TaxTMI 
TaxTMI 
2026 (4) TMI 289
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....h, Member (Technical) For the Appellant : Shri Mukund Chouhan, Advocate For the Respondent : Shri A R Kanani, Superintendent (AR) ORDER DR. AJAYA KRISHNA VISHVESHA : Appeal No. E/12679/2014 (Icilon Industries vs. Commissioner of Central Excise) and Appeal No. E/12680/2014 (Rajesh G. Gandhi vs. Commissioner of Central Excise) have been preferred by the appellants against Order-in- Original No. 127/2013-14 dated 20.03.2014 passed by the learned Commissioner of Central Excise and Customs Surat-I through which he had confirmed the demand of Central Excise duty amounting to Rs. 3,19,86,352/- along with interest and also imposed penalty of Rs. 3,19,86,352/- against the appellant and a penalty of Rs. 50,000/- upon Shri Rajesh G Gandhi, Partner of the firm. 1.1 Appeal No. E/13871/2014-DB (Vardhman Metalic Pvt Ltd vs. Commissioner of Central Excise) and Appeal No. E/13872/2014-DB (Amit Adishwar Jain vs. Commissioner of Central Excise) and Appeal No. E/13873/2014-DB (Ravi Radheshyam Toshniwal vs. Commissioner of Central Excise Surat-I) have been preferred by the appellants against Order-in- Original No. 045/2014-15 dated 18.09.2014 passed by the learned Commissioner Central....
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....s similar. The common issue to be decided in all these appeals is whether Central Excise duty is leviable on captively consumed Lacquered Polyester Film or not, and whether penalty was rightly imposed upon the firms and their officers and proprietors. As the issue to be decided in these appeals are same, therefore, they are being disposed off by this common order. 1.6 For the sake of convenience, the facts of Appeal No. E/12679/2014 Icilon Industries vs. Commissioner of Central Excise & Service Tax-Surat-I are being provided. 1.7 Appellant were engaged in the manufacturing of Lacquered Polyester Film in their premises at Surat out of Metallised Polyester Film procured by them and captively consumed the same for manufacturing of Badla/Jari Kasab by the process of slitting. The Lacquered Polyester Film is an excisable product falling under Central Excise Tariff Heading 3921 and attracts Central Excise duty. Vide Finance Act, 2008, an amendment to Note 16 of Chapter 39 was made in respect of lamination or lacquering stating as -'in relation to products of headings 3920 and 3921, the process of metallisation or lamination or lacquering shall amount to "manufacture". Therefore....
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....med lacquered film, should not be demanded from them under Section 11A(1) (now Section 11A (4)) of the Central Excise Act, 1944) by invoking extended period along with interest under Section 11AA and penalty under Section 11AC (1)(a) of the Central Excise Act, 1944, read with Rule 25 of the Central Excise Rules, 2002. A separate penalty was proposed on Shri Rajesh Gandhi, Partner of the firm. 1.11 The learned Commissioner after hearing the representative of the appellant concluded that M/s. ICILON Industries manufactured Lacquered Polyester Film at intermediate stage falling under chapter 3921 and consumed the same captively for making Badla/ Jari Kasab, which was cleared by them without payment of Central Excise Duty. Lacquered Polyester Film manufactured at the intermediate stage is known in the market as such and is ordinarily being bought and sold in the market. Lacquered Polyester Film is excisable and dutiable goods falling under chapter 3921 specified in the First Schedule to the Central Excise Tariff Act, 1985. M/s. ICILON Industries did not take Central Excise Registration till 01.07.2011 and did not pay the Central Excise duty on Lacquered Polyester Film manufactured a....
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.... into existence during production of exempted Badla/ Badlu. In view of this, he submitted that intermediate product being not marketable, hence nonexcisable and therefore, would not attract any Central Excise duty. He cited decision of this Tribunal in the case of Nicholas Piramal India Limited vs. CCE, Mumbai - 2003 (158) ELT 342 (Tri. Mumbai), Collector of Central Excise, Chandigarh vs. Milk Plant - 1995 (79) ELT 315 (Tribunal) and CCE, Mumbai vs. Godfrey Philips (I) Limited - 2003 (156) ELT 1026 (Tri. Mumbai). The appellant never suppressed any material fact from the department with intention to evade payment of Central Excise duty and therefore, the Commissioner has erred in invoking extended period of limitation. 3. Per contra, learned AR for the Revenue reiterated the findings of the learned Commissioner and stated that appellant was engaged in the manufacture of Jari/ Badla (final product) in which Lacquered Polyester Film (coated) was used. The said final product classified under CTTH 5605 was exempted from Central Excise duty as per Notification No. 30/2004 (Serial No. 11). However, as the intermediate product i.e. Lacquered Metalized Polyester Film, used captively for ....
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....) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, 4.3 Notification No. 67-95-CE 16th March, 1995 stipulates that goods manufactured and captively consumed are exempted from Central Excise duty subject to the following conditions. The provisions of the said Notification are being reproduced below. Capital goods and inputs captively consumed within the factory of production In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts - (i) capital goods as defined in rule 57Q of the Central Excise Rules, 1944 manufactured in a factory and used within the factory of production: (ii) goods specified in column (2) of the Table hereto annexed (hereina....
