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Steel Authority of India Ltd. Versus Commissioner of Central Excise & ST, Salem

2017 (8) TMI 1046 - CESTAT CHENNAI

N/N. 21/2002-Cus. dt. 1.3.2002 - goods imported not used for intended purpose - Appellant had imported 2000 MTs Hot Rolled Stainless Coils (HRSS coils) vide Bills of Entry No.411286 dt. 19.7.2002 and 388555 dt.08.04.2002 availing full exemption from Customs duties under Notification No.21/2002-Cus. dt. 1.3.2002 Sl.No.196. It appeared that appellants have used only a quantity of 457.113 MTs HRSS coils for the intended purpose namely for manufacture of coin blanks for supply to Indian Government M .....

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whether the words for use in the manufacture of coin blanks requires the appellant to manufacture and supply only coin blanks to the Govt of India Mint. - The scope of phrase "for use" was gone into by the Hon'ble Supreme Court in the case of State of Haryana Vs Dalmia Dadri Cement Ltd. [1987 (11) TMI 94 - SUPREME COURT OF INDIA]. The issue therein related to a dispute concerning cement supplied to Electricity Board on the basis of certificates issued by the latter that such cement was requ .....

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facture of coin blanks, the imported goods have satisfied the post-importation condition of Notification No.21/2002-Cus., The imported goods have been converted into CRSS coils which are intended for use for manufacture of coin blanks by the Government of India Mint, the factum of which is not disputed. In the event, in respect of this quantity of 1178.570 MTs of HRSS coils, it will have to be considered that they have satisfied the condition "for use in manufacture of coin blanks" mandated in t .....

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17 MTs HRSS coils, along with interest liability thereon will sustain. - In respect of the remaining quantity of 457.113 MTs, there is no allegation or dispute about their not having been used in the manufacture and supply of coin blanks supplied to the Mint. Hence no differential duty liability against the said quantity can be demanded. - Appeal allowed - decided partly in favor of appellant. - E/440/2005, C/234/2008 - 41724-41725/2017 - Dated:- 21-8-2017 - Ms. Sulekha Beevi C.S. Member .....

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Blanks falling under Chapter Headings 72 and 73 of the Central Excise Tariff Act, 1985. Appellant had imported 2000 MTs Hot Rolled Stainless Coils (HRSS coils) vide Bills of Entry No.411286 dt. 19.7.2002 and 388555 dt.08.04.2002 availing full exemption from Customs duties under Notification No.21/2002-Cus. dt. 1.3.2002 Sl.No.196. It appeared that appellants have used only a quantity of 457.113 MTs HRSS coils for the intended purpose namely for manufacture of coin blanks for supply to Indian Gov .....

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priated the amount of ₹ 2,03,85,115/- and ₹ 12,45,805/- paid by the appellant during investigation towards duty and interest liability respectively, however, refrained from imposing penalty. Both the appellant as well as the department filed appeals with the Commissioner (Appeals) who vide his impugned order dt. 31.3.2008 rejected the appeal of the appellant, however accepted the prayer of department for imposition of penalty under Section 117 of the Customs Act, 1962 and imposed pen .....

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ook the view that availment of such credit was not permissible since credit was taken on T.R.6 challans which are not prescribed as eligible documents for the purpose of availment of cenvat credit under Rule 7 of Cenvat Credit Rules, 2002 and further, amount was paid in respect of goods imported and involved in offence case for contravention of provisions of Customs Act, 1962 with intent to evade payment of duty. Hence show cause notice was issued to appellant proposing disallowance of cenvat cr .....

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sions which can be broadly summarized as under : (i) Out of 2000 MTs of Hot Rolled Stainless Steel coils (HRSS coils), imported, they were put to use as follows : (a) Used in the manufacture and supply of coin blanks : 457.113 MTs; (b) Used in the manufacture of Cold Rolled Stainless} Steel (CRSS) Strips, which were supplied to the } India Government Mint, which had, in turn, used them for manufacture of coin blanks }: 1,178.570 MTs (c) Quantity not used for any of the above 2 purposes : 364.317 .....

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overnment Mint, Mumbai. (v) So long as the HRSS coils were used in the manufacture of CRSS Strips supplied to the India Government Mint, which in turn had converted the CRSS Strips into coin blanks, the exemption should be available as the purpose/objective behind this exemption is to prevent increase in cost of coin blanks from which the Re.1 and ₹ 2 coins are being minted for use by the public in the country. The narrow interpretation placed by the department does not promote the objecti .....

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items cleared on payment of ED, Cenvat credit of the CVD and SAD is available as credit to the appellant. (viii) On merits, thus the demand can only be to the extent of ₹ 48,14,112 with CENVAT of CVD and SAD (Rs.24,38,215) being available. (ix) The proceedings were also hit by jurisdiction. The SCN was issued by Asst. Commissioner of Central Excise, Salem-I under Rule 8 of the 1996 Rules, invoking Section 28 of the Customs Act,1962. It is submitted that the said Asst. Commissioner had not .....

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lment of cenvat credit of ₹ 80,25,636/- being the component of additional duty of customs, out of the total duty of ₹ 2,03,85,115/- paid by the appellant on 1,542.887 MTs of HRSS coils in 2002, well before issue of the SCN in 2005. In the impugned Order-in-Original dt. 07.03/2005, the Commissioner has held that amount of ₹ 80,25,636/- clearly fell under the category of duty recoverable from manufacturer/importer due to non-levy, short-levy by reason of fraud, collusion, etc., a .....

