TaxTMI 
TaxTMI 
2024 (8) TMI 592
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..... 2.1. The audit scrutiny of records revealed to the audit team that the assessee from time to time requested to issue procurement certificates to import the goods like raw materials, consumables, intermediaries, components, spares, packing materials for use in manufacturing of their final products without payment of Customs duty and Excise duty on availing the benefit of Notification No. 52/2003-Cus dated 31.03.2003 and notification No. 22/2003-CE dated 31.03.2003 to procure goods at 'nil' rate of duty to the Customs Bonded Warehouse of the assessee for manufacturing of their final products for the purpose of export. 2.2. The assessee appears to be clearing the commercial grade items, the rejects, waste and scrap of granite slabs and tiles for DTA sale availing the concession under serial no. 3 of the table annexed to Notification No. 23/2003-CE dated 31 March 2003 which applies to the goods falling under all chapters read with condition 3 (i). If the goods cleared by an 100% EOU into DTA are manufactured wholly from the indigenous raw materials procured and manufactured in India and without use of any other imported goods, it would be liable to pay duty equal to exc....
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....he concession of paying only excise duty on par with DTA units has to be claimed on the final products under S.No.3 only if they are manufactured wholly out of indigenous raw materials without use of imported goods, which had resulted in contravening the provisions of Notification No. 23/2003 CE dated 31.03.2003 and Rule 6 of the Central Excise Rules, 2002. The above therefore resulted in the issuance of the Show Cause Notice No. 28/2013 dated 09.05.2013, proposing inter alia to recover differential duty along with applicable Cesses, interest and penalty, for which the extended period of limitation under erstwhile S. 11 A (1) & S. 11 A (4) of the Central Excise Act, 1944 was invoked by the issuing authority. 3.2. It appears that the appellant filed a detailed reply to the Show Cause Notice, but not satisfied, the original authority has confirmed the proposals vide Order in Original No. 11.2014 - (C.Ex. - Commr,) dated 26.12.2014; and it is against this order that the present appeal has been filed before this forum. 4. Sri Karthikeyan, Ld. advocate appeared for the appellant and Sri. Rajaraman, Ld. Asst. Commissioner, defended the Revenue. 4.1. Heard both sides and perused ....
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....e end product and thus could not be considered as raw material. He would thus plead for setting aside the impugned order. 7. Per contra, Ld. Asst. Commissioner has relied on the findings of the Adjudicating Authority. He would also draw our attention to paras 27 & 28 of the impugned order where the Adjudicating Authority has negatived the pleas of the appellant, by relying on the decision of Apex Court in Collector of Central Excise, New Delhi Vs. Ballarpur Industries Ltd. 1989 (43) E.L.T.804 (S.C.) [para 28] 5. The question, in the ultimate analysis, the whether in input of Sodium Sulphate in the manufacture of paper would cease to be a "Raw-Material" by reason alone of the fact that in the course of the chemical reactions this ingredient is consumed and burnt-up. The expression "Raw-Material" is not a defined term. The meaning to be given to it is the ordinary and well-accepted connotation in the common parlance of those who deal with the matter. The ingredients used in the chemical technology of manufacture of any end-product might comprise, amongst others, of those which may retain their dominant individual identity and character throughout the process and also in t....
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....ion No. 8/97-C.E., dated 1-3-1997. Another issue was/is whether the Department was justified in invoking extended period of limitation. 8.2. The Hon'ble Supreme Court has thereafter held as regards the availability of benefit of notification number 8/97 - CE dated 01.03.1997, that the said issue is squarely covered against the assessee in view of the decision of the Supreme Court in the case of M/s. Meridien industries Ltd. Vs. Commissioner of Central Excise [2015 (325) E.L.T. 417 (S.C.). It is further held that the Supreme Court considered the very exemption Notification and the use of wax in manufacturing of cotton yarn, after detailed analysis of the submissions made on behalf of the revenue and assessee and after considering the process of manufacturing of cotton yarn and the definition of raw material, the wax used in the manufacture of cotton yarn is a material/input and therefore, the assessee was not entitled to the benefit of Notification (supra). However, insofar as the period of limitation was concerned for show notice having being issued after invoking the extended period of limitation, the Hon'ble court held that the department was not justified in invoking the exte....
