Pradeep Jain - Chartered Accountant

Case: - Yomika Fabrics Pvt. Ltd. v/s Commissioner of Cus.,Ahmedabad

Citation: - 2009(233) E.L.T. 237 (Tri.-Ahmedabad)

Issue: - Conversion of Free Shipping bills to DEEC Scheme shipping bills.

Brief Facts: -

Appellant sought permission of the Commissioner for converting the free shipping bills to DEEC Scheme shipping bills. The request was rejected by the Commissioner by following Board’s Circular No. 4/2004,dt.16-1-2004 which says that if the goods have been exported under the free ship bills, the same cannot be converted under any other beneficial use.

Appellant’s Contention: Conversion of Free Shipping Bills to DEEC scheme shipping bills should be allowed.

Respondent’s Contention:

The respondent argued that conversion cannot be done as the Board’s Circular No. 4/2004, dt.16-01-04 does not allow such conversion.

Reasoning of Judgment:-

Tribunal relied upon the judgment passed in the case of M/s Kiran Pondy Chems Ltd. v/s CC, Chennai [2006 (203) ELT 588 (Tri. - Chennai)].In the said case it was held that the Board’s Circular No. 4/2004 against the provisions of Sec 149. It was noted that the goods were examined at the factory and sealed containers were allowed to be exported under the shipping bills. Possibility of mis-declaration or mis-use of export benefits does not arise. The request for conversion has to be accepted.

Decision: - Matter remanded to Commissioner with direction to allow conversion of Free Shipping Bills to DEEC scheme shipping bills.

Case: -Commissioner of C. Ex. ,Vapi v/s Donear Inds.Ltd.

Citation: - 2009(233) E.L.T. 221 (Tri.-Ahmedabad)

Issue: - Payment of Education Cess by utilizing Cenvat Credit of Basic Excise Duty.

Brief Facts: -

The assessee utilised Cenvat credit of basic excise duty to pay education cess. The Department challenged the payment so made. The Commissioner (Appeal) held that the education cess could be paid by using Cenvat credit of BED. The Department has challenged the order of Commissioner (Appeal) before the Tribunal.

Appellant’s Contention:

The main ground taken by the department is that Education Cess is not excise duty and therefore, the BED cannot be used for payment of Education Cess.

Respondent’s Contention:

Nobody represented the respondent-assessee.

Reasoning of Judgment:-

The Tribunal agrees with the order of Tribunal and has found no reason to interfere with the said order. The tribunal has upheld the reasoning of the Commissioner (A) that the sub-rule (4) of Rule 3 of the Cenvat Credit Rules, 2004 provides that Cenvat Credit can be utilized for payment of any duty of Excise on any final product. As per Section 93 of the Finance Act, 2004 education cess levied under Section 91 in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985 being goods manufactured or produced shall be a duty of Excise.

The Tribunal has also held that the judgment passed in the case of Mahindra & Mahindra Ltd. v/s CCE, Mumbai [2007 (211) E.L.T. 481(Tri.-Mum)] which was relied upon by the Commissioner (A). It was held that education cess imposed on manufacturer and production of goods under Sec 91 & Sec 93 of Finance Act, 2004 is in a nature of Excise Duty. The restriction under Rule 3 (7) of the Cenvat Credit Rules, 2004, about utilizing Cenvat credit of various duties, such as additional duties on textiles and textiles articles, NCCD, Education Cess etc does not specifically extend to basic excise duty. As a result, credit of basic excise duty can be utilized for payment of any duty of excise.

Decision: - Appeal filed by revenue rejected.

Case: - Jindal Texofab Ltd. v/s Commissioner of C. Ex.,Ahmedabad

Citation: - 2009(233) E.L.T. 241 (Tri.-Ahmedabad)

Issue: - Shortage of goods admitted by Director without admitting clandestine removal does not amount to clandestine removal.

Brief Facts: -

The Appellant is engaged in the production of cotton and man-made fabric. Their factory was visited by the officers of Directorate General of Central Excise Intelligence on 10.08.01, who conducted various checks and verifications. A quantity of 14,077 LMs. of processed cotton and manmade fabric valued at Rs. 3, 33,722/- was found to be short than the recorded balance. The shortages were admitted by the appellant’s representative as also by their Director in their statement recorded at the time of visit as also subsequently. Duty was demanded on allegation of clandestine removal. Demand was confirmed by the Additional Commissioner and penalty was also imposed on the Director. In appeal, the Commissioner (A) upheld the order of the Additional Commissioner. The appellant therefore approached the Tribunal.

