufactured out of the goods specified in column 2 on which the excise duty or additional duty of customs had already been paid. the explanation to the notification contained a deeming provision that of stocks in the country except such stock as has been duty payable shall be deemed to be on which duty has already been paid. the notification is subject to the condition that no credit of the duty paid on inputs have been taken under rule 56a. the notification does not apply to goods produced and manufactured in a free trade zone. the claim of the appellant has been denied on the ground that it did not produce evidence that excise duty or additional duty of customs had been paid on the inputs for some of the goods from august 1983 to november 1985 which it utilised in the manufacture of the final product.5. the contention of the counsel for the appellant is that there was no requirement on the part of the appellant to produce evidence of payment of duty by virtue of the explanation to the notification, the inputs that it obtained were deemed t be inputs duty paid; the demand does not even allege tat they were clearly recognisable as non-duty paid.6. the departmental representative contends that the invoice of the sellers of the goods indicated them to be from ship broker. therefore he says that the ratio of the tribunal decision in digrania steel inds.v. cce 1994 (50) ecr 437 will apply and exemption has been rightly denied.7. counsel for the appellant states that he does not press the claim contained in the appeal against the commissioner (appeals)'s order to the exemption contained in 208/83. his claim before us is that the deemed proforma credit available in terms of order of the based in 56a(3)(i)(b) reproduced in bombay trade notice 34/83 dated 19.10.83 1983 (2) elt t181 of the duty paid deemed on the scrap when it utilised in the manufacture of the final product.8. the benefit of the exemption contained in notification 208/83 was denied on the ground that the goods had been obtained from a ship breaker and clearly identifiable as ship breaking scrap and appropriate duty had not been paid. the contention of the appellant that the direction issued under rule 56a(3)(i)(b) of central government which deems to be the duty paid of scrap fresh and unused purchased from outside and lying in stock which reroller on or after 1.4.83 does not contain any explanation excluding from its "such stock of scrap as clearly recognisable as non-duty paid or clear to duty". he cites the decision of the tribunal in cce v. vinubhai steel appeal e/1051 and ors. in support. in this decision, the tribunal was concerned with the order b-22/5/86 tru dated 7.4.86 of the central government passed in excess of the provision of second proviso under sub-rule (2) of rule 57g directing that ingots, or material or iron and steel purchased from outside or lying in stock on or after 1.4.84 that rerollers will be deemed to have paid duty. the tribunal noting that this order did not contain any provisions except from its "such material as was clearly recognisable as non-duty paid or having been subject to nil rate of duty, confirming the extension of the benefit of the deemed credit to goods which were clearly recognisable as non-duty paid. the tribunal was following the ratio of laxmi steel v. cce 1997 (23) rlt 623 which came to the same conclusion with regard to the government order ts-36/94 relating to ingots or rolling mills lying in stock after 1.4.94.9. in reply to an objection from us, the central government had no power to deem to duty paid clearly recognisable as non-duty paid and rule 56a(3)(i)(b) and second proviso under rule 57g(2) both only permitted the government to deem to be duty paid such stock as were not clearly recognisable as non-duty paid, counsel for the appellant cites the madras high court judgment of the asst. commissioner of commercial tax v. dharmendra 1988 (3) scc 578. paragraph 5 of this judgment, the supreme court rejected the contention of the asst. commissioner of commercial taxes that an order of government of karnataka 13/1969 was of no legal effect as there was no statutory provision under which the concession can be granted. the board said "we totally fail to see how the dy. asst. commissioner of sales tax who are functionary of the state and the concession granted by the state even beyond the powers of the state or how state an say so either.' 10. this being the case, we are required to follow the ratio of the earlier decision. the appeal is accordingly allowed.

Judgment:
1. Appeal 4291/99 is against the order 1331/99 dated 8.9.99 of the Commissioner (Appeals). Appeal 1056/02 is against the order 1057/02 dated 7.1.02 of the Commissioner (Appeals). In both these orders each of these, the Commissioner (Appeals) disposed of an appeal against order 3/Addl.Commr./98 dated 11.12.97. The Commissioner (Appeals) passed his first order 1331/99 on the appeal filed by the assessee on this order. He dismissed the appeal for failure on the part of the assessee to deposit entire duty and penalty. The assessee appealed this order and the Tribunal, by its order on 12.4.01 allowed the stay application filed by the assessee waiving deposit of the duty and penalty and staying recovery.

2. The file of the Commissioner (Appeals) which has been made available by the departmental representative indicates that thereupon the assessee approached the Commissioner (Appeals) drawing attention to Tribunal's order saying that it had not heard from him the consequence of the order. The Commissioner (Appeals), thereupon listed the same appeal for hearing and after hearing the parties passed the impugned order in appeal 1057/02.

