TaxTMI 
TaxTMI 
2011 (5) TMI 726
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....wo show-cause notices dt. 28-12-2007 and 2-1-2009 demanding excise duty under proviso to Section 3 of Central Excise Act, 1944 for the period from 1-12-2006 to 30-11-2007 and 1-12-2007 to 22-6-2008 respectively on the ground that w.e.f. 28-2-2005, fresh Mushrooms were classifiable under CETH 07095100 of the Central Excise Tariff attracting 'nil' rate of duty and are therefore excisable goods. Appellants applied for de-bonding of the unit on 10-3-2008 and in principle, de-bonding permission was given to the appellants on 13-3-2008. On 2-7-2008, appellants paid customs duty on imported capital goods and excise duties on indigenous capital goods on depreciated value and the depreciation was availed upto 31-7-2008. Appellants paid total duty of Rs. 31.53 lakhs. In the impugned order, duty of demand of Rs. 3.15 crores has been confirmed and penalty also has been imposed under Rule 25 of Central Excise Rules, 2002. 2. Before ld. Counsel for the appellants could present his arguments, the ld. Jt. CDR raised preliminary objections, which are as follows :- (i) Appellant's Miscellaneous Application No. 602/2010 is on record and has not been disposed of by....
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....n affidavit proposing to amend the appeal cannot be entertained at such belated stage, in any case, if they want to introduce any additional document in the appeal Court, after filing appeal, leave of the Court to be taken and an application for introduction of such documents should be filed in terms of Rule 23 of the CESTAT(Procedure) Rules, 1982. Since they have failed to comply with the said Rule, this documents should be considered as not relevant and to be treated as filed in violation of the established principles of Law and Practice. No cognizance of any submission made in this affidavit is legally permissible. The Hon'ble Delhi High Court in the matter of Gunvant & Ors. Reported In [1987 (32) E.L.T. 53 (Del.)] (copy already submitted to the Tribunal at the time of hearing) has held at para (8) as follows :- ".... It is well settled that additional evidence could not be permitted even in an appeal to enable one of the parties to remove lacunae in presenting its case at the proper stage and to fill in gaps...."                      (Emphasis supplied) (iii) ....
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....ed before the Hon'ble High Court. We are not inclined to accept this attitude of the appellants. If they want the memorandum of appeal to be amended, they should make it clear in the amendment application. If necessary, they could have filed an affidavit in support of the application. In the absence of these pre-requisites, we are unable to entertain the amendment application in its present form. At this stage, the ld. Counsel has proposed to take remedial steps. The appellants have liberty to do so." In para 9 of the order, it was observed as follows :- "We have also noted that, in the memorandum of appeal, the appellants have worked out altogether an amount of duty (Rs. 64.14 lakhs). But in respect of this figure, their application for amendment is on record and hence we do not discuss further on this aspect at this juncture." 4. Ld. Jt. CDR urged that in view of the fact that in para 10, there was no mention about disposal of Miscellaneous application and in para 9, the Tribunal took note that application for amendment is on record, the Miscellaneous application filed by the appellants for amendment of the appeal has not been disposed of. 5. We are unable to accept....
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.... position, the filing of an affidavit with the leave of the court really does not make a difference to the ultimate outcome of the matter before us. The purpose of hearing both sides when an appeal is filed is to render justice and it is nobody's case that once an assessee submits a particular amount as payable, he bound to that for ever. The whole exercise whether it is adjudication or appellate proceedings, is to ensure that Government collects the correct amount of taxes and wherever offences are committed, appropriate penalties are imposed. Under these circumstances, we do not agree with the contention of the ld. Jt. CDR that the affidavit has to be dismissed lock, stock and barrel on a procedural ground. In any case, we do not intend to consider the grounds made out in the affidavit and in the event of our coming to a conclusion that duty demand has to be re-worked out, it will have to be done by the Revenue after taking note of the submissions by the appellants. In any case, only correct amount of duty can be collected. 7. Now, we come to the second preliminary objection raised by the ld. Jt. CDR. He has relied upon the decision of the Hon'ble Delhi High Court in the ma....
