TaxTMI 
TaxTMI 
2009 (8) TMI 996
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....ended. The department during the scrutiny of records of the appellant's factory noticed that they are engaged in manufacture of Flexible Laminated printed Film (in rolls and pouches) for various buyers as per the brand names belonging to them. The department on the basis of condition of para 4 to the said notification, which provided that "the exemption shall not apply to specified goods bearing a brand name or trade name, whether registered or not, of another person" denied the benefit and raised a demand for recovery of duty along with interest for the period from April, 2007 to January, 2008 and to initiate penal proceedings. The appellants in reply to show-cause-notice submitted that their goods were exempted from duty as SSI exemption was available to them, but the department on the basis of the findings given by the Hon'ble Supreme Court in the case of M/s. Kohinoor Elastic (P) Ltd. v. CCE - 2005 (8) LCX15, held that the SSI exemption on the appellants goods was not available as the same were branded goods and attracted the mischief of para 4 of the said notification. 3. Feeling aggrieved with the said order, the appellants have filed this appeal on the following grou....
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....manufacture of underwear itself; Emphasis supplied to amendments to Notification No. 175/86-C.E., ibid, which are detailed as under : - (a) Notification No. 223/87-C.E., dated 22-9-1987 (b) Notification No. 224/87-C.E., dated 22-9-1987 (c) Notification No. 225/87-C.E., dated 22-9-1987 As stated, the above referred 3 Notifications, carved out the exception with regard to embossing of a brand name as referred supra by the Appellants. • That the Appellants submit that the said exception, disentitling the SSI Units manufacturing excisable goods or integral part of excisable goods, bearing brand name of other manufacturers, was done, not with an intention to compel the manufacturer of the packaging material in the form of "printed cartons of paper or paper board, metal containers, HDPE woven sacks, adhesive tapes, sticker, PP caps, Crown corks and metal labels" etc., which is not an integral part of the final excisable goods. With the intention of the Government not to exclude such small scale industries from the benefit of promotional incentive of SSI exemption offered by Exemption Notification No. 175/86-C.E., the Central Board of Excise and ....
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....L.T. 3 (S.C.); • That the Appellants crave indulgence of this Hon'ble Chair and beg to submit that in the interim Order in the case of Sharda Packaging Pvt. Ltd., and Others, the Hon'ble High Court of Judicature at Allahabad had observed as follows :- "In these circumstances, we are of the opinion that the decision in the case of Kohinoor Elastics Pvt. Ltd. v. Commissioner of Central Excise, Indore - 2005 (188) E.L.T. 3 (S.C.) which was in respect of elastic bands prepared with the brand name of the manufacturer of the undergarment and which is attached to the fabric of the underwear as such, would not apply to SSI manufacturing packaging material." By this interim order this Hon'ble Court had held and observed that the judgment of Hon'ble Apex Court in the case of Kohinoor Elastics Pvt. Ltd., was not applicable to SSI Units manufacturing packaging material, copy of Order is enclosed. • That the Appellant further beg to submit that in the case of Kohinoor Elastic (P.) Ltd., supra the Hon'ble Apex Court had placed the said decision for reference before the Constitutional Bench on the limited issue that in case of departmental clarification and any Cir....
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....incorporated to ensure that in cases where benefits of exemption Notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopen. However, this did not mean that even in cases where the Revenue/Department had already contended that the benefit of Exemption Notification was not available, and the matter was sub-judice before a court or a Tribunal, the Court are Tribunal would also given effect to Circular of the Board in preference to a decision of the Constitution Bench of this Court. Where as a result of dispute the matter is sub-judice, a Court/Tribunal is, after Dhiren Chemical Case, bound to interpret as set out in that judgment. To hold otherwise and to interpret in the manner suggested would mean that Courts/Tribunals have to ignore a judgment of this court and follow Circulars of the Board. That was not what was meant by para 9 of Dhiren Chemical case. Emphasis supplied. • That the Appellants further say that the Hon'ble Apex vide the above decision had followed the earlier decision of Apex Court in the case of Kalyani Packaging Industry v. U.O.I, reported in 2004 (168) E.L.T. 145 (S.C.) (Emphasis ....
