| SooperKanoon Citation | sooperkanoon.com/5424 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Jan-11-1990 |
| Reported in | (1990)(27)ECC29 |
| Appellant | J.K. Chemicals |
| Respondent | Collector of Central Excise |
2. The facts of the cases, in brief, are that M/s. Godavari Chemicals manufactured Sodium Silicate falling under Item 14BB of the Central Excise Tariff in their factory at 37 - Industrial Extension Area, Gangyal, Jammu Tawi. During the financial year 1982-83, the value of Sodium Silicate cleared by them exceeded Rs. 25 lakhs and hence they were not entitled to any exemption from Central Excise duty on Sodium Silicate during the year 1983-84 in terms of Notification No.83/83-C.E., dated 1-3-1983, as amended. M/s. Godavari Chemicals ceased to function from May, 1983 and the aforesaid industrial shed was handed over to the appellants by the Estate Manager, J&K S. S. I. Development Corporation on 30-7-1983. The appellants manufactured and cleared from the factory Sodium Silicate during the period from 1-8-1983 to 31-1-1984 without payment of central excise duty. A show cause notice demanding duty was issued on 20-5-1984 (Stated to be received by the appellants on 28-5-1984) in respect of the duty payable for the clearances made during the period from 1-8-1983 to 7-12-1983. This demand show cause notice and the corresponding order-in-original No.8/CE/86 dated 20-3-1986 are the subject matter of Appeal No.E/1393/86-C. Another show cause notice dated 1-8-1984 was issued to the appellants in respect of duty payable for the clearances made during 8-12-1983 to 31-1-1984. The proceedings relating to this show cause notice was adjudicated by the Additional Collector of Customs and Central Excise, Chandigarh, vide his order-in-original No. 9/CE/86 dated 21-3-1986. This is the subject matter of Appeal No. E/1527/86-C.By the impugned orders, the Additional Collector held that the appellants were not entitled to the exemption of duty under the aforesaid notification as the value of clearances from the same factory during the preceding financial year 1982-83 exceeded the limit of Rs. 25 lakhs. He has, therefore, confirmed the duty of Rs. 65,362.16 and Rs. 34,459.15 under Rule 9(2) of the Central Excise Rules, 1944 and imposed penalty of Rs. 10,000/- and Rs. 5,000/- on the appellants under Rules 9(2) and 173Q of Central Excise Rules. He also confiscated Sodium Silicate valued at Rs. 4,152.20 with a redemption fine of Rs. 2,000/- only. The appellants have challenged the orders of the Additional Collector by these appeals.
3. Shri Lachman Dev, learned Consultant for the appellants, has argued that paragraph 3 of the Notification No. 83/83-CE covers the appellants' case. This notification is in respect of a manufacturer. In support of his arguments, he has relied on the following decisions :- (i) 1985 (6) E.C.C. 219 (Karnataka) - Shyam Sunder U. Nichani v. Asstt. Collector of C. Excise and Customs and Anr.Jaideep Corporation, Hubli v. Collector of Central Excise, Baroda.
(iii) 1981 (8) E.L.T. 128 (Bom.) - Jenson and Nicholson (India) Ltd. v. Union of India and Ors.
4. The second argument of the learned Consultant is that there was no suppression of facts. So, the longer time limit was not applicable in raising the demand for duty and no penalty was to be imposed on the appellants. He has stated that the second demand for the period from 8-12-1983 to 31-1-1984 is totally time-barred under Section 11A(1) of the Central Excises and Salt Act. He has also argued that the first demand for the period from 1-8-1983 to 7-12-1983 was partly time-barred to the extent the period fell beyond six months prior to the issue of the show cause notice. In support of his arguments, the learned Consultant has relied on the following decisions :-Collector of C. Ex. v. Chemphar Drugs & Liniments.Tata Yadogawa Limited v. Assistant Collector of Central Excise, Jamshedpur and Ors.Indian Granite Limited v. Collector of Central Excise, Hyderabad.Kelvinator of India Limited, Faridabad v. Collector of Central Excise, New Delhi.Chemicals & Fibres of India Ltd., Bombay v. Collector of Central Excise, Bombay.
5. The third point of argument of Shri Lachman Dev is that while calculating the demand for duty, the Department has applied the rate of duty on the total value without deducting duty element. This has enhanced the amount of demand. Another point argued for the appellants is that 3 lakhs Ltrs. of Sodium Silicate were supplied to M/s.
Hindustan Levers Limited. The reduced rate of duty at 5% ad valorem under Notification No. 148/81-CE dated 1-8-1981 was applicable to this quantity. There is no bar to avail of this exemption although the prescribed procedure was not followed. On this point, Shri Lachman Dev has relied on this Tribunal decision reported in 1986 (24) ELT 567 (Tribunal) in the case of Annasaheb Bapu Bhagate v. Collector of C.Ex., Bombay.