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....e submitted that M/s. Eco Valley Farms & Foods Ltd. Is very much in existence and it has not been liquidated. Just because the undertaking of food business has been transferred, does not mean that the company ceased to be in existence. Further we also take note of the fact that in the affidavit filed by Shri Sailesh Kanora, the appellants name has been given as Eco Valley Farms & Foods Ltd. and round seal of the company has been affixed on the last page. Unless a company is liquidated and assets disposed of with the judicial approval, it does not cease to be in existence and the appellants' advocate being an officer of the court, we are quite sure that he would not fail in his duty by making submissions on behalf of the company which is not in existence. Therefore, we reject this preliminary objection also. Thus, all the three preliminary objections raised by the ld. Jt. CDR are rejected. 9. We propose to deal with the issues submitted by the appellant one by one and come to the conclusion issue-wise. 9.1 The first submission made by the learned counsel for the appellant is that the identical issue was decided earlier by the Commissioner (Appeals) vide OIA No. P-III/47/....
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....chedule and this was the case made out by the appellants also. Under these circumstances, we do not find any merit in the claim made by the appellants that the issue has already attained finality and, therefore, the order of the Commissioner (Appeals) dated 27-5-2004 is binding on the department. 9.2 Another submission that was made as an alternative submission was that department should be barred from changing its stand of mushroom being excisable goods retrospectively and should be allowed to change stand only prospectively from the date of order of the Commissioner namely 27-2-2009. For this contention, the appellant relied upon the decision of the Hon'ble Supreme Court in the case of CCE v. Cotspun Ltd. - 1999 (113) E.L.T. 353 (S.C.). In the case of M/s. Cotspun Ltd., it was held that the demand contrary to approved classification list cannot be made retrospectively. However, as submitted by the appellant themselves, Section 11A was amended retrospectively by Section 110 of Finance Act, 2000 and, therefore, the decision of the Hon'ble Supreme Court cited by the appellant would not help them. The appellants also submitted that the ratio of the decision in the case of Cotsp....
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....s and, therefore, assessment is on a monthly basis or quarterly basis. We also find reliance of the learned Jt. CDR on the decision of the Tribunal in the matter of Raman Boards reported in 2009 (243) E.L.T. 550 (Tri.-Del.) is relevant and in this decision, the Tribunal held that "......in case the fact situation reveals to the Department any mistake in the matter of classification in the earlier decision and the view taken had not been tested and finalized in any of the proceedings before the Tribunal or Higher Courts, certainly, it would not preclude the Department from taking appropriate stand which would warrant from the facts situation in a given case.......". In this case, admittedly, the situation has changed after 1-3-2005 as submitted by the learned Jt. CDR and this is another reason why this matter requires to be considered. 9.6 Another submission was made that agricultural produce were never intended to be subjected to Excise Duty under the Central Excise Act, 1944. For this purpose, they rely upon Circular No. 892/12/09-CX dated 23-7-2009 and submit that the Circular treats agricultural produce as non-excisable goods, in the context of self-sealing for the purpos....
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....ond Schedule of the Central Excise Tariff Act would make them excisable goods subject to duty". The landmark decision of the Apex Court in the case of CCE, Hyderabad v. Vazir Sultan Tobacco Co. Ltd. [1996 (83) E.L.T. 3 (S.C.)] would also be relevant in our opinion. In that case, a view was taken that when a product has been brought into excise net for the first time, the question as to whether the goods lying in stock and manufactured earlier would attract excise duty imposed for the first time or not would depend upon whether the product was listed in the schedule. If it was already listed in the schedule, it was already excisable and, therefore, when duty is levied for the first time, it is not a fresh levy and, therefore, goods which have already been manufactured and lying in stock would also attract duty. However, if the product or the item is not at all figuring in the Schedule and is subjected to excise duty for the first time, simultaneously introducing in the tariff also, the levy would not be applicable for the goods which have already been manufactured and lying in stock. Basically, excisability is linked to taxable event and taxable event is manufacture. Therefore, we f....
