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2002 (9) TMI 173
Issues:
Rectification of impugned order of the Tribunal dated 15-2-2002 regarding refund claim rejection.
Analysis:
The applicants sought rectification of the impugned order of the Tribunal dated 15-2-2002, which rejected their refund claim against the Order-in-appeal dated 27-2-2001 by the Commissioner (Appeals). The applicants detailed alleged mistakes in the impugned order, including the claim being consequential to a previous order, duty payment under coercion, appeal as protest, admissibility of additional evidence, and correspondence with the department. The Counsel reiterated these alleged mistakes and requested correction. The SDR contended that the alleged mistakes were not apparent on the record and argued against rehearing the appeal under the guise of a ROM. The Tribunal reviewed the record, which showed the background of the refund claim and subsequent rejections leading to the appeal. The Tribunal held the refund claim to be time-barred and dismissed the appeal based on this ground.
The grounds raised by the applicants, such as the claim being consequential to a previous order, duty payment under protest, appeal as protest, and admissibility of additional evidence, were considered by the Tribunal. However, the Tribunal found these grounds to pertain to the merits of the case and not as mistakes apparent on the face of the impugned order. The Tribunal emphasized that the question of whether the refund claim was time-barred was a factual determination already decided against the applicants. The Tribunal also addressed the admissibility of additional evidence, highlighting that it was within the Tribunal's discretion to disallow such evidence based on the case's circumstances. The Tribunal clarified that the applicants' arguments did not establish any mistakes in the impugned order that warranted its recall.
Regarding the contention that the refund claim was in pursuance of a previous Tribunal order, the Tribunal explained that the previous order did not grant the applicants the right to claim a refund. The Tribunal concluded that no mistake of fact or law was apparent on the face of the record in passing the impugned order. The Tribunal further emphasized that the ROM could not be used to seek a rehearing of the appeal on debatable questions of fact or law. Ultimately, the Tribunal found no merit in the ROM application and dismissed it accordingly.
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2002 (9) TMI 172
Issues Involved:
1. Confiscation of explosive material
2. Confiscation of remaining scrap
3. Imposition of penalties on Mukand Ltd. and its employees
4. Imposition of penalties on ITC Global Holdings and its employees
5. Imposition of penalties on Express Transport Ltd. and its employees
Detailed Analysis:
1. Confiscation of Explosive Material:
The confiscation ordered by the Commissioner of the explosive material is not challenged by anyone and therefore is confirmed.
2. Confiscation of Remaining Scrap:
The confiscation of the remaining scrap was challenged by Mukand Ltd. The Commissioner ordered the confiscation under Sections 118 and 119 of the Customs Act. Section 119 requires conscious intention for the concealment of smuggled goods. The Commissioner found no deliberate attempt to contravene any provisions of the law, thus no attempt to conceal the goods. The scrap was brought in containers, and the explosive material was found only after the scrap was piled into heaps, making it difficult to say that each container contained explosive material. The quantum of explosive substance was a small percentage of the total scrap, and the absence of intention to bring the explosive material was noted by the Commissioner. Therefore, the scrap was not liable to confiscation under Section 118.
3. Imposition of Penalties on Mukand Ltd. and its Employees:
Mukand Ltd. contended that it had taken sufficient precautions by insisting on inspection of the goods by Lloyds before shipment. The Commissioner found that the survey was conducted by buyer's surveyors appointed by Lloyds, not Lloyds directly. He speculated whether this departure was with the buyer's concurrence and noted that Mukand Ltd. should have known about the potential presence of explosives in Middle Eastern scrap. However, the Commissioner did not specify what additional precautions Mukand Ltd. could have taken. The Commissioner repeatedly acknowledged the absence of motive and did not establish what Mukand Ltd. did that would render its employees liable to penalty. Therefore, Mukand Ltd. and its employees were not found liable for penalty.
4. Imposition of Penalties on ITC Global Holdings and its Employees:
The show cause notice stated that ITC Global Holdings and its employees failed to comply with the inspection clause of the sales contract. ITC contended that it relied on an agent at Aden for inspection. The Commissioner found no collusion between the parties to import ammunition/explosives. The inspection clause did not specifically state that ITC's representative must be present during the survey. The Commissioner's argument that ITC's representative should have been present was not supported by the contract. The Commissioner also noted that the show cause notice did not charge the dangerous nature of the goods. The absence of specific allegations in the show cause notice meant that the adjudicating authority could not find the appellants in violation of Section 46 of the Act. Therefore, ITC Global Holdings and its employees were not liable for penalty.
5. Imposition of Penalties on Express Transport Ltd. and its Employees:
The show cause notice stated that Express Transport Ltd. and its employees failed to ensure proper examination of the containers and charged more than the prescribed amount for clearance. The Commissioner imposed penalties for facilitating the clearance of containers without proper examination. However, the show cause notice did not mention the need for proper examination. The Commissioner's finding that the failure to examine the goods properly was due to collusion between the custom house agent and the customer was not supported by the show cause notice. There was no proposal to impose penalties on the officers involved. For penalties to be imposed under Clause (b) of Section 112, it must be shown that the custom house agent had knowledge or reason to believe that the goods were liable to confiscation, which was not attempted in the show cause notice. Therefore, penalties on the custom house agent and its employees were set aside.
