TMI Blog2009 (5) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... No. (1) by following the procedures provided under Notification No. 214/86-C.E., dated 25-3-1986. On the basis of the investigations conducted, it was noticed by the lower authorities that appellant No. (1) was evading the Central Excise duty, hence the show cause notice was issued to appellant No. (1) and (2). The appellants submit that when they have disclosed the relevant facts to the department at the appropriate time, longer period of limitation cannot be invoked under the proviso to Section 11A of the Central Excise Act, 1944. Held that- We find that the question of limitation will also need to be considered in this case. The Adjudicating Authority has decided the issue of limitation only on the ground that the appellant No. (1) has not informed the Revenue Authorities as regards the manufacturing and clearing of the goods from the factory premises in their returns. It is also held that the appellant No. (1) has not made true declarations and also given the false declaration. - E/251 and 268/2008 - 667-668/2009 - Dated:- 26-5-2009 - S/Shri T.K. Jayaraman, Member (T) and M.V. Ravindran, Member (J) S/Shri G. Shiva Dass, Advocate and S.K. Choudhury, Consultant, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of duty, during the period from December 2003 to March 2007, as detailed in Annexure-B should not be demanded from them as provided under Sub-section (1) of Section 11A of the Central Excise Act, 1944 read with proviso thereto and why an amount of Rs.50,75,000/-, already paid by them, voluntarily, should not be adjusted and appropriated towards the duty liability. (b) Interest on the amount mentioned in 'a' above, should not be demanded in terms of Section 11AB of the Central Excise Act, 1944 and why an amount of Rs.11,75,000/-, paid by them, voluntarily, towards the interest amount should not be adjusted and appropriated towards the interest payable. (c) Penalties equal to the amount mentioned in (a) above, should not be paid by them in terms of Section 11AC of the Central Excise Act, 1944 for the contraventions alleged supra. (d) Penalty as provided under Rule 25 of the Central Excise Rules, 2002 should not be imposed on them for the contraventions alleged supra. 5. Appellant No. (1) and (2) both contested the show cause notices on the various grounds, mainly on the ground that the issue is time barred, that the products, which come out on the job work basis in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire case. It is his submission that the issue involved in this case is for the period December 2003 to March 2007. He would submit that the appellant No. (1) was a job worker and was manufacturing profiles on behalf of appellant No. (2). It is his submission that till 10-6-2003, appellant No. (2) was correctly following the procedures of the Notification No. 214/1986 and sending the inputs for the manufacture of job work. It is his submission that after the issuance of Notification No. 50/2003-C.E., appellant No. (2) was exempted their demand of Central Excise duty, being located in certain areas of Uttarakhand subject to the following conditions: (a) The manufacturer who intended to avail of the exemption under the above notification was to exercise his option in writing before effecting the first learance and such option was to be effective from the date of exercise of the option and could not be withdrawn during the remaining part of the financial year, (b) The manufacturer shall, while exercising the option under condition (a) above, inform in writing to the jurisdictional Deputy/Assistant Commissioner of Central Excise, with a copy to the jurisdictiorial Superintendent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Steel Tubes of India Ltd. v. CCE, Indore - 2007 (217) E.L.T. 506 (Tri.-L.B.) (b) CCE, Visakhapatnam v. Deccan Veneers (P) Ltd. - 2007 (217) E.L.T. 511 (Tri.-Bang.) (c) Asea Brown Boveri Ltd. v. CCE, Jamshedpur - 2003 (159) E.L.T. 350 (Tribunal) = 2003 (55) R.L.T. 835 (CEGAT-Kol.). (d) CCE, Patna v. Orient Beverages Ltd , 2003 (160) E.L.T. 326 (Tribunal) = 2003 (55) RLT 837 (CEGAT-Kol.) (e) Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad - 1995 (76) E.L.T. 241 (S.C.) (f) Union of India v. Delhi Cloth General Mills Co. Ltd. - 1997 (92) E.L.T. 315 (S.C.) (g) L. Chandra Kumar v. Union of India - 1997 (92) E.L.T. 318 (S.C.) (h) Union of India v. Sonic Electrochem (P) Ltd. - 2002 (145) E.L.T. 274 (S.C.) (i) Standard Pencils (P) Ltd. v. Collr. of C. Ex., Madras - 2002 (145) E.L.T. 278 (S.C.) 8. Learned Counsel Shri Shiva Dass appeared on behalf of appellant No. (2) and contended that the issue in this case is well within the knowledge of the Revenue. 8.1 He would submit that the impugned order has been issued without appreciating the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Collector - 1995 (78) E.L.T. 641 (c) UOI v. Sonic Electrochem Pvt. Ltd. - 2002 (145) E.L.T. 274 (S.C.) (d) UOI v. Delhi Cloth General Mills Co. Ltd. - 1997 (92) E.L.T. 315 (S.C.) 8.7 Further the appellants submit that it was precisely the reason due to which the appellants have indicated in their declaration dated 21-9-2004 that there would be no duty liability on the extrusions manufactured by M/s. Alumeco India Extrusion Ltd. 8.8 The appellants submit that the profiles/extrusions as emerging after the process of job work cannot be considered as marketable goods inasmuch as it is meant for the exclusive use of the appellants at their Bhimtal factory. 