3. It appears that the Commissioner (Appeals) has quite wrongly interpreted the Tribunal's stay order to be one of disposal of appeal and remanding the matter back. Nothing else could justify his appeal.

Whatever the reason the effect remand that his earlier order had not been set aside and the later order (16/02) is non est and is accordingly set aside. So far as appeal 4291/99 is concerned, the Tribunal had prima facie found ground fro waiver of deposit of duty and penalty. Since the Commissioner (Appeals)'s order has been passed only on the ground that the assessee had not deposited the duty and penalty, that order is set aside and the appeal allowed and the matter remanded to the Commissioner for deciding the appeal on merits without insisting on further deposit.

4. We turn next to the remaining appeal before us of the appellant 1056/02. By the order impugned in this appeal, the Commissioner (Appeals) has confirmed the denial by the Asst. Commissioner of the benefit of the exemption contained in notification 208/83 to the goods, bars, rounds and angle of the steel manufactured by the appellant. The notification exempts from duty goods specified in column 3 of the table to it "final products specified in column 3 of the goods manufactured out of the goods specified in column 2 on which the excise duty or additional duty of customs had already been paid. The explanation to the notification contained a deeming provision that of stocks in the country except such stock as has been duty payable shall be deemed to be on which duty has already been paid. The notification is subject to the condition that no credit of the duty paid on inputs have been taken under Rule 56A. The notification does not apply to goods produced and manufactured in a free trade zone. The claim of the appellant has been denied on the ground that it did not produce evidence that excise duty or additional duty of customs had been paid on the inputs for some of the goods from August 1983 to November 1985 which it utilised in the manufacture of the final product.

5. The contention of the counsel for the appellant is that there was no requirement on the part of the appellant to produce evidence of payment of duty by virtue of the explanation to the notification, the inputs that it obtained were deemed t be inputs duty paid; the demand does not even allege tat they were clearly recognisable as non-duty paid.

6. The departmental representative contends that the invoice of the sellers of the goods indicated them to be from ship broker. Therefore he says that the ratio of the Tribunal decision in Digrania Steel Inds.

v. CCE 1994 (50) ECR 437 will apply and exemption has been rightly denied.

7. Counsel for the appellant states that he does not press the claim contained in the appeal against the Commissioner (Appeals)'s order to the exemption contained in 208/83. His claim before us is that the deemed proforma credit available in terms of order of the based in 56A(3)(i)(b) reproduced in Bombay Trade notice 34/83 dated 19.10.83 1983 (2) ELT T181 of the duty paid deemed on the scrap when it utilised in the manufacture of the final product.

8. The benefit of the exemption contained in notification 208/83 was denied on the ground that the goods had been obtained from a ship breaker and clearly identifiable as ship breaking scrap and appropriate duty had not been paid. The contention of the appellant that the direction issued under Rule 56A(3)(i)(b) of Central Government which deems to be the duty paid of scrap fresh and unused purchased from outside and lying in stock which reroller on or after 1.4.83 does not contain any explanation excluding from its "such stock of scrap as clearly recognisable as non-duty paid or clear to duty". He cites the decision of the Tribunal in CCE v. Vinubhai Steel appeal E/1051 and Ors. in support. In this decision, the Tribunal was concerned with the order B-22/5/86 TRU dated 7.4.86 of the Central Government passed in excess of the provision of second proviso under Sub-rule (2) of Rule 57G directing that ingots, or material or iron and steel purchased from outside or lying in stock on or after 1.4.84 that rerollers will be deemed to have paid duty. The Tribunal noting that this order did not contain any provisions except from its "such material as was clearly recognisable as non-duty paid or having been subject to nil rate of duty, confirming the extension of the benefit of the deemed credit to goods which were clearly recognisable as non-duty paid. The Tribunal was following the ratio of Laxmi Steel v. CCE 1997 (23) RLT 623 which came to the same conclusion with regard to the government order TS-36/94 relating to ingots or rolling mills lying in stock after 1.4.94.

9. In reply to an objection from us, the Central government had no power to deem to duty paid clearly recognisable as non-duty paid and Rule 56A(3)(i)(b) and second proviso under Rule 57G(2) both only permitted the government to deem to be duty paid such stock as were not clearly recognisable as non-duty paid, counsel for the appellant cites the Madras High Court judgment of the Asst. Commissioner of Commercial Tax v. Dharmendra 1988 (3) SCC 578. Paragraph 5 of this judgment, the Supreme Court rejected the contention of the Asst. Commissioner of commercial taxes that an order of Government of Karnataka 13/1969 was of no legal effect as there was no statutory provision under which the concession can be granted. The board said "we totally fail to see how the Dy. Asst. Commissioner of Sales Tax who are functionary of the state and the concession granted by the state even beyond the powers of the state or how state an say so either.' 10. This being the case, we are required to follow the ratio of the earlier decision. The appeal is accordingly allowed.