TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 743
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.... of limitation under proviso to Section 11A of the Act was invokable for demanding duty from the assessee and for imposing penalty on the assessee? 2. The factual background under which the appeals have been preferred by the appellants can be captured by taking note of the following salient features: The assessee is engaged in the process of cold-rolling of hotrolled stainless steel patta/patti on job work basis. As per the assessee, for this purpose, it receives hot-rolled SS patta/patti from other manufacturers and thereafter undertakes the process of cold-rolling in the cold-rolling mill. The purpose of cold-rolling is only to reduce the gauge of the SS patta/patti. After so reducing the gauge by the process of cold-rolling, the SS patta/patti are sent back to the suppliers. For this purpose, the assessee receives job charges from the suppliers of the materials. The assessee claims that apart from cold-rolling, no other process was undertaken by the assessee on the SS patta/patti. The assessee had undertaken this activity during the period between November 1995 and March 1997. It is also the case of the assessee that by the process of cold-rolling, only the gauge of the SS pa....
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....tainless steel, of a width of less than 60mm 7220.10 - Not further worked than hot-rolled, whether or not in coils 15% 7220.20 - Not further worked than cold-rolled (coldreduced) 15% 7220.90 - Other 15% 7. We find that in the Order-in-Original passed by the Adjudicating Authority on the question as to whether cold-rolled pattas are distinct marketable commodities, he relied upon the Harmonised Commodity Description and Coding System (HSN) published by World Custom Organisation to facilitate uniform classification of goods traded in the world classifies cold rolled strips and the hot rolled strips under two separate headings. As per him, this itself shows that all over the world these products are considered as separate identifiable products. As per general explanatory notes given in part (IV)(B) to Chapter 72 of HSN on which Central Excise Tariff Act, 1985 is based, cold rolled products can be distinguished from hot rolled products by the following criteria:- (a) The surface of cold rolled products has a better appearance than of products of hot rolled and never has a layer of scale. (b) The dimensional tolerances are smaller for cold ....
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....ucing is being independently by multiple number of units either on job work basis or for use in their other factories it is certainly capable of being marketed. 9. When the matter was taken in appeal before the Tribunal by the assessee, Judicial Member took the view favourable to the assessee whereas Technical Member affirmed the view of the Commissioner. The Technical Member in his brief order pointed out that the Commissioner had given detailed findings that the process of cold-rolling imparts quality of hardening to the products in question and this process entails changes in the characteristics. The Judicial Member also passed a brief order holding that the case was covered by the judgment of this Court in Steel Strips Ltd. wherein it was held that cold-rolling of steel strips reduced out of the duty paid hot-rolled steel strips do not undergo a process of manufacture. The Judicial Member also observed that there was nothing on record to show that the mere passing of hot-rolled SS patta/pattis between the two rollers, so as to reduce the thickness of the same, amounts to process of hardening or tempering being undertaken. 10. With this difference of opinion, when the matter c....
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....rolling done at a temperature between the point of rapid recrystallization and that of the beginning of fusion, while cold rolling is carried out at ambient or room temperatures which is below the recrystallization temperature. 5.1 The cold-rolled strips have the following properties which may be shared by certain hotrolled products:- (a) because of the strain or work hardening they have undergone, cold-worked products are very hard and possess great tensile strength, though these properties may diminish appreciably with heat treatment; (b) elongation of fracture is very low in cold worked products; it is higher in products that have undergone suitable heat treatment. Cold-rolling in the true sense also includes cold reduction changing the crystalline structure of the work-piece by considerably reducing its cross-section. The HSN Notes, therefore, clearly indicate that in the cold-rolling processes because of the strain or work hardening, the cold-worked product becomes very hard. Therefore, when hot-rolled strips, which are flatrolled products, are subjected to cold rolling, such cold-worked product would be very hard and would possess great tensile strength. The proce....
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....ature, but for high melting point metals cold-working may be carried out at a red heat. Hot working processes are: forging, rolling, pipe welding, extrusion, spinning and hot piercing and rolling (tubes) etc., while cold rolling processes commonly employed are : rolling, extrusion, pressing and deep drawing, stamping, squeezing, bending, shearing etc. 5.2 Cold rolling is a process by which the sheet metal or strip is introduced between rollers and then compressed and squeezed. The amount of strain introduced determines the hardness and other material properties of the finished product. Cold rolled sheet can be produced in various conditions such as skinrolled, quarter hard, full hard depending on how much cold work has been performed. This cold working (hardness) is often called temper, although this has nothing to do with heat treatment temper. Cold-rolled metal is given a "temper" rating based on the degree it was compressed. Temper is the state or a condition of a metal as to its hardness or toughness produced by either thermal treatment or heat treatment and quench or cold working or a combination of same in order to bring the metal to its specified consistency. As per Steel....
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....come hard and possess a very high tensile strength by the process of cold-rolling. The fact that a degree of hardness can be achieved will not dilute the applicability of the Chapter Note 4 because every degree of hardening or type of tempering resulting from cold-rolling of flat-rolled products would amount to manufacturing within the meaning of Chapter Note 4 of Chapter 72. The fact that annealing and pickling was done earlier by the party sending the goods for job work, will not make any difference because hardening or tempering of such flat-rolled products comes about only after cold-rolling. Having regard to the variety of flat-rolled products, which are cold-rolled, it cannot be said that the goods are not marketable. Admittedly, none of the parties sending the goods for job work to the appellant-assessee adopted the procedure of sending the goods for job work, as contemplated by Rule 57F of the Central Excise Rules, 1944 and, therefore, there can arise no question of the goods having been sent for job work under Rule 57F. It was not the case of any of these appellants that the goods were sent in accordance with the provisions of Rule 57F of the said Rules. 12. The other qu....
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....ning of Section 2(f) of the Act. 13. Once, we keep the aforesaid facts in mind, it is difficult to accept that the assessee was under bona fide belief that excise duty was not payable and that it was not permissible for the Department to avail the larger period of limitation by invoking proviso to Section 11A of the Act. All the Authorities below have rejected this argument of the assessee. The Tribunal while upholding the view of the Commissioner agreed with the reasons given by the Commissioner in the following manner: "The Commissioner has also for valid reasons held that the extended period of limitation was applicable and that the Department's record did not show the receipt of any letter allegedly written on 28.09.1996. The assessee, dealing with several similar manufacturing units who paid excise duty on identical processes, and doing job work on their behalf would have obviously known that excise registration was required for the cold rolling mills in its factory for the purpose of manufacturing cold-rolled pattas/pattis. The partner of the assessee was fully aware that such activity was dutiable, in view of the fact that four out of six units from which the goods w....