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...., which provides for the levy and collection of excise duty on all excisable goods produced or manufactured in India at the rate set forth in the Schedule, thereby showing that excisable goods in the definition in the section refer only to the description of the goods in column (2) of the First Schedule, and not to the rate of duty in column (3) of that Schedule......" The same view was taken by CEGAT, Special Bench 'C, New Delhi in Shree Shankar Industries, Bombay v. Collector of Central Excise, Bombay, 1984 (17) E.L.T. 402 (Tribunal). To the same effect is the view taken by a learned Single Judge in Andhra Pradesh Paper Mills Ltd., Rajahinundry v. Assistant Collector of Central Excise. Rajahmundry and another, 1980 (6) E.L.T. 210 (A.P). The relevant discussion is to be found in paragraph 13 at p.216. 23. In view of the above authorities, except the High Courts of Madhya Pradesh and Allahabad, a large majority of the other High Courts have taken the view that excisable goods do not cease to be excisable goods on exemption being granted under Rule 8 of the Rules. In support of the same conclusion, we may add some more reasons. The definition of the expression "excisable good....
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....specified goods" also does not come to the help of the appellants. It cannot be said that the Parliament consciously wanted to enlarge the scope of Section 6 for the purpose of making it clear that Section 6 does applies to all the goods specified in the First Schedule notwithstanding the fact that no excise duty leviable thereon. It cannot be said that because of this amendment, goods necessarily have to suffer duty to qualify as excisable goods. What is relevant is the decisions of the Hon'ble Supreme Court as regards the excisability provisions of Section 2(d) of Central Excise Act, 1944 and Section 3 of Central Excise Act, 1944 which is the charging section. Section 6 is basically a procedural section and the purpose of this section is registration of the manufacturers. 9.9 Another point that was submitted by the learned JCDR was that in addition to the provisions of Central Excise Act, a 100% EOU is also covered by the provisions of Foreign Trade Policy. In para 6.8 of the Policy, as it existed during the relevant time, "non-excisable goods" were defined as follows :- "In case of DTA sale of goods manufactured by EOU/EHTP/STP/BTP, where basic duty and CVD is nil, such g....
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....the goods under consideration are non-excisable. We have already taken a view on the basis of judicial precedents and consideration of law that in this case it cannot be said that the goods were non-excisable. For the same reason, reliance of the appellants on Circular No. 31/01-Cus., dated 24-5-2001 is also found to be mis-placed. In fact, contrary to the submissions made by the appellants, the Circular speaks of issue of Notifications to remove the analogy. Para 27 of the Circular is relevant and is reproduced below :- "27. The matter has been examined. In the central excise notifications governing duty free procurement by EOUs and units under EPZ/STP/EHTP Schemes, there is a provision to recover duty on the inputs & consumables procured duty free under exemption notification, which have gone into production of non-excisable goods cleared into DTA. In the notifications governing duty free import by EOUs and the EPZ/STP/EHTP units, the anomaly, however, exists inasmuch as the notifications talk about payment of customs duty on the inputs used in the manufacture of articles in an amount equal to the customs duty leviable on such articles as if imported as such. In order to re....
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.... can be considered as non-excisable. This is the reason why just because a finished product attracts Nil rate of duty if it is listed in the tariff, it cannot be held to be non-excisable. In fact, when goods are non-excisable, the Circular issued in 2001 says that in such cases, input duty is required to be paid by 100% EOU if the finished products are cleared to domestic tariff area. In both situation, DTA unit as well as EOU would be put in a similar situation. Thus, even going by legislative intention, the appellant's contention cannot be accepted. 9.12 We also find that the learned Jt.CDR's submission that a legal fiction was created for charging excise duties on the goods manufactured and cleared in India from EOU as if they were imported from outside India for the limited purpose of calculating an amount equivalent to the duties of Customs on such goods appropriate. He relied upon the decision in the case of Jalyan Udyog [1993 (68) E.L.T. 9 (S.C.)] to submit that where a legal fiction is created by a provision of Law, the Court must give full effect to the fiction, and it is often said, it should not allow its imagination to be boggled by any other considerations. Ficti....
