2017 (8) TMI 1046 - AT - Central Excise

Assistant Commissioner's Jurisdiction Upheld; Exemption Granted for Coin Blanks

Steel Authority of India Ltd. Versus Commissioner of Central Excise & ST, Salem

The Tribunal held that the Assistant Commissioner had jurisdiction to issue the show cause notice despite not being a notified officer of Customs at the ... N/N. 21/2002-Cus. dt. 1.3.2002 - goods imported not used for intended purpose - Appellant had imported 2000 MTs Hot Rolled Stainless Coils (HRSS coils) vide Bills of Entry No.411286 dt. 19.7.2002 and 388555 dt.08.04.2002 availing full exemption from Customs duties under Notification No.21/2002-Cus. dt. 1.3.2002 Sl.No.196. It appeared that appellants have used only a quantity of 457.113 MTs HRSS coils for the intended purpose namely for manufacture of coin blanks for supply to Indian Government Mint - Held that: - There is no dispute about the quantity of 457.113 MTs of HRSS coils which have been converted and supplied as coin blanks to the Mint - In respect of 1178.570 MTs imported HRSS coils, they have been converted into CRSS strips and supplied to the Mint. Sufficient proof has also been adduced, which has not been disputed, to confirm that CRSS strips thereupon were used in the manufacture of coin blanks by the Govt of India Mint. The only controversy in respect of this quantity is whether the words for use in the manufacture of coin blanks requires the appellant to manufacture and supply only coin blanks to the Govt of India Mint. The scope of phrase 'for use' was gone into by the Hon'ble Supreme Court in the case of State of Haryana Vs Dalmia Dadri Cement Ltd. [1987 (11) TMI 94 - SUPREME COURT OF INDIA]. The issue therein related to a dispute concerning cement supplied to Electricity Board on the basis of certificates issued by the latter that such cement was required for use in the generation or distribution of electrical energy which would attract exemption granted under Punjab General Sales Tax. The Hon'ble Apex Court held that the expression 'for use' must mean 'intended for use'. In respect of 1178.570 MTs imported HRSS coils which have been converted to Cold Rolled Stainless (CRSS) strips by the appellant and entire quantity thereof supplied to the Government Mint, who in turn, have certified and confirmed that they have been used in the manufacture of coin blanks, the imported goods have satisfied the post-importation condition of Notification No.21/2002-Cus., The imported goods have been converted into CRSS coils which are intended for use for manufacture of coin blanks by the Government of India Mint, the factum of which is not disputed. In the event, in respect of this quantity of 1178.570 MTs of HRSS coils, it will have to be considered that they have satisfied the condition 'for use in manufacture of coin blanks' mandated in the said notification. Hence there cannot be any demand of duties of customs on this quantity. That part of the impugned order demanding duty on this quantity will therefore require to be set aside, which we hereby do. In respect of the quantity of 364.317 MTs, appellants have themselves conceded that post-importation condition of the Notification No.21/2002 has not been complied with and have paid up the duty forgone thereof. Hence demand of duties of customs on the said quantity of 364.317 MTs HRSS coils, along with interest liability thereon will sustain. In respect of the remaining quantity of 457.113 MTs, there is no allegation or dispute about their not having been used in the manufacture and supply of coin blanks supplied to the Mint. Hence no differential duty liability against the said quantity can be demanded. Appeal allowed - decided partly in favor of appellant. Issues Involved:1. Jurisdiction of the Assistant Commissioner to issue the show cause notice.2. Eligibility for exemption under Notification No. 21/2002-Cus for HRSS coils not converted into coin blanks.3. Availment of Cenvat credit on additional duties of customs paid through TR6 challans.Detailed Analysis:Issue 1: Jurisdiction of the Assistant CommissionerContention on Jurisdiction:The appellant argued that the Assistant Commissioner of Central Excise, Salem-I, who issued the show cause notice (SCN), was not notified as an officer of Customs at the relevant time. They relied on the Tribunal decision in the case of Molex (I) Ltd. vs CC Bangalore, which was confirmed by higher courts.Tribunal's Decision:The Tribunal agreed with the Revenue's counter-argument that the retrospective amendment to Section 28 of the Customs Act, 1962, and the insertion of sub-section (11) w.e.f. 16.09.2011, addressed the earlier lacuna concerning the appointment of certain officers of Central Excise as proper officers of customs. Therefore, the contention on jurisdiction was deemed misconceived and did not succeed.Issue 2: Eligibility for Exemption under Notification No. 21/2002-CusFacts and Arguments:- The appellant imported 2000 MTs of HRSS coils without payment of duty under Sl.No.196 of Notification No.21/2002-Cus, which required the coils to be used in the manufacture of coin blanks supplied to the Indian Government Mint.- The appellant used 457.113 MTs for manufacturing coin blanks, 1178.570 MTs for manufacturing CRSS strips supplied to the Mint, and 364.317 MTs were not used for the intended purpose.Tribunal's Decision:- 457.113 MTs: No dispute existed about this quantity being used for manufacturing coin blanks supplied to the Mint.- 1178.570 MTs: The Tribunal held that the phrase 'for use' in the manufacture of coin blanks should be interpreted as 'intended for use,' following the Supreme Court's decision in State of Haryana Vs Dalmia Dadri Cement Ltd. Since the CRSS strips were used by the Mint to manufacture coin blanks, the exemption was applicable for this quantity.- 364.317 MTs: The appellant conceded that this quantity did not meet the post-importation condition of the notification. Therefore, the demand for customs duties and interest on this quantity was upheld.Issue 3: Availment of Cenvat Credit on Additional Duties of CustomsFacts and Arguments:- The appellant paid Rs. 2,16,30,320/- towards duty liability, including Rs. 80,25,636/- as additional duty of customs (CVD), and availed Cenvat credit on this amount.- The department contended that the credit was taken on TR6 challans, which are not prescribed documents under Rule 7 of the Cenvat Credit Rules, 2002, and that the amount was paid pursuant to an offence case.Tribunal's Decision:- TR6 Challans: The Tribunal found that TR6 challans, which evidence payment of duties including CVD, should be considered valid documents for availing Cenvat credit. Therefore, the appellant's plea succeeded.- Offence Case: The Tribunal held that the credit was not availed based on supplementary invoices but on TR6 challans. Since the appellant had paid the duty on 364.317 MTs of HRSS coils, including the CVD component, the availment of Cenvat credit was not barred. The penalty of Rs. 5 lakhs imposed under Rule 13 of the CCR Rules was also set aside.Conclusion:- Appeal No. C/234/2008: Partly allowed. The demand for customs duties on 1178.570 MTs of HRSS coils was set aside, while the demand on 364.317 MTs was upheld.- Appeal No. E/440/2005: Allowed. The appellant was entitled to avail Cenvat credit of Rs. 80,25,636/-, and the penalty of Rs. 5 lakhs was set aside.