Clearance of goods to other manufacturing units for job work during the pendency of permission.

PJ/CASE-LAW/2015-16/2759

Case:- COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS MODI METALS UDYOG

Citation:- 2015 (315) E.L.T. 142 (Tri. - Del.)

Brief Facts:-The respondent M/s. Modi Metal Udyog Pvt. Ltd. are engaged in the manufacture of Steel Ingots, which were being cleared by them to the other manufacturing units for carrying out process of Rolling on job work basis, in terms of Rule 16B of the Central Excise Rules, 2002. Being aggrieved with the order passed by the Commissioner (Appeals) Revenue has filed the present appeals, which are being disposed of by a common order as all the appeals arise out of the same order of Commissioner (Appeals).

Appellants Contention:-The Revenue initiated proceedings on the ground that the requisite permission was not obtained from the competent authority. The said proceeding resulted in passing of an order by the original adjudicating authority, who confirmed the demand and imposing penalty.

Respondents Contention:-The Revenue’s only objection is that the permission was not available during the relevant period. However, it is on record that application was filed and the Commissioner did not act upon the same immediately and the appellant cleared the goods during the pendency of decision on the said application. In any case the permission having been granted by the Commissioner in the relevant period, the Revenue’s objection that the said permission was not available at the time when the goods were cleared cannot be sustained.

Reasoning of Judgement:-The tribunal have heard both the sides duly represented by Ms. S. Sharma learned AR and Shri Sudeep Singh learned advocate and find that a short issue is involved. The respondent M/s. Modi Metal Udyog Pvt. Ltd. are engaged in the manufacture of Steel Ingots, which were being cleared by them to the other manufacturing units for carrying out process of Rolling on job work basis, in terms of Rule 16B of the Central Excise Rules, 2002. The Revenue initiated proceedings on the ground that the requisite permission was not obtained from the competent authority. The said proceeding resulted in passing of an order by the original adjudicating authority, who confirmed the demand and imposing penalty.

It is seen that as the appellant had filed an application with the Commissioner for grant of such permission, the said permission was subsequently granted by the Commissioner. Based upon the same, the Commissioner (Appeals) held in favour of the Respondent.

For better appreciation, Tribunal reproduce the relevant paragraph of Commissioner (Appeals) order :-

“It is on the records that the request, dated 7-7-2005 of the Appellant No. 1 for granting the permission under Rule 16B of the Rules has been rejected by the Department on 30-11-2006 and again the request of Appellant rejected by the Commissioner, Central Excise, Chandigarh on 5-2-2007 after re-examining the issue. The Appellant No. 1 once again requested to reconsider their case and the Commissioner, Central Excise, Chandigarh after re-considering the issue granted one time permission for the year 2005-06 to the Appellant No. 1 vide letter, dated 23-4-2007.

The tribunal find that undoubtedly the case of the Appellant No. 1 falls under the provisions of the Rule 16B of the Rules, however the statutory permission of the Commissioner was required to be obtained by them. Now when the Commissioner has granted the permission to the Appellant No. 1 vide letter, dated 23-4-2007, all the requirements of the Rule have been met with, hence the demand confirmed against the Appellant No. 1 is not sustainable especially in the circumstances when they have already paid the appropriate duty on the rolled products (received back from the job workers) at the time of clearances from their factory premises. Accordingly, there is no question of demanding the duty from the job workers i.e. Appellant Nos. 3 and 4 when the Appellant No. 1 got the permission to remove the Steel Ingots for conversion to rolled product. Further they observe that when the cases against the Appellant Nos. 1, 3 and 4 are not sustainable, there is no reasons to impose penalty on the Appellants as well as on the Appellant Nos. 2 and 5.”

The Revenue’s only objection is that the permission was not available during the relevant period. However, it is on record that application was filed and the Commissioner did not act upon the same immediately and the appellant cleared the goods during the pendency of decision on the said application. In any case the permission having been granted by the Commissioner in the relevant period, the Revenue’s objection that the said permission was not available at the time when the goods were cleared cannot be sustained. Accordingly, all the appeals filed by the Revenue’s are rejected.

Decision:- Appeal rejected.

Comment:- The gist of the case is that the procedural infractions of law should not be taken as tool to fasten unnecessary duty liability. According to Rule 16B of the Central Excise Rules, the Commissioner of Central Excise may by special order and subject to conditions as may be specified by the Commissioner of Central Excise, permit a manufacturer to remove excisable goods which are in the nature of semi-finished goods, for carrying out certain manufacturing processes, to some other premises and to bring back such goods to his factory, without payment of duty. However, in the present case, the goods were cleared to other unit even when the permission was pending to be granted. But, the Tribunal held that as ultimately the permission was granted, the objection of the revenue department is not tenable.

Prepared By:- Neelam Jain

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