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....nion expressed by the Board was as under : - "The matter has been examined by the Board and it is clarified that : (a) In respect of situation (i) above the benefit of Notification No. 8/97-CX., dated 1-3-1997 cannot be extended to those units which manufacture goods out of both imported and indigenous raw material. The benefit is available to those units which manufacture goods only from indigenous raw materials. (b) In respect of situation (ii) a unit is eligible for the benefit of Notification No. 8/97-CX, ibid, even if, imported consumables are used since the Notification does not debar the use of imported consumables, provided other conditions of the said Notification are satisfied." • That the appellants say that as is seen from the above, the Board entertained a view that even imported consumables are used, the benefit of the Notification would still be available to the appellant. The said Board's circular was subsequently withdrawn vide Circular No. 614/5/2002-CX dated 31-1-2002 [reported in 2002 (48) RLT M 115]. As per the said circular, the issue of use of imported consumables was re-examined and it was decided to withdraw the earlier circular. The r....
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....ution Control Board v. Kanoria Industrial Ltd., reported in 2001 (128) E.L.T. 3 (S.C.), held that : - "No duty or tax can be levied but without authority of law". The appellant submit that the TRU & Board Circular referred above being binding upon the Revenue and being withdrawn vide yet another TRU Circular being No. 354/124/2008/TRU, dated 1-9-2008, the benefit of SSI exemption already given vide Boards' Circular cannot be taken away retrospectively and withdrawal of CBEC Circular shall only have a prospective effect and cannot snatch away or nullify any provisions of statute making it nugatory with retrospective effect; • The Hon'ble Supreme Court in the case of UCO Bank Ltd. v. Commissioner Income Tax (W.B.), 1999 (111) E.L.T. 673 (S.C.), has held as follows :- • "Departmental Circulars not meant for contradicting or nullifying any provisions of the statute but are meant for ensuring proper and efficient administration of the statute, for mitigating the rigors of too literal and an application of a particular provision of the statute in certain situations by applying a beneficial interpretation to the provision and for ensuring uniformity of assessment....
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.... particular statute. Penalty will not ordinarily be imposed unless party obliged either acted deliberately in defiance of law or was guilty of conducted contumacious or dishonest or acted unconscious disregards of its obligation. The penalty will also not be imposed for failure to perform a statutory obligation. Penalty will also be not imposed because it is lawful to do so, whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of an authority to be exercised judicially and on a consideration of all relevant circumstances. Even if a minimum penalty is prescribed the authority competent to impose penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." The appellants relied upon the decision of Pratibha Processors v. UOI reported in 1996 (88) E.L.T. 12 (S.C.), wherein it has been held in Para 13 that the penalty is ordinarily levied for some contumacious conduct or for deliberate violation of provisions of a particular Statute. T....
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.... that the issue to be decided in the case is, as to whether the department was right in demanding the duty from the appellants for the period in question on the basis of the interpretation given by the Apex Court in the case of M/s. Kohinoor Elastics that too against the law of the land laid down by the Hon'ble Supreme Court in the case of Dhiren Chemicals that benefit already granted was not to be re-opened. The need to examine the issue has arisen due to the reason that the issue as to whether the circulars will prevail over the Judgments of Apex Court as raised in the case of Kohinoor Elastics (supra) and M/s. Ratan Melting & Wire Industries, three member bench 2005 (181) E.L.T. 364 (S.C.), was settled by the order of the constitutional bench of the Apex Court in the case of Ratan Melting & Wire (supra) on 14-10-2008 and the circulars extending the benefit of SSI exemption were operative upto 31-8-2008. The second reason to examine the issue is the interim order of Hon'ble High Court, Allahabad wherein it has been held that "the case of Kohinoor Elastics Pvt. Ltd. v. Commissioner of Central Excise, Indore - 2005 (188) E.L.T. 3 (S.C.) which was in respect of elastic bands prepare....
