TMI Blog2015 (11) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... treating that it is only an intimation. - demand is hit by limitation. - Decided in favor of assessee. Decision on merit - Appellant have received MS scrap as per conversion agreements entered into with the principal manufacturer/supplier and there is no dispute on the fact that appellants are also original manufacturers of MS ingots and billets on their own account and discharging central excise duty on the final products. It is an admitted fact that appellant received raw materials on job work and after conversion cleared MS ingots/billets to their principal supplier M/s.Kanishk Steel Industries. Vyapar, Salem, Ispat Radice (India) Ltd. in the respective central excise jurisdiction. On perusal of the challans and invoices, we find that the invoice bears the clear endorsement sent for conversion under Rule 4 (5) (a). No SCN has been issued or any investigation carried out with the principal suppliers of raw materials as to whether the duty has been discharged on the final product cleared by the principal manufacturer as per the job work notification. Further, it is pertinent to see that both the appellant and the principal suppliers are duly registered with the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 104/09 arising out of OIO No.20/2008 dt. 25.11.2008. 2. The brief facts of the case are that appellants are manufacturers of billets and ingots of iron and steel falling under Central Excise Heading 7207 and 7206 of CETA and also registered with Central Excise and discharging duty on the finished goods cleared during the period Jan'05 to July'05. On verification of records, it was alleged that appellants cleared M.S. billets and M.S. ingots without payment of duty after conversion. The appellants have entered into conversion agreements with M/s.Kanishk Steel Industries Ltd., Gummidipoondi, Kanishik Steel Industries Ltd., Bangalore and M/s.Sonal Vyapar Ltd., Salem. As per the agreement, appellants received MS scrap, H.M.S, L.M.S., Scrap turnings and boring scrap and sponge iron etc. for conversion into M.S. Billets/ingots. It was alleged that after conversion the appellants cleared the finished goods without payment of duty to their principal suppliers. There was no evidence to show that appellants or the principal supplier claimed the benefit of exemption under Notification No.214/86. No declaration filed by the principal supplier with jurisdictional Central Excise auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986. Appellants have also addressed letters dt. 1.4.2005, 8.8.2005 directly to the jurisdictional AC intimating the receipt of raw materials for conversion under Rule 4(5)(a) of CCR. That end use certificate dt. 21.9.2005 was also obtained from the jurisdictional DC on the consumption of raw material and the DC has certified that appellants have consumed the raw materials in manufacture of MS ingots. The department never raised any doubt or any objection on the intimation letters submitted to the AC Division. 5. On merits of the case, he submits that they have not violated any procedure and being a job worker, they received the inputs, processed and after conversion the MS Ingots/Billets were returned to the principal manufacturers under valid invoice cum delivery challan. Both receipt of the raw material and clearance of the goods were accompanied by valid documents. He submitted copies of both supplier's invoice and delivery challans. In the said invoices, it is clearly mentioned that the goods were sent for conversion under Rule 4(5)(a) of CCR. They have returned the entire goods after conversion and also returned the scrap arising out of manufacture to the respective su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs CCE Trivandrum 2007 (215) ELT 434 (Tri.- Chennai) (5) Seam Engineers Vs CCE 2009 (238) ELT 809 (Tri.-Mumbai) (6) M.Tex D.K. Processors (P) Ltd. 2001 (136) ELT 73 (Tri.-Del.) (7) G.G. Automotive Gears Ltd. Vs CCE Indore 2014 (308) ELT 546 (Tri.-Del.) (8) CCE Bangalore Vs Bharath Fritz Werner Ltd. 2007 (218) ELT 177 (Kar.) 7. Ld. Special Counsel appearing for the main appellant submitted written synopsis along with paper book containing relevant documents. He submits that the Range Superintendent of Central Excise, Mayiladutharai, on scrutiny of ER 1 Returns, sought clarification from the appellant vide his letter dt. 31.8.2006 and again on 23.10.2006 on clearance of billets/ingots manufactured by them, both on payment of duty and without payment of duty. Thereafter summons were issued, statements were recorded from Shri Arvind Gupta, President of the company and statement was recorded from Shri Ashok Bhora, Director of Kanishk Steel Industries. He referred to letter dt. 1.4.2005 addressed to AC by the appellant and submits that it is only an intimation of receiving the raw materials under Rule 4(5) (a) of CCR and returning the goods to the principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly from CFS to appellant's unit. It is clearly showed that the principal manufacturer has not received the inputs and availed any credit on the goods but directly sent to the appellant for manufacture of MS Billets. He relied on the statement of Shri Asok Bhora, Director of M/s.Kanishk Steel Industries annexed to page 11 of paper book, wherein at Question No.16, he has admitted that goods were directly sent from CHA to appellant's unit and no credit was taken by them. 7.1 He further submits that appellants have misdeclared in their ER-1 returns that they are following the procedure prescribed under Rule 4 (5) (a) of CCR. Since the principal manufacturer has not complied with the condition of the notification 214/86, Rule 4(5) (a) is ab-initio and not applicable. No monitoring done by the department either at the principal manufacturer's end or at the end of the job worker. Therefore he submits that extended period has been rightly invoked as there is clear cut suppression of facts. Appellants relying on letters addressed to the AC, Salem is only an intimation. Mere filing of ER-1 returns is not equivalent to compliance of conditions of exemption notification an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l counsel in his rejoinder submits that since the notification No.214/86 has been denied and rule 4(5) (a) is not applicable to the instant case, excise duty cannot be fastened on the supplier of raw material. 