Conclusion:
The appeals were allowed, and penalties imposed on Mukand Ltd., ITC Global Holdings, Express Transport Ltd., and their employees were set aside. The confiscation of the explosive material was confirmed, but the confiscation of the remaining scrap was not upheld.
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2002 (9) TMI 169
Issues involved:
Classification of exported piston rings under DEPB Schedule Group Code No. 61, Serial No. 78 as "Pig Iron Products".
Analysis:
The appeal filed by Revenue questioned whether piston rings exported by a company should be classified under the DEPB Schedule Group Code No. 61, Serial No. 78 as "Pig Iron Products." The Deputy Commissioner initially held that piston rings cannot be classified under the DEPB Schedule under either Group Code No. 61 Sl. No. 67 or Sl. No. 78. The Revenue argued that granting DEPB benefits to all automobile parts would render specific entries redundant. The Commissioner (Appeals) allowed the DEPB benefit for piston rings, stating that the practice at certain ports cannot dictate classification, and that piston rings are identifiable automobile engine parts distinct from automotive castings or pig iron products. The Revenue contended that since no specific rate exists for piston rings in the DEPB Schedule, they should not be classified as pig iron products.
On the other hand, the Respondents argued that the piston rings are manufactured from pig iron, confirmed by a chemical test. They contended that since there is no specific rate for piston rings made of pig iron in the DEPB Schedule, they should be covered under the generic description of "Pig Iron Products." They relied on Para 3 of Appendix 28A of the Handbook of Procedures, which states that items with specific rates should not be covered under generic descriptions.
The Tribunal considered both arguments and upheld the decision of the Commissioner (Appeals). They noted that the DEPB benefit should be extended to items not specifically mentioned in the schedule under the appropriate generic description. The Tribunal agreed with the interpretation of the instruction in Appendix 28A, stating that the description "Pig Iron Product" is not restricted or qualified by any specific terms. They found no reason to interfere with the decision and rejected the appeal filed by the Revenue.
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2002 (9) TMI 168
Issues Involved:
1. Determination of assessable value of PET chips considering the retention of Methanol as an additional consideration.
2. Applicability of extended period of limitation for issuing the show-cause notice.
3. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.
4. Liability to pay interest under Section 11AB of the Central Excise Act, 1944.
Issue-wise Detailed Analysis:
1. Determination of Assessable Value:
The appellants, M/s. Flex Chemicals Ltd., manufacture PET chips and also perform job work for their sister concern, M/s. Flex Industries Ltd. (FIL). The job work involves two processes: one using DMT, MEG, and catalyst, which produces Methanol as a by-product retained by the appellants, and the other using PTA and MEG + catalyst, which does not produce any by-product. The Central Excise authorities determined that the retention of Methanol constituted an additional consideration. As per Section 4(2) of the Central Excise Act, 1944, and Rule 5 of the Central Excise (Valuation) Rules, 1975, the value of PET chips should include the money value of any additional consideration. Consequently, the assessable value was increased by Rs. 4000.00 PMT, leading to a demand of Rs. 24,24,648/- for the period from February 1997 to September 1997.
2. Applicability of Extended Period of Limitation:
The appellants argued that the demand was time-barred as the department had knowledge of the different job work charges since 12-12-97. They contended that the show-cause notice issued on 24-3-2001 was beyond the six-month limitation period. However, the Tribunal referred to the Larger Bench decision in Nizam Sugar Factory v. CCE, Hyderabad, which stated that the extended period of five years is applicable in cases involving fraud, suppression, or wilful mis-statement, regardless of when the department acquired knowledge of the facts. The Tribunal found no merit in the appellants' contention and upheld the applicability of the extended period.
3. Imposition of Penalty under Section 11AC:
The appellants contested the imposition of a penalty under Section 11AC, arguing that the facts were already known to the department from an earlier show-cause notice dated 3-3-98, which did not allege suppression or fraud. The Tribunal rejected this argument, stating that the appellants' acceptance of duty liability and payment without contesting the demand indicated that the extended period for penalty was applicable. However, considering that the appellants had paid the duty amount well before the issue of the show-cause notice, the Tribunal reduced the penalty from an equal amount to Rs. 2 lakhs.
4. Liability to Pay Interest under Section 11AB:
The Tribunal upheld the liability of the appellants to pay interest under Section 11AB of the Central Excise Act, 1944, as confirmed by the adjudicating authority.
Conclusion:
The Tribunal confirmed the demand of Rs. 24,24,648/- and upheld the liability to pay interest under Section 11AB. The penalty under Section 11AC was reduced to Rs. 2 lakhs, considering the early payment of the duty amount by the appellants. The appeal was disposed of accordingly.