Appellant’s Contention:

Nobody appeared on behalf of Appellant.

Respondent’s Contention:

The respondent argued that the shortage of processed cotton and man-made fabric was admitted by the Director of the Company therefore, there was clandestine removal of goods. The demand and penalty is required to be imposed.

Reasoning of Judgment:-

The entire demand was confirmed against the appellant on the findings of clandestine removal which in turn are based upon shortages found during the time of visit of officers. Though, the Director of the Company admitted such shortages, but there is nothing on record to show that he admitted that such shortages were on account clandestine removal. There is also no other evidence on record to show clearance of processed fabric. It was settled that fact of shortages by itself established when the appellant has contended that the verification was not done properly, cannot lead to inevitable conclusion of Clandestine Removal. Benefit of doubt was extended to appellant.

Decision: - Impugned order set aside. Appeal allowed with consequential relief to the appellant.

Case: Narendra Impex vs Commissioner of C.Ex.,Daman

Citation: - 2009(238) E.L.T. 497 (Tri.-Ahmd.)

Issue: - Demand raised for shortage of quantity of inputs on the basis of 3 CD Income Tax Return.

Brief Facts: -

The appellants are manufacturers of plastic lay flat tubing, plastic films, plastic bags etc. falling under Chapter 39 of the Central Excise Tariff Act. Proceedings were initiated against them on the ground that they have short received the raw material to the extent of 3262.94 Kgs and as such have taken excess credit to that extent. The said allegations were based upon the 3 CD returns filed by the appellants before the income tax authorities. The appellant explained that such shortage was due to yield loss occurring during the process of conversion of the raw material into final product and as such, the same was shown as shortage in the return. The Original Authority accepted the explanation of the appellant’s and dropped the demand. But in appeal the Commissioner (A) reversed the order-in-original and confirmed the demand. Hence appellant is now before the Tribunal.

Appellant’s Contention:

The Appellant explained that such shortage reflected in the ITR is on account of yield loss occurred during the process of conversion of the raw material into final product and as such, the same is reflected as shortage in return.

Reasoning of Judgment:-

The adjudicating authority observed that except for the 3 CD return there is no corroborative evidence to establish that the shortage was on account of short-receipt of raw material. The appellant have availed credit of duty as reflected in invoices for inputs. There is no allegation that the credit availed by them is in excess of duty paid by supplier of the inputs. Further it was observed that there was process loss during blow molding process and the loss as claimed b the appellant is not on higher side.

It was held that the order of Commissioner (A) was based on assumption and presumption and not on the basis of any evidence showing less receipt of raw material in appellant’s factory. The Benefit of yield loss extended to the appellant.

Decision: -

Appeal allowed with consequential relief. Stay petition disposed of.

Case: - Commissioner of C. Ex.,Chennai vs Sanmar Speciality Chemicals Ltd.

Citation: - 2009(238) E.L.T. 468 (Tri.-Chennai)

Issue: - Admissibility of Cenvat credit taken on goods falling under Chapter 73 but were part and parcel of reverse osmosis system/multiple evaporator and glass line reactor which were capital goods.

Brief Facts: -

Respondents had taken capital goods credit on M.S. Plates, M.S. angles and M.S. Channels falling under Chapter 73 which were required for constructing a civil structure for installation of the capital goods. Original authority confirmed the demand raised against the respondent and also imposed penalty. It was held that the goods were not eligible for Cenvat credit as capital goods even though they were part and parcel of reverse osmosis system/multiple evaporator and glass line reactor which were capital goods. In appeal, the Commissioner (A) found that the disputed goods were capital goods as they had been found to be part and parcel of capital goods by the original authority. The order of original authority was set aside. Accordingly, department has filed this appeal before the tribunal.

Appellant’s Contention:

The impugned goods were required to construct a civil structure for installation of the capital goods. As they were not components, spares or accessories of capital goods, the Commissioner (A) had wrongly held that those items were eligible for capital goods credit.

Reasoning of Judgment:-

The categorical finding that the impugned goods were part and parcel of capital goods was not disputed by the Revenue. Therefore, the respondents cannot be denied capital goods credit relating to those goods. In the circumstances, the impugned order does not call for interference.

Decision: -

Appeal filed by Revenue dismissed as devoid of merit.

