New grounds to confirm demand cannot be taken at the appellate stage.

PJ/Case Law/2013-14/1699

Case:-COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS RAJASTHAN FASTENERS PVT.LTD.

Citation:-2013(292) E.L.T. 466(Tri.-Del.)

Brief Facts:-Being aggrieved by the impugned order passed by the Commissioner (Appeals), revenue has filed the present appeal. The respondent is an 100% EOU and cleared their final product in DTA by availing the benefit of Notification No. 23/2003 which prescribes 16% rate of duty. Show cause notice was issued to the respondent alleging that the duty required to be paid by them should be equivalent to the aggregate of the customs duty. Thus, a demand of Rs. 2,61,069/- was raised against them which was confirmed by the original adjudicating authority. On appeal, Commissioner (Appeals) reversed the said order. The following are major issue in impugned order:
(a) Whether it is allowable when respondent is not taken prior approval from Development commissioner for such clearance of goods to DTA?
(b) Whether respondent has utilized the CENVAT credit accumulated when it was DTA?
(c) Whether it is reasonable confiscated of excess goods and option to redeem with them to pay redemption fine?

Appellant Contentions:-The revenue has submitted that for availing the benefit of Notification No. 23/2003 the respondent were required to satisfy the condition No. 3 of the notification which prescribes requisite permission from DTA in respect of goods specified in paragraphs 6.8(a), (b), (d) and (h).Inasmuch as the said paras relates to clearance of waste reject etc., the same will not be available for clearance of finished goods.

Reasoning of Judgment:We have considered the submission from both parties and perused the record. We find that the allegation made in the show cause notice was on the sole ground that the requisite permission from the Development Commissioner has not been taken. The original adjudicating authority also adjudicated the matter on the above ground itself. Commissioner (Appeals), by taking note of various decisions of the higher authorities held that taking of permission from Development Commissioner was procedural formality and non-taking will not act prejudice to the assessee’s interest. It is for the first time that the above ground of paras 6.8(a), (b), (d) and (h) being relatable to waste and reject is being taken by the revenue. From the show cause notice as also from the impugned order, we find that the revenue’s grievance was never on the above grounds. It is well settled law that a new case cannot be made at the higher level when no such issue was made in the show cause notice. In the present case revenue has taken altogether a new ground which was neither the subject-matter of show cause notice nor of the order-in-original or the order of Commissioner (Appeals). As such, we do not entertain the above ground raised by the Revenue.

The second issue is that the appellant had paid the excise duty by utilizing the Cenvat credit which was accumulated when the respondent was a DTA unit. However, such utilization was when the assessee had become a 100% EOU. In terms of Rule 17, clearances by 100% EOU in DTA have to be a payment of appropriate duty by debiting the account current required to be maintained for this purpose. Inasmuch as the said rule requires payment of duty from the account current, Ld. Advocate admits to pay the same subject to reversal of the duty already paid from the Cenvat credit account. We find that the above proposal to be fair. On the appellants paying duty through account current, the duty already paid from the cenvat credit would be credited to their said account.

The 3rd and 4th issue relates to the setting aside the confiscation of excess found raw material and finished goods. The original adjudicating authority had confiscated the same with an option to redeem the goods on payment of redemption fine of Rs. 50,000/- each. Commissioner (Appeals) set aside the confiscation on the ground that the weighment and stock verification was not proper inasmuch as the same was on eye estimation basis, as also 100% EOU are not required to maintain RG-1 register.

We note that the revenue has not shown any documentary evidence to reflect upon the fact that the physical stock taking was made by actual weighment of the goods and by making inventories. As such we find it fit not to interfere in the said part of the impugned order of Commissioner (Appeals).

Decision:-The Revenue’s appeal is disposed of in the above manner.

Comment:-The essence of this case is that not taking prior approval from Development Commissioner for clearance of goods to DTA was only procedural formality andthe department cannot confiscate the goods found in excess of raw material and finished goods on eye estimation basis until and unless proper evidence is produced to substantiate confiscation.

Comments

PJ/Case Law/2013-14/1699

Post a Comment

Query