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2002 (9) TMI 167
Issues Involved:
- Violation of actual user condition by selling imported second-hand machines.
- Liability of the sold machines for confiscation.
- Confiscation of machines under seizure.
- Imposition of penalties on the noticees.
Detailed Analysis:
1. Violation of Actual User Condition:
The Chief Commissioner found that 23 companies were floated by R. Janardhanan, who controlled the import and sale of 460 second-hand printing machines. The firms were merely name lenders, and 389 machines were sold in the local market, violating the actual user condition under para 5.4 of the EXIM policy. The importers had declared adherence to the actual user condition but sold the machines, constituting a grave violation of the import policy. The Chief Commissioner concluded that the noticees contravened the actual user condition, making the goods unauthorized and liable for confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962.
2. Liability of Sold Machines for Confiscation:
The Chief Commissioner held that the 389 sold machines were liable for confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962, despite their physical unavailability. The sale of goods in the market constituted an offense, leading to the imposition of a redemption fine of Rs. 25 lakhs on R. Janardhanan, as per the Supreme Court's judgment in M/s. Western Components v. Commissioner.
3. Confiscation of Machines Under Seizure:
The Chief Commissioner noted that the 71 seized machines were not at the premises of the importers and were intended for sale, evidenced by their storage in different locations. This led to the conclusion that the machines were meant for sale, not installation, violating the import policy. Consequently, these machines were ordered for confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962, with an option for redemption on payment of a fine of Rs. 3 lakhs.
4. Imposition of Penalties:
The Chief Commissioner imposed a penalty of Rs. 10 lakhs on R. Janardhanan under Section 112(a) of the Customs Act, 1962, for his central role in the import and sale scheme. Additionally, a penalty of Rs. 5000/- each was imposed on 20 persons for their involvement. The Chief Commissioner justified the penalties based on the seriousness of the offense and the clear intention to profit by violating the actual user conditions of the EXIM policy.
Conclusion:
The appeal by R. Janardhanan was rejected, affirming the confiscation orders, redemption fines, and penalties imposed by the Chief Commissioner. The judgment emphasized the adherence to the actual user condition and the consequences of violating import policy provisions.
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2002 (9) TMI 166
Issues involved: Alleged clandestine removal of goods without payment of duty, challenge to show cause notice, confirmation of duty demand, imposition of penalty.
Summary:
The appellants, a firm and its partner, were accused of clandestine removal of goods without paying duty. The central excise officers seized documents revealing the evasion. The Commissioner confirmed a duty demand of Rs. 11,50,342 and imposed penalties. The appellants contested the notice, denying the allegations. The Tribunal found that the entries in the seized diaries were vague and lacked detail. Without corroboration, the allegations could not be substantiated. Previous cases emphasized the need for independent evidence to prove clandestine activities. The Tribunal concluded that the entries in the diaries did not establish clandestine production and removal of goods. The statement of the firm's manager was not admissible as he was not cross-examined. The allegation of using duplicate invoices was not supported by tangible evidence. The Tribunal set aside the Commissioner's order, accepting the appeals of the appellants.
In conclusion, the Tribunal found that the allegations of clandestine removal of goods by the appellants were not proven beyond doubt. The impugned order of the Commissioner was set aside, and both appeals of the appellants were accepted with consequential relief.
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2002 (9) TMI 161
Issues Involved:
1. Eligibility for benefit under Notification No. 208/83-C.E., dated 1-8-83.
2. Classification of inputs obtained from ship breaking.
3. Retrospective application of Notification No. 101/87-C.E., dated 27-3-87.
4. Time-bar of demands.
Detailed Analysis:
1. Eligibility for Benefit under Notification No. 208/83-C.E., dated 1-8-83:
The appellants argued that they were entitled to the benefit of Notification No. 208/83-C.E. for inputs obtained from ship breaking or purchased from traders for manufacturing CTD bars/rods of iron, round bars, and angles. They contended that these inputs were exempt from excise duty, as they were considered 'nil' duty paid items. The Tribunal, however, referenced previous judgments (Collector of Central Excise v. Choday Apparaw Steel Re-Rolling Mills and M/s. Tigrania Metal & Steel Ltd. & Others v. Collector of Central Excise) and concluded that waste and scrap arising from ship breaking were not entitled to the benefit of the Notification. The Tribunal held that the inputs were not on the same footing as those purchased from the open market and were not covered under the specific sub-headings of the Notification.
2. Classification of Inputs Obtained from Ship Breaking:
The appellants argued that the inputs should be classified under TI 25(9) and 25(11) as re-rollable material, which were exempt from duty. The Tribunal disagreed, stating that the inputs were classified as waste and scrap under TI 25(3)(i)(ii) and were not covered by the Notification. The Tribunal emphasized that the classification of inputs could not be challenged at the appellant's end and upheld the previous judgments that inputs from ship breaking were not eligible for exemption under Notification No. 208/83.