6. Shri Chandrasekaran, learned SDR has argued that paragraph-2 of the Notification No. 83/83-CE says as follows :- "2. Nothing contained in this notification shall apply if the aggregate value of clearances of all excisable goods for home consumption, - (i) by or on behalf of a manufacturer, from one or more factories, or (ii) from any factory, by or on behalf of one or more manufacturers, had exceeded rupees twenty-five lakhs in the preceding financial year." "3. Where a manufacturer has not cleared any specified goods in the preceding financial year, or has cleared any such goods for the first time on or after the 1st day of August, in the preceding financial year, the exemption contained in this notification shall be applicable to such manufacturer, - (a) If he files a declaration with the Assistant Collector of Central Excise that the aggregate value of clearances of all excisable goods by him or on his behalf, for home consumption, from one or more factories, during the financial year is not likely to exceed rupees twenty-five lakhs, and (b) If the aggregate value of clearances of all excisable goods by him or on his behalf, for home consumption, from one or more factories, during the financial year does not exceed rupees twenty-five lakhs." M/s. Godavari Chemicals were manufacturing Sodium Silicate in the factory taken-over by the appellants in July, 1983. The said firm cleared Sodium Silicate valued more than Rs. 25 lakhs in the preceding financial year 1982-83. This being the position, the exemption under the aforesaid notification was not available in respect of the Sodium Silicate cleared during the financial year 1983-84 in view of provision of para 2(ii) of the notification. The appellants were not, therefore, entitled to duty-free clearances of Sodium Silicate under the aforesaid notification during the period from 1-8-1983 to 31-1-1984. The learned Consultant for the appellants has cited three judgments, namely, those reported in 1985 (6) E.C.C. 219 (Karnataka), 1985 (5) E.T.R. 419 (Tribunal) and 1981 (8) ELT 128 (Bom.). These judgments do not help the case of the appellants. In the judgment reported in 1985 (6) E.C.C. 219 Hon'ble Karnataka High Court has held that what is important for the purpose of granting exemption under Notification No. 80/80-CE dated 19-6-1980 is the aggregate value of clearance from "any one factory" during the financial year. In 1985 (5) E.T.R. 419, this Tribunal has held that if another licensee of a factory availed of the general exemption under Notification No. 71/78-CE during the relevant financial year, the clearances at nil rate of duty of Sodium Silicate manufactured from the same factory by the appellants, the loan licensees, being in excess of Rs. 5 lakhs would not be permissible. In the case reported in 1981 (8) ELT 128 (Bom.), the Hon'ble Bombay High Court has held that the benefit of Notification No. 137/60 is admissible on the basis of production of the factory and not on the basis of production by a particular manufacturer. Paragraph-3 of the notification lays down the procedure to be followed by a manufacturer who did not clear any specified goods in the preceding financial year.
This paragraph does not supersede the basic provision of paragraph-2 of the notification. Paragraph-2 clearly makes the exemption inapplicable if the value of clearances from the factory in question during the preceding financial year exceeded Rs. 25 lakhs. This is exactly what has happened in the present case of the appellants.
7. As the benefit of the Notification No. 83/83-CE was not available to the appellants during the financial year 1983-84, duty was payable by them, but the demands for duty were required to be raised within a period of six months from the dates of clearances as there was no suppression of facts by the appellants. From that point of view, the demand for duty relating to the period from 8-12-1983 to 31-1-1984 is clearly time-barred under Section 11A(1) of the Central Excises and Salt Act as the show cause notice proposing the recovery of duty was issued on 1-8-1984, i.e. after expiry of six months from the date of clearances of the goods. The demand for duty raised in the show cause notice dated 25-5-1984 is time-barred for the period prior to 27-11-1983, being more than six months old. The appellants have stated that the show cause notice was received by them on 28-5-1984. This averment stands unrebutted. The demand for duty should, therefore, be confined to the period 28-11-1983 to 28-5-1984. While calculating duty amount, the element of duty, if included in the price, should also be deducted in terms of the provisions of Section 4 of the Central Excises and Salt Act, 1944.
8. The learned Consultant for the appellants has argued that if duty was at all payable, it should be at 5% ad valorem under Notification No. 148/81-CE dated 1-8-1981 in respect of the Sodium Silicate supplied to M/s. Hindustan Levers Limited. This notification reads as follows :- "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India, in the Ministry of Finance (Department of Revenue and Insurance)) No. 154/70-Central Excises, dated the 1st August, 1970, the Central Government hereby exempts Sodium Silicate, falling under Item No. 14BB of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is in excess of 5% ad valorem, subject to the conditions that - (i) it is proved to the satisfaction of the Assistant Collector of Central Excise that such Sodium Silicate is used in industries other than soap industry; and (ii) the procedure set out in Chapter X of the C. Ex. Rules, 1944 is followed." The benefit of this notification is available subject to fulfilment of the two conditions. The Additional Collector has denied the benefit of this notification as the appellants "failed to observe other central excise formalities mentioned in the said notification and their activities regarding their sales could not be gauged by the Departmental officers in the absence of any information to the Department from the party in this regard". Even at the stage of appeals before us the appellants have not furnished any material to establish that the conditions of this notification were fulfilled by them. In ground No. 9 of their appeal No. E/1527/86-C, the appellants have stated that the entire quantity of Sodium Silicate was despatched to M/s. Hindustan Levers Limited for its use in the manufacture of detergents and hence duty leviable was to the extent of 5% ad valorem under Notification No. 148/81 dated 1-8-1981 instead of 15% as charged by the Department. This ground of appeal has not been substantiated by them by adducing necessary evidence to show that the conditions of the notification dated 1-8-1981 were fulfilled. In the result, we are unable to extend the benefit of this notification to the appellants.
The Tribunal's decision reported in 1986 (24) ELT 567, cited by the learned Consultant for the appellants, does not apply to the facts of the present case.
9. So far as the penalty and confiscation are concerned, we observe that there was no suppression of facts on the part of the appellants.
In the facts and circumstances of the cases, imposition of penalty and confiscation of their good (sic) warranted. We, therefore, set aside the penalty and confiscation ordered by the Collector.
10. The appeals are disposed of in the light of the foregoing discussions.