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....rs per minute. (ii) The lubrication of the yarn also facilitated the use of the high speed knitting machines. (iii) The wax was only a temporary coat and did not form part of the cotton yarn and the wax removed permanently after the knitting and does not remain part and parcel of the yarn. (iv) The jurisdictional Superintendent of Central Excise had consistently issued Warehousing Certificate treating the same as 'consumable' and the wax disc was treated as 'capital goods' consistently as entered in RG 23C for Cenvat purposes. 9.1 The Hon'ble Apex court has recorded in extenso the pleadings urged on behalf of both the litigants and thereafter, observed as under: "13. The appellant is seeking the benefit of exemption Notification No. 8/97-C.E. Since it is an exemption notification, onus lies upon the appellant to show that its case falls within the four corners of this notification and is unambiguously covered by the provisions thereof. It is also to be borne in mind that such exemption notifications are to be given strict interpretation and, therefore, unless the assessee is able to make out a clear case in its favour, it is not entitled to cl....
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....n few cases. Some of these judgments were taken note of in the case of Vanasthali Textiles Industries Ltd. v. CCE, Jaipur - (2007) 12 SCC 115 = 2007 (218) E.L.T. 3 (S.C.). We may clarify at the outset that the Court in that case was concerned with the provisions at the relevant time that did not contain the definition of 'raw material' and, therefore, it banked upon the meaning that has to be given in ordinary connotation in the common parlance of those who deal with the matter. At the same time, some observations made in the said case, particularly, 'dominant ingredient test', which was applied were pressed into service by the appellant and, therefore, the discussion in the said judgment becomes relevant. As far as term 'raw material' is concerned, following discussion followed in the said judgment : "13. The expression "raw material" is not a defined term. The meaning has to be given in the ordinary well-accepted connotation in the common parlance of those who deal with the matter. In Ballarpur case (1989) 4 SCC 566 it was inter alia observed as follows : (SCC p. 572, para 14) "14. The ingredients used in the chemical technology of manufacture of any end product....
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....ported. 15. It is to be noted that cost of dye varied between 2 and 2.5% of the total production cost. The denim is manufactured from cotton and not from indigo. The condition for getting the benefit of the notification is that the end products should be wholly manufactured from the raw material produced and sold in India. 16. It is to be noted that dominant ingredient test has not been applied in the instant case; so also the effect of value addition. In Ballarpur case it was held in para 19 as follows : (SCC p. 573) "19. We are afraid, in the infinite variety of ways in which these problems present themselves it is neither necessary nor wise to enunciate principles of any general validity intended to cover all cases. The matter must rest upon the facts of each case. Though in many cases it might be difficult to draw a line of demarcation, it is easy to discern on which side of the borderline a particular case falls." 17. In that case, the Court was concerned with the same notification wherein the appellant-company, which was 100% EOU, claiming partial exemption from duty in terms of Notification No. 8/97 in respect of goods sold in DTA. One of ....
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....e whether a particular input would be treated as 'consumable' or 'raw material'. 19. A cursory glance of these judgments may give an impression that the present case is also covered by those decisions as in the instant case the waxing is ultimately removed from the cotton yarn by the buyer, after using this cotton yarn as raw material for fabricating the cloth. It is this aspect on which great stress and emphasis is laid by Mr. Bagaria, learned senior counsel for the appellant/assessee. However, a fine and subtle distinction is pointed out by Ms. Khajuria that becomes determinative of the outcome and changes the entire complexion, weighing the scales in favour of the respondent. Consumable is an item which does not form part of the end product. The assessee while arguing so is taking into consideration the end product at the hands of buyer which is not only extraneous and irrelevant but clearly impermissible. We are concerned with the article manufactured by the assessee, viz. cotton yarn, and not with the new and altogether different product, viz. knitting hosiery, manufactured by the buyer, who buys the cotton yarn as raw material/input. The article manufactured by the a....