3. Retrospective Application of Notification No. 101/87-C.E., dated 27-3-87:
The appellants claimed that Notification No. 101/87, which incorporated goods obtained from ship breaking under specific sub-headings, was clarificatory and should be applied retrospectively. The Tribunal rejected this argument, stating that Notification No. 101/87 was a new Notification with only prospective effect. The Tribunal noted that the earlier Notification No. 208/83 did not include waste and scrap from ship breaking and that the amendment in 1987 did not have retrospective application.
4. Time-bar of Demands:
The appellants argued that the demands were barred by time, as the department had full knowledge of their activities and the utilization of inputs from ship breaking. They pointed to correspondence with the Assistant Collector and statements recorded by the department. The Tribunal, however, found that the appellants had not filed the required classification lists or declarations and had withheld information. The Tribunal referenced the Supreme Court judgment in Madras Petro-Chem. Ltd. v. C.C.E. Madras and concluded that the demands were not time-barred. The Tribunal held that the appellants were aware of their duty liability and had failed to discharge it, justifying the invocation of the larger period for demands.
Majority Order:
The majority order, delivered by S/Shri S.S. Kang, Member (J) & V.K. Agrawal, Member (T), rejected the appeals on both merits and time-bar. The Tribunal upheld the findings that the inputs from ship breaking were not eligible for exemption under Notification No. 208/83 and that the demands were not time-barred due to the appellants' failure to comply with excise requirements and their awareness of duty liability.
Conclusion:
The appeals were rejected based on the majority order, affirming that the inputs obtained from ship breaking were not eligible for exemption under Notification No. 208/83 and that the demands were not time-barred. The Tribunal emphasized the need for compliance with excise regulations and the non-retrospective application of Notification No. 101/87.
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2002 (9) TMI 160
Issues Involved:
1. Benefit of Notification No. 24/91.
2. Suppression of facts.
3. Duty on hollow blocks.
4. Penalty.
Summary:
A. Benefit of Notification No. 24/91:
The appellants argued that Notification No. 24/91 does not distinguish between cement produced from their own clinker and clinker purchased from outside. The Tribunal observed that the notification exempts duty for portland cement manufactured by a factory using a vertical shaft kiln and does not specify that the clinker must be produced in the same factory. The Tribunal noted that a similar issue had been decided in favor of the appellants in their own case previously. Therefore, the benefit of the notification cannot be denied merely because the factory used clinker purchased from outside along with their own clinker. The benefit of the notification was allowed to the appellants.
B. Suppression of facts:
The appellants contended that there was no suppression of facts and that the shortage of clinker was not indicative of clandestine manufacture of cement. The Tribunal observed that there was acceptable evidence of removal of cement and use of clinker purchased from outside, supported by statements from the appellants' employees. The Tribunal found that the appellants had shown excess removal of limestone and other raw materials, indicating suppression of production and clearance of cement. The Tribunal rejected the appellants' plea and upheld the longer period of limitation for the demand of duty.
C. Duty on hollow blocks:
The appellants claimed that hollow blocks used for constructing a compound wall were exempt from duty under Notification No. 59/90. The Tribunal found evidence that the hollow blocks were manufactured at the site and accepted the appellants' plea for exemption. However, the Tribunal noted that the appellants had suppressed the diversion of 838 bags of cement for manufacturing hollow blocks and upheld the department's allegation of suppression.
D. Penalty:
The Tribunal observed that the penalty under Section 11AC could not be imposed as it came into force after the period involved in the case. The Commissioner had imposed a combined penalty under Rule 173Q and Section 11AC without apportioning the amount. The Tribunal set aside the penalty, following the decision in Punjab Recorder Ltd. v. CCE.
Conclusion:
1. Duty of Rs. 1,68,191/- demanded on account of denial of benefit of Notification No. 24/91-C.E., dated 25-7-91 is set aside.
2. Duty of Rs. 19,599.77 demanded on the hollow blocks manufactured is also set aside.
3. The entire penalty of Rs. 23,04,994/- imposed under Rule 173Q read with Section 11AC of the C.E. Act, 1944 is set aside.
4. The rest of the duty demand of Rs. 21,17,204/- is confirmed.
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2002 (9) TMI 159
Issues Involved:
1. Imposition of penalty under Section 116(a) of the Customs Act, 1962 on the Steamer Agents.
2. Responsibility for pilferage of goods during transit from Chennai Port to CFS Virugambakkam.
3. Interpretation of "person in charge of the conveyance" under the Customs Act, 1962.
4. Applicability of judgments by the Hon'ble Apex Court.
Detailed Analysis:
1. Imposition of Penalty under Section 116(a) of the Customs Act, 1962 on the Steamer Agents:
The Commissioner of Customs imposed a penalty of Rs. 70,78,408/- on the appellants, M/s. P & O Nedlloyd (India) Ltd., under Section 116(a) of the Customs Act, 1962. The appellants contended that they were unaware of the actual quantity of goods in the container and that the container's seal was intact when unloaded from the vessel. They argued that the adjudicating authority incorrectly held them responsible for the pilferage, asserting that the responsibility should lie with the transporter.