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....ufacture". 4.6 Now, the question before us is whether the intermediate product 'Lacquered Polyester Film' is marketable and can be bought and sold in the market ordinarily. The argument of the appellants / respondents is that the said intermediate goods namely Lacquered Polyester Film is not freely marketable hence, it is not liable to excise duty. Their contention is that first up to 60 meters, Metallised Polyester Film remains unlacquered and across the length of the Metallised Polyester Film at many places due to various technical reasons, lacquering may be uneven. In support, they produced Chartered Engineer's certificate. Learned AR on the other hand filed copy of letter F. No. V (Misc.) 2-58/RC/14-15 dated 23.09.2014 enclosing therewith Invoice No. 003498 dated 24.11.2013 of M/s. Surat Metallics to show marketability of Lacquered Mentalised Polyester Films. Under this invoice, 10 rolls of Lacquered Metallised Polyester Film SM0112MIC SPC01 have been sold to Model Metallic Pvt Ltd and others @ Rs. 163.50 per kg Total assessable value of Rs. 3,38,808.70/- has been shown on which appropriate excise duty (including Education cess and SHE cess) @ Rs. 12.36% has been paid along ....
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....registered with the Central Excise Department nor filed any returns as required under the Central Excise Rules and therefore, it can be fairly presumed that this suppression was made with intention to evade the Central Excise duty. The Icilon Industries took Central Excise Registration on 01.07.2011 but even then, they did not start paying Central Excise duty. 4.9 It has been held by Hon'ble Supreme Court in the case of Dharampal Satyapal vs. Commissioner of Central Excise, New Delhi reported in 2005 (183) ELT 241 (SC) that units where goods are manufactured, are not registered or licenced and no Central Excise records maintained - plea of bonafide belief not acceptable and demand is not barred by time limit. Relevant para 23 is reproduced below:- "We do not find merit in the above contentions. In this matter, we are concerned with the application of the above judgments to the facts of this case. The words wilfulness" and "intent" in Section 11A are expressions of mental state at the time of manufacture and clearance of the goods. The situs of the levy of central excise is on manufacture. Pricing and value of clearances are matters specially within the knowledge of the ....
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....enalty under Rule 173Q of erstwhile Central Excise Rules, 1944 and Rule 25 of Central Excise Rules, 2002 is not imposable when issue is entirely one of interpretation of law. 4.11 We are of the view that the law laid down in above mentioned cases is not applicable upon the facts of the present cases. In the present issue, there is no dispute involving interpretation of any law or notification. An amendment to note 16 of Chapter 39 of the 1st schedule to Central Excise Tariff Act, 1985, was carried out through Section 89 of the Finance Act, 2008. As per which "in relation to products of heading 3920 and 3921, the process of metalisation or lamination or lacquering shall amount to manufacture." There appears no ambiguity in the above provision. It is apparent from the records that the appellants / manufacturers have contravened the provisions of Rule 4, 6, 8, 9, 10, 11 and 12 of Central Excise Rules, 2002, in as much as they failed to pay Central Excise duty on the excisable goods at the appropriate time and in the manner prescribed under the said Rules, failed to assess the Central Excise duties on the excisable goods, failed to get themselves registered with the Central Excise d....
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....heir cross-objections. As per facts of the case, the officers had searched factory premises of M/s Telstar Industries Ltd (Respondent) and found that they were engaged in Lacquering of Metalized Polyester Film but they had not obtained Central Excise Registration with the department nor were they paying any Central Excise duty. The stock found in the factory premises of M/s Telstar Industries Ltd valued at Rs.2,26,40,280/- and stock valued at Rs. 33,93,400/- seized from the premises of M/s Mithilanchal Industries Pvt Ltd, Sachin Surat was seized by the officers. After conduction investigation, they issued a show cause notice to the respondent on 22.05.2015 proposing confiscation of seized goods under Rule 25 of the Central Excise Rules, 2002 along with imposition of penalty under Rule 25 (1)(b) of the said rules read with Section 11AC of the Central Excise Act, 1944. The Revenue issued another show cause notice to the respondent on 09.02.2016 demanding Central excise duty of Rs.5,57,42,922/- under Section 11A (4) of the Central Excise Act, 1944 by invoking extended period of limitation along with interest under Section 11AA and penalty under Section 11AC and Rule 25 of the Central ....
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.... Central Excise department nor started paying excise duty on the said intermediate products by filing the required returns with the department. They also failed to follow other relevant rules relating to issue of invoice, assessment of goods, payment of duty and filing of returns. We therefore hold that extended period of limitation is invokable in this case as the respondent has not followed the procedure, not obtained the registration and not filed the returns and paid the private excise duty with intent to evade payment of duty. Accordingly, we hold that the respondent is also liable to equal penalty under Section 11AC of the Central Excise Act, 1944. 4.17 As regards, seizure of goods totally valued at Rs. 2,60,33,680/-, we find that the learned Adjudicating authority has vacated seizure against the respondent on the ground that duty was not demandable on the respondent. As discussed above, the goods "Lacquered Metalized Polyester Film" are leviable to excise duty, the seizure of stock lying in the premises of the respondent as well as in the premises of M/s. Mithilanchal Industries Pvt Ltd, Sachin Surat is fully justifiable. As almost 11 years have passed since seizure of go....