10. We have carefully considered the submissions of both sides and the various annexures submitted by both special counsel for the Revenue and the advocate for the respondent. 11. The issue in the present appeal relates to demand of excise duty on the goods manufactured by the appellants under job work Notification No.214/86-CE. In the impugned order, the adjudicating authority has demanded Central Excise duty on the MG ingots/billets manufactured from MS scrap received from the principle suppliers and returned to the principal manufacturer. The demand pertains to the period Jan 2005 to March 2007. The facts of the case are already set out as above. Appellants entered into agreement with M/s.Kanishk Steels Industries, Gummidipoondi, M/s.Sonal Vyapal Ltd., Salem, M/s.Radice Ispat (India) Ltd., Calcutta and M/s.Kanishk Steel Industries, Bangalore. Adjudicating authority in the order dealt the issue in detail while demanding duty on the MS ingots and billets on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement with M/s.SAIKRIPA VYAPAR PVT. LTD. for converting out H.M.S into finished products. Photocopy of agreement enclosed for y our ready reference. 14. We find that during the same time, the appellant also sent a letter dt. 15.11.2004 to ACCE, Karaikalal intimating on the proposed conversion of MS scrap received from the principal supplier, Sonal Vyapar Ltd. for conversion into ingots. The said letter is duly acknowledged by the jurisdictional ACCE's office as evident from the paper book. Further, we find that jurisdictional authorities issued end-use certificate dt. 22.12.2005 wherein the DCCE, Karaikal certified that MS scrap received from Radice Ispat (India) Ltd. were fully utilized in the manufacture of MS ingots and billets. We find that appellants were filing ER-1 return. On perusal of copy of ER-1 returns, wherein they have declared clearance of MS ingots for conversion. We also find that the appellants unit was audited by the internal audit as well as CERA audit and periodical returns were filed during the relevant period. Perusal of documents reveal that the said invoices of clearances of MS ingots under job work were seen by Audit and accepted and not raised an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of facts by the appellant. In this regard, we rely Hon ble Supreme Courts decision in the case of Continental Foundation Jt. Venture Vs CCE Chandigarh-I - 2007 (216) ELT 177 (SC) wherein the Hon'ble Apex Court held that mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. The relevant paragraph of Supreme Court order is reproduced as under :- 10. The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as fraud or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants are also original manufacturers of MS ingots and billets on their own account and discharging central excise duty on the final products. It is an admitted fact that appellant received raw materials on job work and after conversion cleared MS ingots/billets to their principal supplier M/s.Kanishk Steel Industries. Vyapar, Salem, Ispat Radice (India) Ltd. in the respective central excise jurisdiction. On perusal of the challans and invoices, we find that the invoice bears the clear endorsement sent for conversion under Rule 4 (5) (a). The revenue s main plea is that the main condition of the notification stipulates filing of undertaking by the principal manufacturer before the jurisdictional central excise authorities where the job worker is located and the same has not been complied by them and no declaration filed by the principal manufacturer. On perusal of letter dt. 10.11.2004, we find the principal manufacturer Sonal Vyapar (India) Ltd. filed undertaking before ACCE, Salem. Revenues contention that the principal manufacturer has not filed required undertaking before the jurisdictional ACCE, Karaikal. We find that the principal supplier Sonal Vyapar (India) Ltd. is reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n/intimation as per Notfn 214/86before ACCE, Salem instead of filing with the jurisdictional ACCE Karaikal. Therefore, it is not the case of non-compliance. It is also in the present case, it is revealed that goods are cleared after conversion under Rule 4 (5) (a). Therefore, the revenue relying on the Honble Supreme Court s decision is distinguishable on facts and not applicable to the facts of the case. The department has also relied in the case of CCE Vs Universal Radiators Ltd. (supra) and other citations. The same are not applicable to this case. In this regard, there are series of Tribunal s decisions on this issue where the Tribunal has held that benefit of notification No.214/86 cannot be denied and duty cannot be demanded on the job worker. In this regard, we rely this Tribunal decision in the case of Aggarwal Rolling Mills Vs CCE New Delhi (supra). The relevant paras 20 21 are reproduced as under :- 20. Furthermore, if an assessee firm was a small? scale manufacturer and therefore, governed by the SSI Notification and at the same time some items manufactured by it were entitled to benefit of some other notification the same could not be denied unless it was specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat only the labour charges mentioned in such invoices were collected from them by the appellants. The Revenue has no case that the work undertaken by the appellants did not fall within the scope of the expression job work under Explanation-I to the Notification. Their only case is that the condition laid down in para (2) of the Notification was not complied with by the appellants. The appellants have claimed that the Sodium Silicate Solution returned after job work to their customer was removed by the latter on payment of duty for home consumption from their factory. This claim has not been contested by the Revenue. In the circumstances, the appellants were eligible for the benefit of the Notification subject to the surviving condition that the raw material-supplier gave an undertaking to the Asst. Commissioner or Deputy Commissioner of Central Excise having jurisdiction over the appellants factory to the effect that the goods would be removed (by the raw material-supplier) on payment of duty for home consumption. The demand of duty is consequential to non-fulfillment of this condition. The appellants have resisted the demand of duty on the ground that it was for the raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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