2. Responsibility for Pilferage of Goods during Transit from Chennai Port to CFS Virugambakkam:
The appellants argued that the pilferage occurred en route to the CFS and that the transporter and the driver should be held accountable. Statements from various individuals, including the driver and employees of the transport company, were recorded, revealing that the goods were removed illegally during transit. The driver admitted to colluding with others in the removal of goods.
3. Interpretation of "Person in Charge of the Conveyance" under the Customs Act, 1962:
The Tribunal examined whether the liability of the steamer agents ended once the container was unloaded with the seal intact inside the Harbour premises. The Tribunal referred to the judgment in British Airways PLC v. Union of India, where the Hon'ble Apex Court held that the liability could be fastened upon the agent of the person in charge of the conveyance. The Tribunal concluded that the steamer agents' responsibility extended to the CFS/CWC to which the containers were allowed to be removed based on the applications filed by the steamer agents.
4. Applicability of Judgments by the Hon'ble Apex Court:
The Tribunal considered the judgments cited by the Revenue, including IAAI v. Grand Slam International and British Airways PLC v. Union of India. These judgments supported the argument that the responsibility for the goods lies with the person in charge of the conveyance or their agent until the goods are handed over to the custodian. The Tribunal observed that the steamer agents were responsible for the shortages noticed at the time of examination of the container and were liable to pay the penalty under Section 116(a) of the Customs Act, 1962.
Conclusion:
The Tribunal upheld the penalty imposed on the appellants under Section 116(a) of the Customs Act, 1962, finding no infirmity in the impugned order. The Tribunal rejected the appellants' plea that the liability should be fixed on the transporter, emphasizing that the steamer agents were responsible for the transport of the goods from Chennai Port to CFS Virugambakkam. The Tribunal noted that the original authority had the power to impose a penalty twice the amount of duty but had reasonably restricted the quantum of penalty to the amount of duty only.
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2002 (9) TMI 155
Issues:
1. Admissibility of Modvat credit on compressors used for pneumatic operation in an arc furnace.
2. Correct interpretation of Rule 57G regarding the time limit for availing Modvat credit on imported goods.
3. Applicability of Trade Notice in determining the date of issue of Bill of Entry for availing Modvat credit.
Analysis:
Issue 1: Admissibility of Modvat credit on compressors used for pneumatic operation in an arc furnace.
The Appellate Tribunal addressed the issue of whether compressors used for pneumatic operation in an arc furnace could be considered as compressors used for refrigerating and air-conditioning appliances. The Commissioner (Appeals) had previously ruled that Modvat credit on such compressors was admissible. The Tribunal upheld this decision, emphasizing that the compressors in question were not used for refrigerating and air-conditioning appliances, making the Modvat credit rightfully claimed by the appellant.
Issue 2: Correct interpretation of Rule 57G regarding the time limit for availing Modvat credit on imported goods.
The case involved a dispute over the interpretation of Rule 57G concerning the time limit for availing Modvat credit on imported goods. The Revenue argued that the Modvat credit was wrongly allowed after the expiration of six months from the date of payment of duty on Bills of Entry. However, the respondents contended that the credit was correctly taken within the stipulated time frame. The Tribunal examined the provisions of Rule 57G and relevant case law, ultimately determining that the date of issue of Bill of Entry for availing Modvat credit should be considered as the date of release by the Customs authorities. The Tribunal rejected the Revenue's appeal, emphasizing the importance of interpreting the rule based on the specific circumstances of each case.
Issue 3: Applicability of Trade Notice in determining the date of issue of Bill of Entry for availing Modvat credit.
The Tribunal also deliberated on the applicability of a Trade Notice in determining the date of issue of Bill of Entry for availing Modvat credit. The Revenue argued that the Trade Notice clarifying the date of payment of duty as the date of issue of Bill of Entry should be followed. However, the Tribunal held that Trade Notices cannot override mandatory requirements and that the date of issue should be determined based on the actual release of Bills of Entry by the Customs authorities. Consequently, the Tribunal rejected the Revenue's appeal, highlighting that Trade Notices cannot take precedence over statutory provisions.
In conclusion, the Appellate Tribunal upheld the decision of the Commissioner (Appeals) regarding the admissibility of Modvat credit on compressors and ruled in favor of the respondents on the interpretation of Rule 57G and the applicability of Trade Notices in determining the date of issue of Bill of Entry for availing Modvat credit.
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2002 (9) TMI 154
Issues involved:
Whether Reduced Crude Oil (R.C.O)/ Low Sulphur Heavy Stock (LSHS) captively consumed by the appellant were eligible for exemption from Central Excise duty.