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....o the date from which the changed stand is being effected by the department viz. 1-12-2006. According to the appellants, it is the date on which the department changed its stand which was being followed for many years and the department wants to change its stand eadier, the appellant would have de-bonding on that date. It was stated that this is further evidenced by the fact that as since the show-cause notice was issued, the appellants applied for de-bonding and got formal permission for the same. According to the appellants, the first show-cause notice was received in January, 2008 and appellants applied for de-bonding in March, 2008. Final de-bonding order was issued by the Development Commissioner on 2-9-2008. It was submitted by the appellant that only repercussion of pre-dating the de-bonding to 1-12-2006 is that the appellants will be required to pay duty on capital goods on the depreciated value as on 1-12-2006 instead of 22-6-2008 and interest for delay in payment of duty also is required to be discharged. The learned JCDR vehemently opposed this contention and submitted that there is no legal provision for any deemed de-bonding or giving effect to de-bonding from an earli....
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.... the scheme at any time, when renewal is at the request of the 100% EOU and knowing fully well that to survive as a unit, they have to make sales in DTA only and that too much in excess of their entitlement, the appellant continued to be a EOU and only after issue of show-cause notice, applied for de-bonding. He also drew our attention to the fact mentioned in the de-bonding order that the appellant had submitted an undertaking along with 10% Bank Guarantee of the duty involved in the two show-cause notices issued by the Department in the de-bonding order itself. According to him, this amounts to acceptance of liability. Further, he also submits that the de-bonding order does not say anywhere that the unit has applied for de-bonding from the deemed earlier date and whether it is being considered or not. 10. We have carefully considered the submissions made by both sides. We find that there is absolutely no legal provision anywhere for any deemed de-bonding. No evidence was shown to us that appellant applied to Development Commissioner for giving retrospective effect to the date of de-bonding. Further, the de-bonding permission is given in principle by the Development Commissi....
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....refore, duty has to be decided under proviso to Section 3(1) of the Central Excise Act, 1944. 11. The next question that has to be determined is the alternative submission that the value realized by the appellant has to be treated as cum duty price. The learned JCDR relied upon the decision of the Hon'ble Supreme Court in the case of Amrit Agro Industries - 2007 (210) E.L.T. 183 (S.C.) and the decision of the Tribunal in the case of Sarla Polyester [2008 (222) E.L.T. 376 (Tri.-Ahmd.)] to submit that the benefit of treating the value at which mushrooms were sold by the appellant as cum duty value cannot be extended to the appellant. The Hon'ble Supreme Court has considered this issue in paras 14 & 15 of the Order in Amrit case, which is reproduced below for ready reference. "14. In our view, the above judgments in the case of Maruti Udyog Ltd. and Srichakra Tyres Ltd. have no application in the facts of the present case. In the case of Asstt. Collector of Central Excise v. Bata India Ltd. reported in 1996 (84) E.L.T. 164 this Court held that under section 4(4)(d)(ii) of Central Excises and Salt Act, 1994 the normal wholesale price is the cum-duty price which the wholesel....
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.... be applied in the case of clandestine removal of goods. It is not the case of the Revenue herein that the appellant had removed the goods clandestinely. Therefore, the decision in the case of Sarla would also not be applicable to the facts and circumstances of this case. Therefore, as regards the value realization as cum duty value, the matter requires to be remanded to the Commissioner to decide afresh in the light of the decision of the Hon'ble Supreme Court and other relevant factors and judicial precedents if any. 12. As regards penalty, admittedly, prior to the introduction of New Tariff w.e.f. 1-3-2005, there was a decision that mushrooms produced by the appellants were not excisable and this decision was not challenged by the Revenue. If the appellants entertain a bona fide belief that subsequently also, mushrooms remains non-excisable, they cannot be found fault with. Further, the detailed discussion that we have made in this order itself shows that excisability of the goods under consideration is such that a bona fide belief that when goods attract 'nil' rate of duty, they are non-excisable cannot be ruled out. Consideration of various judgments, statutory provision....