8.9 It is submitted that in order to charge the duty of excise on particular goods, first it has to be established that the goods were marketable when they are removed from the factory and the burden to prove the marketability rests on the department. 8.10 The appellants submit that various decisions of the Supreme Court and Tribunal clearly clarify that burden to prove the marketability of any goods rests on the Department. This issue was settled for the first time by the Supreme Court in the case of Collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants submit that marketability is a must for anything to qualify as goods. Marketability does not imply the actual sale and purchase but ability of being bought and sold in market. 8.15 One of the earliest disputes relating to excisability of commodities with reference to marketability was decided by the Hon'ble Supreme Court in the case of UOI v. Delhi Cloth and General Mills reported in 1977 (1) E.L.T. (J) 199 (S.C.) in which the Hon'ble Supreme Court held that for any commodity to be considered as goods, they should ordinarily be capable of being brought to the market to be bought and sold. 8.16 This principle was again followed by the Hon'ble Supreme Court in the case of Moti Laminates Pvt. Ltd. v. CCE reported in 1995 (76) E.L.T. 241 (S.C.). The test laid down by the Hon'ble Supreme Court in the case of Moti Laminates was again reiterated by the Supreme Court in the latest decision in the case of UOI v. Sonic Electrochem Pvt. Ltd. reported in 2002 (145) E.L.T. 274 (S.C.). 8.17 It is submitted that in view of the law as laid down and clarified by the Hon'ble Supreme Court, the appellants submit that the extrusion/profile got manufactured by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd at Hyderabad have accepted the declaration filed, allowed the appellants and M/s. Alumeco India Extrusion Ltd. to operate under the job work procedure for quite a long time and thereafter suddenly raised an objection that such a job work procedure was not available on the basis of the same set of documents which was always in position of the department right from the beginning. 8.23 The appellants submit that when they have disclosed the relevant facts to the department at the appropriate time, longer period of limitation cannot be invoked under the proviso to Section 11A of the Central Excise Act, 1944 [ Gemini Leather Stores v. Income Tax Officer - 1975 (100) ITR 1 (S.C.)]. 8.24 Further it is also submitted that it is well settled law that the Department cannot press into service the machinery for invoking the extended period of limitation unless there is established an act of suppression or mis-declaration with an intent to evade payment of duty. In this connection, the appellants wish to place reliance on the decisions on the following decisions of this Hon'ble court: (a) Cosmic Dye Chemical v. Collector of Central Excise, Bombay - 1995 (75) E.L.T. 721 (S.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve perspective, it would become clear that there has been no violation of Notification No. 214/86-C.E. on their part and consequently the proposal to impose penalty under Rule 26 of the Central Excise Rules is not sustainable. In addition to the above decision, he also relied upon the decision of the Hon'ble Supreme Court in the case of Cipla Ltd. v. CCE, Bangalore as reported at 2008 (225) E.L.T. 403 (S.C.). 9. Learned SDR would submit that the entire Order-in-Original is correct and does not require any interference. It is her submission that the duty liability is on the manufacturer of the product i.e. appellant No. (1) in this case. It is her submission that appellant No.(1) should have made proper declarations before the authorities as to the manufacturing and clearance of the said products. It is her submission that extrusion/profiles are dutiable products. She would draw our attention to the statement of the Manager of appellant No. (2). She would also rely upon the decision of the Supreme Court in the case of M/s. Jaishri Engineering Company Pvt. Ltd. as reported at 1989 (40) E.L.T. 214 (S.C.). She also relied upon the decision of Hon'ble Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appellant No. (1) under Notification 214/86 after following the procedure of sending the job work challans as prescribed. It is also undisputed that appellant No. (1) records all the receipt of the raw materials in a register, which is also prescribed and the dispatch particulars therein. It is also noticed that the entire case is regarding the demand of duty on aluminium profiles manufactured on job work basis and cleared by appellant No. (1). 