Analysis:
The appeals revolve around the eligibility of Reduced Crude Oil (R.C.O)/ Low Sulphur Heavy Stock (LSHS) for exemption from Central Excise duty when captively consumed. The appellants, engaged in refining crude petroleum, claimed exemption based on various notifications. However, the impugned orders denied the exemption, stating it was only available for RCO/LSHS directly used in the oil refinery, not for those used in generating electricity for refining. The appellants argued that indirect use should not disqualify them from exemption, citing precedents like Hindustan Petroleum Corporation Ltd. v. CCE and Jaypee Rewa Cement v. Commissioner of Central Excise.
The counsel highlighted that even indirect use of specified inputs should be eligible for exemption, as ruled by the Apex Court in Jaypee Rewa Cement case. They also referred to a decision by the Larger Bench of the Tribunal regarding Modvat credit on fuel oils like LSHS used in electricity generation. The counsel emphasized that the Board's Circular supported their position, clarifying that the generation of electricity as an intermediate product is incidental to the manufacturing process of petroleum products, making the exemption applicable.
The Tribunal examined the records and the arguments presented. It noted that the issue raised was addressed in the Hindustan Petroleum Corporation Ltd. case and the Board's Circular, which confirmed the eligibility of the exemption for electricity generated as an intermediate product in the manufacture of petroleum products. The Tribunal concluded that indirect use of RCO/LSHS in generating electricity for refinery use satisfied the exemption criteria, while such use for other purposes would not be exempt. Therefore, the appeals were allowed in favor of the appellants for RCO/LSHS used in the refinery, with duty liability imposed on RCO/LSHS used otherwise.
In conclusion, the Tribunal upheld the appellants' claim for exemption on RCO/LSHS used in the refinery for electricity generation but not for other purposes. The decision was based on established legal principles, precedents, and the Board's Circular, ensuring clarity on the eligibility for Central Excise duty exemption in such cases.
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2002 (9) TMI 152
Issues Involved:
1. Legality of the seizure of 49 foreign marked gold biscuits.
2. Application of Section 123 of the Customs Act.
3. Confiscation of gold biscuits under Section 111(d) of the Customs Act.
4. Confiscation of the blue colored jeans bag under Section 119 of the Customs Act.
5. Imposition of penalties on the involved parties under Section 112(a) and 112(b)(ii) of the Customs Act.
6. Validity of the statements and evidence provided by the appellants.
Detailed Analysis:
1. Legality of the Seizure of 49 Foreign Marked Gold Biscuits:
The judgment outlines that the gold biscuits were seized from Shri D.S. Srinivas by the Ulsoor Gate Police on 12-3-98. The Customs Officers were informed and conducted independent investigations. The gold biscuits bore the markings of 'Swiss Bank Corporation'. The initial claim by Shri Lakhanraj was that the gold was purchased from Indian Overseas Bank (IOB), but later documents suggested it was from Canara Bank. The court found discrepancies in the statements and documents provided, leading to the conclusion that the gold was smuggled.
2. Application of Section 123 of the Customs Act:
The court discussed the burden of proof under Section 123 of the Customs Act, which lies on the person from whose possession the gold was seized. The appellants failed to satisfactorily prove that the seized gold was not smuggled, as their explanations and documents were inconsistent and appeared to be afterthoughts.
3. Confiscation of Gold Biscuits under Section 111(d) of the Customs Act:
The Commissioner concluded that the 49 gold biscuits were smuggled into India in contravention of Section 11 of the Customs Act, making them liable for confiscation under Section 111(d). The court upheld this finding, noting that the appellants did not satisfactorily account for the possession of the gold and failed to prove its duty-paid character.
4. Confiscation of the Blue Colored Jeans Bag under Section 119 of the Customs Act:
The blue colored jeans bag used to conceal and carry the gold biscuits was also ordered to be confiscated under Section 119 of the Customs Act. The court upheld this decision as the bag was used in the act of smuggling.
5. Imposition of Penalties on the Involved Parties:
- Shri Lakhanraj: A penalty of Rs. 5 lakhs was imposed for his involvement in smuggling and attempting to legitimize the smuggled gold through false documents.
- Shri D.S. Srinivas: A penalty of Rs. 2 lakhs was imposed for his role in receiving, keeping, and selling the smuggled gold.
- Shri Prakash Chand: Initially, a penalty of Rs. 3 lakhs was imposed for giving false statements to legitimize the smuggled gold. However, the court set aside this penalty, finding no sufficient grounds to uphold it.
6. Validity of the Statements and Evidence Provided by the Appellants:
The court found the statements and evidence provided by the appellants to be inconsistent and unreliable. The initial claim that the gold was from IOB was contradicted by later documents suggesting Canara Bank as the source. The statements of Shri Vasudeva Bhat from IOB and the lack of cross-examination of his statements further weakened the appellants' case. The court also considered the statement of Shri B.H. Srinivasamurthy, which corroborated the possession of the gold biscuits by Shri D.S. Srinivas before the claimed time of delivery from Canara Bank.
Conclusion:
The appeals of Shri D.S. Srinivas and Shri Lakhanraj were dismissed, upholding the confiscation of the gold biscuits and the penalties imposed on them. The appeal of Shri Prakash Chand was allowed, and the penalty against him was set aside.