Case: Pneumatic Power Tools & Co v/s Commissioner of C. Ex., Raipur

Citation: - 2009 (238) ELT 605 (Tri.-Del)

Issue: - Whether more time can be granted to the appellant because he has filed an appeal before the Apex Court when the appellant has used dilatory tactics for 2 years to avoid pre-deposit as directed by the Tribunal.

Brief Facts: -

Demand of service tax was confirmed against the appellant at the lower appellate stage. The appellant approached the Tribunal. The Tribunal directed for deposit of 50% of the total demand within 8 weeks. Appellant moved modification application against pre-deposit order which was rejected as being without merit. However, time of 3 more weeks was granted for pre-deposit. In the next hearing, appellant submitted that they have gone before the High Court against the order passed in modification application. Matter was adjourned. On next hearing, the appellant submitted that they had withdrawn the writ petition as the same was dismissed but the High Court had granted 8 weeks time to make pre-deposit. On next hearing, appellant filed an order of the High Court in a miscellaneous application in which 6 weeks of time was granted. Thereafter, the appellants again approached the Tribunal by miscellaneous application for modification of order of pre-deposit. But when hearing was fixed, the appellant withdrew its application by saying that he wanted to pursue the matter before the appropriate forum. Accordingly, the miscellaneous applications were disposed off. On the next hearing the appellants have submitted that they have filed a civil appeal before the Apex Court against the order passed in miscellaneous applications. The appellant’s are praying for further time.

Also, the counsel appearing on behalf of the appellants has not filed the vakalatnama. It was noticed that different counseld were appearing before the Tribunal on various dates of hearing.

Respondent’s Contention:

The appellants have abused the process of law by using dilatory tactics to avoid pre-deposit of 50% amount of the demand. He has prayed for dismissal of the appeals since the adjudication has been completed long long ago and the appellant could not succeed before the first appellate authority two years back.

Reasoning of Judgment:-

The Tribunal held that the factual position has not been contradicted by the appellant’s counsel. It is clear that the interest of the Revenue has been prejudiced by the appellants by following the dilatory tactics and abusing the process of law. The Tribunal also followed the decision of Apex Court in Dunlop India Ltd. [1985 (19) ELT 22 (SC)] and Benaras Valves Ltd vs CCE [2006 (204) ELT 513 (SC)] and has held that they were unable to appreciate the undue hardship of the appellant’s. The Tribunal has opted to dismiss the appeal. However, it has been reiterated that they will follow any direction given by the Apex Court in the Civil appeal filed by the appellant before them.

Further, the Tribunal has directed the present counsel appearing for the appellant’s to file vakalatnama and also to explain by memo whether all such counsels were signatory to vakalatnama and whether he was also signatory.

Decision: - Appeals dismissed as pre-deposit order of the Tribunal not stayed by the Apex Court.

Case: I.B.P. Co. Ltd. v/s Commissioner of Central Excise, Meerut

Citation: - 2009 (238) ELT 612 (Tri.-Del.)]

Issue: - Whether a registered dealer dealing in excise goods can be held liable to pay duty by invoking section 11D of the Central Excise Act, 1944?

Brief Facts: -

The appellant is a registered dealer who is dealing with the excisable goods at the second stage of removal of goods beyond the point of clearance. Duty was demanded from him by invoking section 11D of the Central Excise Act, 1944 against him.

Appellant’s Contention:

The appellant’s contended that they are dealing with the goods at the second stage and have relied upon the judgment in case of Bharat Petroleum Corporation Ltd. v/s CCE, Meerut [2002 (146) ELT 646 (Tri.-Del.) and Sr. Terminal Manager, IOC Ltd v/s CCE, Coimbatore [2007 (212) ELT 536 (Tri.-Chennai)] in which it was held that a registered dealer should not be liable to duty since he is not a manufacturer.

Respondent’s Contention:

It was contended that the appellants had realised over and above the sales prices and also produced documentary evidence to show excess realisation by the appellant and that was not deposited into the treasury.

Reasoning of Judgment:-

The Tribunal held that a registered dealer was ny no means liable to pay duty when he is not a manufacturer. They also failed to understand as to how section 11 D could be invoked against a dealer who was not liable. Considering the citations submitted by the Appellants which is a public sector undertaking cannot be held to have acted against the law. Levy imposed was held to be unsustainable.

Decision: - Impugned order set aside. Appeal allowed.

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