14. We find the most important aspect in this case is whether the said aluminium profiles as manufactured by appellant No. (1) is marketable or not. The contention of appellant No. (2) that the said product aluminium extrusions/profiles as manufactured by appellant No. (1) is not marketable was raised by them before the Adjudicating Authority. The Adjudicating Authority disposed of the said objection by making the following observations: "The contention of the noticee, M/s. AWSL, is not correct. The duty of excise is on the manufacture or production of the goods. As per Section 3 of the Central excise Act, 1944, duties specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985, to be levied on all e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. AIEL. The product emerged out of the manufacture i.e. Aluminium Extrusions/Profiles is a distinct and new article and no longer regarded as Aluminium Ingots. Further, the assesses, M/s. AIEL, are also manufacturing Aluminium Extrusions/Profiles on their own in addition to undertaking job work for M/s. AWSL. M/s. AIEL are clearing the Aluminium Extrusions/Profiles for sale in the market and the said Extrusions/Profiles are purchased by different customers of them. The above fact itself prove that the Aluminium Extrusions/Profiles manufactured on job work basis by M/s. AIEL and cleared to M/s. AWSL, are marketable. Further, the words "sale" and "purchase" have been defined vide clause (h) of Section 2(f) of the Central Excise Act, 1944 as any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration. Basing on the said definition, the Hon'ble Tribunal, Chennai, in the case of Commissioner of Central excise, Coimbatore v. Blue Mountain Treads Pvt. Ltd. has held that Stock Transfer of inputs to job worker under invoices amounts to sale within the meaning of Section 2(h) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is manufacture of article before the same is chargeable to duty it must satisfy the test of marketability. Another point is that whether the aluminium extrusions/profiles as manufactured by appellant No. (1) are marketable commodity as they are removed at the time of removal from the appellant No. (1)'s factory gate. It is undisputed in this case that there is no evidence lead by the department as to whether the aluminium extrusions/profiles were marketable in the condition in which they were removed from appellant No. (1)'s factory. The following case-laws have clearly settled the law, that the marketability of the product should be in the condition in which they are removed. (a) RINL v. CCE - 2002 (150) E.L.T. 743 (b) CCE, Cochin v. Mythri Rubbers Pvt. Ltd. - 2001 (132) E.L.T. 627 (c) TISCO v. CCE, Jamshedpur - 1995 (76) E.L.T. 602 which is affirmed by the Hon'ble Supreme Court as reported at 2000 (117) E.L.T. A124. 16. It is noticed that in this case, revenue has not produced nor there are any findings regarding marketability of the product which seeks to levy duty. We find that Hon'ble Supreme Court in the case of Cipla Ltd. (supra) was consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that the product was either marketed or was marketable. Since the Revenue has failed to lead any evidence to show that the product in question was marketable or was capable of being marketed and that the product in question was a distinct product for being sold in the market, it has to be held that the product in question was not marketable. Accordingly, the appeal is accepted. The order of the Tribunal is set aside with consequential effect. No costs." 16.1 It can be noted from the above reasoning of their Lordship and the decided case-laws, that in the absence of any evidence regarding the marketability of the product, the duty liability cannot be fixed. We find that the question of limitation will also need to be considered in this case. The Adjudicating Authority has decided the issue of limitation only on the ground that the appellant No. (1) has not informed the Revenue Authorities as regards the manufacturing and clearing of the goods from the factory premises in their returns. It is also held that the appellant No. (1) has not made true declarations and also given the false declaration. We do not find merits in these findings. We find that it is undisputed that ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N NO. 214/86-C.E. DATED 25-3-1986. - Commissionerate : Hydrabad II Divison : Hydrabad "C" Range : Toopran 1. Date of information : 22-1-2004 2. Name address of the assessee with Registration No. (details of Central Excise Registration held for the Manufacture of excisable Commodities to be given, : Aqumall Water Solutions Limited, Hitron Electronic Complex, Mannital, Bhimtal BCC/REG. No. AADCA 6241 MXM 002 3. Details of inputs or Raw materials or semi-finished goods supplied to the job worker for further manufacture of processing or operation Chapter Heading and Sub-Heading of the materials : Aluminium Ingots or Billets 7601.10 4. Nature of manufacture/process operation to be done (a separate Sheet may be added if Necessary) : Aluminium Extrusions 5. Whether the Raw-materials or Semi-finished goods are supplied directly to the job worker without first bringing the material to the factory of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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