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2002 (9) TMI 149
The Appellate Tribunal CEGAT, Mumbai allowed the appeals filed by Cora Chem regarding the overvaluation of toothpaste exported in 1994. The Tribunal found that the notice issued by the Commissioner lacked supporting evidence and was based on subjective opinions. The order imposing penalties on the exporter and its partner was set aside.
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2002 (9) TMI 148
Issues involved: Interpretation of Section 11D of the Central Excise Act, 1944 regarding the maintainability of a demand against a dealer who is not a manufacturer.
Summary:
The appeal challenged an order by the Commissioner of Central Excise regarding a demand under Section 11D against the appellant, a dealer not involved in manufacturing. The appellant contended that as they were not manufacturers but traders who bought goods from another entity, the provisions of Section 11D did not apply to them.
The Commissioner held that as sellers of petroleum products received from installations, the appellant was liable under Section 11D, being registered dealers with the Central Excise Department. The Commissioner interpreted 'every person' in Section 11D to include those who collected excise duty from buyers and must deposit it with the Government. The appellant's reliance on a previous court decision was rejected by the Commissioner.
The appellant argued that an amendment to Section 11D clarified that the term 'every person' referred to those liable to pay duty, i.e., manufacturers, not dealers. Referring to a previous court decision, the appellant contended that the demand against them was not valid under Section 11D.
The Tribunal noted that the demand in question was for goods not manufactured by the appellant. Referring to a previous court decision and the statutory amendment, the Tribunal agreed with the appellant that no demand could be raised against them under Section 11D as they were not the manufacturers of the goods. Consequently, the impugned order was set aside, and the appeal was allowed.
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2002 (9) TMI 147
The Appellate Tribunal CEGAT, New Delhi ruled that the benefit of Notification No. 3/2001-C.E. is available to Brass Circles manufactured by M/s. Mewar Bartan Nirman Udyog. The Tribunal concluded that since the circles manufactured were brass, an alloy of copper/zinc, they were eligible for the exemption under the notification. The appeal filed by the Revenue was rejected.
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2002 (9) TMI 145
Issues involved:
The issues involved in this case include the payment of anti-dumping duty on imported goods, the recalculation of duty, the imposition of redemption fine, and the imposition of penalty for duty evasion.
Payment of Anti-dumping Duty and Recalculation of Duty:
The appellants imported goods declared to be of Taiwanese origin, but later investigations revealed they were of Thai origin attracting anti-dumping duty. The appellants paid the duty and a penalty. The appellant's counsel argued for recalculation of duty due to a reduction in the anti-dumping duty and the exclusion of anti-dumping duty from the price calculation. The tribunal noted the need for duty recalculation based on these factors.
Imposition of Redemption Fine:
The appellant's counsel cited Supreme Court judgments stating that redemption fine cannot be imposed if goods are not available for confiscation. The tribunal agreed with this argument and set aside the order imposing the redemption fine.
Imposition of Penalty:
The appellant's counsel contended that there was no intent to evade duty, attributing any mistakes to the supplier. The Departmental Representative argued that the appellant switched the origin of goods to evade duty, justifying the penalty. The tribunal found merit in the Departmental Representative's arguments but decided that the penalty should be determined after duty recalculation, not exceeding 25% of the penalty already paid.
Conclusion:
The tribunal ordered a recalculation of duty and potential refund, set aside the redemption fine, and remanded the case for the Commissioner to determine the penalty after recalculating the duty, with a cap of 25% of the penalty already paid.
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2002 (9) TMI 141
Issues:
1. Maintainability of appeal and stay application against the Order-in-Appeal.
2. Nature of the impugned correspondence and assessment proceedings.
3. Validity of the Commissioner (Appeals) decision to dismiss the appeal and stay application.
4. Relief sought by the appellant regarding the encashed bank guarantee.
5. Comparison with the Bombay High Court decision on bank guarantee encashment.
6. Directions regarding the refund of the encashed amount and issuance of a new bank guarantee.
Issue 1: Maintainability of appeal and stay application against the Order-in-Appeal
The appeal was directed against the Order-in-Appeal passed by the Commissioner (Appeals), where the appeal and stay application were dismissed on grounds of non-maintainability. The Commissioner held that the impugned correspondence from the Deputy Commissioner was not a proceeding finalizing the assessment, leading to the dismissal of the appeal and stay application.
Issue 2: Nature of the impugned correspondence and assessment proceedings
The Deputy Commissioner's correspondence dated 19-6-2002 was deemed by the Commissioner (Appeals) as not a final assessment proceeding but merely a correspondence. However, the Tribunal disagreed, asserting that the impugned proceedings were indeed the final assessment for the period from June 2001 to May 2002, covering 46 Bills of Entry. This discrepancy led to the dismissal of the appeal and stay application.