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....7-TRU, dated 29-10-1987 with reference to the above provisions, it has been clarified that names/logos of the brand name owner printed on metal labels, crown corks, P.P. caps and collapsible tubes are not brand name by themselves and as long as these metal labels are not affixed on the goods in the trade of which the name/logo printed on such metal labels etc. serves as branded name (within the definition of Explanation VII) they are not hit by the mischief of para 7 of the notification. This position was further reiterated in the Board instructions issued under F. No. 213/28/87-CX. 6, dated 27-11-1987 specifically, with reference to the dutiability of packing materials like metal containers, HDP woven sacks etc., manufactured by the SSI Unit. This means that in both the said letters the availability of SSI exemption to the packaging material bearing brand names of others has been discussed and it has been clarified that the SSI exemption shall be available in such cases. The appellants have also informed that the said circular was in operation upto 31-8-2008 as the same were rescinded vide Circular F.No. 354/124/2008-TRU, dated 1-9-2008. The appellants have also placed before me t....
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....ll prevail over the Judgments of Apex Court was not clear and this question was referred to the Constitutional Bench by a judgment in the case of Commissioner of C. Ex., Bolpur v. Ratan Melting & Wire Industries, 2005 (181) E.L.T. 364 (S.C.) and also in the case of Kohinoor Elastics (supra). I notice that in para 9 of the judgment in the case of Kohinoor Elastics (supra), a reference has been made regarding the expected outcome of the judgement in the case of Ratan Melting & Wire (supra). Hon'ble bench has observed that the fate of the Civil Appeal No. 3197 of 2000 and Civil Appeal No. 1469 of 2002 under consideration in the case of Kohinoor Elastic (supra) will depend upon the judgement delivered by the constitutional bench in case of Ratan Melting & wire (supra). 13. The appellants in the grounds of appeal have informed that the decision by the constitutional bench of the Apex Court in the case of Ratan ( supra) was delivered vide order dated 14-10-2008 as reported in 2008 (231) E.L.T. 22 (S.C). After going through the said order, I notice that the Civil Appeal No. 3197 of 2000 and Civil Appeal No. 1469 of 2002 in the case of Kohinoor Elastic (supra) were also tagged with the ....
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....courts. It was however held in the said order that the cases in which the benefit of any provision as explained in the circulars has already been extended to the assessees, then the cases shall not be re-opened and the revenue would remain bound. It was further held that the para 9 in the judgment of Dhiren Chemical (supra) was not inserted to mean that Courts/Tribunals have to ignore a judgment of the Apex Court and follow circulars of the Board. 15. I notice that inspite of clear cut findings of the Apex Court in the case of Kalyani Packaging (supra), the position did not change and still the para 9 in the case of Dhiren Chemical (supra) was being interpreted as if, the clarifications in the circulars issued by the statutory bodies would prevail over the law of the land as laid down by the Hon'ble Apex Court. Due to this very reason, the findings of the Apex Court in the case of Dhiren Chemical (supra), para 9 were again relied upon in the case of Ratan (supra) before three member bench and it was claimed that the said para operates in the favour of the assessee. The Hon'ble bench of the Apex Court after considering the interpretations given in the case of Commissioner v. Indi....
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.... withdrawn on 1-9-2008. As held by the Apex Court in the case of Dhiren Chemicals (supra), the benefit already extended cannot be re-opened and the benefit of the circulars has to be given to the appellants. Otherwise also, the Hon'ble Allahabad High Court in the case of Sharda Packaging Pvt. Ltd., while passing an interim order after analyzing the findings given in the case of Kohinoor Elastics (supra) has held that the findings given in the said case would not apply to SSI units manufacturing packaging material. 18. Therefore, in light of the discussions hereinabove and following the law laid down by Hon'ble Supreme Court in the case of Dhiren Chemical and affirmed in the case of Ratan Melting, constitutional bench (supra) and also following the findings of Hon'ble High Court, Allahabad in the case of Sharda Packaging (supra), I find that the SSI exemption was available to the packaging materials bearing other's brand for the period prior to order of constitutional bench of the Apex Court in the case of Ratan Melting (supra) as the issue of applicability of circulars was settled only after that order and thus, the department was bound, not to re-open the case, where benefit wa....