Issue 3: Validity of the Commissioner (Appeals) decision
The Tribunal found that the Commissioner (Appeals) erred in dismissing the appeal and stay application based on the misconception that the impugned action was not a final assessment proceeding. The Tribunal set aside the Commissioner's order and deemed the appeal as maintainable.
Issue 4: Relief sought by the appellant regarding the encashed bank guarantee
The appellant sought to be restored to the original position before the Commissioner's order, considering the stay granted by the High Court regarding the encashment of the bank guarantee. The Tribunal acknowledged the appellant's entitlement to this relief.
Issue 5: Comparison with the Bombay High Court decision on bank guarantee encashment
The Tribunal referred to a Bombay High Court decision where improper encashment of a bank guarantee led to a refund to the assessee. Drawing parallels, the Tribunal directed the Revenue to refund the encashed amount to the appellant and instructed the appellant to provide a new bank guarantee for the same amount.
Issue 6: Directions regarding the refund of the encashed amount and issuance of a new bank guarantee
The Tribunal directed the Revenue to refund the encashed amount within two weeks and mandated the appellant to furnish a new bank guarantee within one week thereafter. Both parties were bound by the High Court's order for interim stay until the Commissioner (Appeals) made a final decision on the stay application.
In conclusion, the Tribunal set aside the Commissioner (Appeals) order, deemed the appeal maintainable, and provided directions for the refund of the encashed amount and issuance of a new bank guarantee.
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2002 (9) TMI 140
Issues involved: Interpretation of Notification No. 67/95-C.E. regarding exemption for capital goods used within the factory of production.
In this case, the Appellate Tribunal CEGAT, Court No. II, New Delhi, considered an appeal filed by M/s. Elcon Clipsal India Ltd. regarding the availability of exemption under Notification No. 67/95-C.E. for moulds, dies, and press tools used within their factory for manufacturing electrical goods. The Assistant Commissioner had disallowed the exemption, stating that the goods cannot be treated for captive consumption. The Commissioner (Appeals) upheld this decision, emphasizing the need to follow Rule 173H of the Central Excise Rules for retaining goods in the factory for others. The Appellants argued that the ownership of the goods is irrelevant for availing the exemption and cited the case of BPL Electronics Ltd. v. C.C.E., Bangalore, 1994 (71) E.L.T. 801 (T) in support.
The Tribunal examined the submissions and found that Notification No. 67/95-C.E. exempts capital goods manufactured in a factory and used within the factory of production. It was acknowledged that the impugned goods were indeed used within the factory of production. The Tribunal agreed with the Appellants that the exemption is based on the place of use, not ownership, and that the goods being sold does not disqualify them from the exemption. Referring to the case of BPL Electronics Ltd., the Tribunal emphasized that as long as the goods are manufactured in a factory and intended for use in that factory, the exemption applies, regardless of any sale transactions.
Therefore, the Tribunal concluded that the Appellants are eligible for the benefit of exemption under Notification No. 67/95-C.E. and allowed the appeal.
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2002 (9) TMI 138
The appeal filed by the Commissioner of Central Excise, Bhopal was dismissed by the Appellate Tribunal CEGAT, New Delhi as it was found to be not maintainable. The Tribunal held that the order passed by the Commissioner had already merged with the final order passed by the Tribunal before any order was passed by the Central Board of Excise & Customs.
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2002 (9) TMI 137
Issues:
1. Determination of assessable value and duty demands for clearances made by a 100% Export-Oriented Unit in the DTA.
2. Application of proviso to Section 3 of the Central Excise Act, 1944, and circulars issued by CBEC for valuation of goods sold by EOU in DTA.
3. Quantification of duty demand based on notifications reducing excise duty equivalent to customs duty on like imported goods.
Analysis:
Issue 1:
The appellants, a 100% Export-Oriented Unit, were engaged in manufacturing Hydrogen Peroxide and selling in the DTA. The appeal concerned the determination of assessable value and duty demands for clearances made during a specific period. The appellants rectified power issues and started selling export-quality products in the DTA with necessary permissions.
Issue 2:
(a) The proviso to Section 3 of the Central Excise Act, 1944, states that when an EOU sells in DTA, excise duty should be equivalent to customs duties on like imported goods. Circulars by CBEC emphasized using transaction value for assessment unless specific exceptions apply, which was not the case here. Lower authorities erred in not applying the circular and resorting to Rule 5 of Customs Valuation Rules.
(b) The adoption of CIF value of imported goods by lower authorities was contested as not meeting valuation requirements. The duty demand calculation was challenged based on notifications reducing excise duty to 50% of customs duties, as per precedent and prevailing notifications.
Issue 3:
The appellants contended that they were liable to pay only 50% of Basic Customs Duty under the relevant notifications, contrary to the duty demand calculation in the impugned order. Citing a Larger Bench decision, it was argued that only 50% Basic Duty of Customs should be levied. The Tribunal set aside the order for reworking duties payable and granting consequential relief.
In conclusion, the appeal was disposed of with directions to rework duties payable and determine any eligible consequential relief according to the law.
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