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255 (Tri.-Ahmd.). In view of the above, the impugned order holding that the appellant is not entitled to Cenvat credit of the CVD paid and imposing penalty of ₹ 5,00,000/- [Rupees five lakhs only] are without any basis in law and is liable to be set aside. 5.1 On the other hand, on behalf of the department, Ld. A.Rs Shri K.P. Muralidharan and Shri R. Subramaniyan support the adjudication and oppose the appeal. 5.2 They point out that the goods were cleared without payment of duty in terms .....

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8 of the Customs Act by insertion of sub-section (11) w.e.f. 16.9.2011 which have empowered inter alia Asst. / Deputy Commissioner of Central Excise appointed as officers of customs to be proper officer of the purposes of that section. Ld. A.R points out that the above amendment has been upheld in the case of Miraj Marketing Vs CC - 2015 (327) ELT 663 (Tri.-Chennai). 5.5 On merits, Ld. A.Rs further submit that exemption under Notification No.21/2002- Sl.No.196 is available only if the imported H .....

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st to avail benefit of a notification. Appellants have also used part of the duty free HRSS coils, for manufacture of CRSS strips/other products and supplied to private parties like IFB Industries, TI Metal etc. and not for manufacture of Coin Blanks. Hence on such conversion and removals and clearances the duty foregone is required to be recovered. 5.8 In respect of appeal E/440/2005, appellant has availed CVD as cenvat credit on the basis of TR 6 challans which are not prescribed as eligible d .....

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/234/2008 - Whether the proceedings are hit by jurisdiction; b) Whether quantity of HRSS coils which were not converted into coin blanks and supplied to Govt of India Mint would be eligible for exemption under Sl.No.196 of Notification No.21/2002-Cus., as it stood during the impugned period; and c) In respect of Appeal E/440/2005 whether component of the additional duties of customs voluntarily paid up by the appellant before issue of SCN through TR6 challans would be barred from being availed a .....

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28 of the Customs Act, 1962 and insertion of sub-section (11) w.e.f. 16.09.2011 has taken care of the earlier lacuna concerning appointment of certain officers of Central Excise as proper officers of customs for the purposes of that section. In the event, the contention of appellant on jurisdiction is misconceived and hence will not succeed. 7.2 In respect of the issue framed at para 6 (b) above, we find that 2000.00 MTs HRSS coils were imported by the appellant without payment of duty in terms .....

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h, 2001 [G.S.R. 116(E), dated the 1st March, 2001], the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods of the description specified in column (3) of the Table below or column (3) of the said Table read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as are specified in the corresponding entry in c .....

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ny of the conditions, specified in the Annexure to this notification, the condition No. of which is mentioned in the corresponding entry in column (6) of the said Table : Provided that nothing contained in this notification shall apply to - (a) the goods specified against serial Nos. 239, 240, 241 and 242 of the said Table on or after the 1st day of April, 2003; (b) the goods specified against serial Nos. 250, 251, 252 and 415 of the said Table on or after the 1st day of March, 2005. Explanation .....

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edure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. 7.3 The facts not disputed in respect of the imported quantity of 2000 MTs HRSS coils are that 457.113 MTs were used in the manufacture and supply of coin blanks, 1178.570 MTs were used in the manufacture of CRSS strips, which were supplied to the Indian Government Mint, which had, in turn, used them for manufacture of coin blanks and finally remaining 364.317 MTs of quanti .....

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ntroversy in respect of this quantity is whether the words "for use" in the manufacture of coin blanks requires the appellant to manufacture and supply only coin blanks to the Govt of India Mint. 7.6 The scope of phrase "for use" was gone into by the Hon'ble Supreme Court in the case of State of Haryana Vs Dalmia Dadri Cement Ltd. - 1988 (14) ECR 292. The issue therein related to a dispute concerning cement supplied to Electricity Board on the basis of certificates issued .....

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the cement supplied by the assessee in this case was actually used in the generation or distribution of electrical energy. It must be noted that the important words used in the relevant provision are "goods for use by it in the generation or distribution of such energy" (emphasised supplied by us). On a plain reading of the relevant clause, it is clear that the expression "for use" must mean "intended for use". If the intention of the legislature was to limit the e .....

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he relevant portion of the judgment is extracted below : "In the present case, the phrase used is goods imported into India" for use" in the leather industry. Therefore, the principle laid down by the Hon ble Supreme Court in the above case will apply to the case of the appellants. The contention of the SDR that the words for use should be taken to be actual use cannot be accepted. This decision of the Hon ble Supreme Court was also taken note of by the Tribunal in the decision re .....

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imported for use in the leather industry. It has been shown that the substance imported has use in leather industry as a penetrator. Proof of actual use is not a condition attached to the exemption. If it were so, the notification would have provided for execution of a bond obliging the importer to produce proof of actual use as in the case of many other notifications. We, therefore, do not agree with the Revenue's contention that the benefit of exemption would not be available to the appel .....

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scribed under Heading B of the notification. In view of the above, we are not able to agree with the contention of the learned SDR. At this stage, the learned Counsel for the appellants drew our attention to the Collectors conference where this issue was taken and he also produced a copy of the minutes of the Collectors conference which is reproduced below : CONFERENCE CONCLUSION : After discussing the issue, the Conference recommended that since question raised by Bangalore Custom House is abou .....

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ather industry, to be in line with the intention of the notification. On the question whether, notification can be extended to traders, Conference felt that the same could be allowed as the items are not subject to any actual user condition. 5. It is thus seen from the conclusion arrived at the Collectors conference that the appellants are entitled to the benefit of the notification in question. In the proviso, we set aside the impugned order and allow the appeal with consequential relief." .....

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isfied the post-importation condition of Notification No.21/2002-Cus., The imported goods have been converted into CRSS coils which are intended for use for manufacture of coin blanks by the Government of India Mint, the factum of which is not disputed. In the event, in respect of this quantity of 1178.570 MTs of HRSS coils, it will have to be considered that they have satisfied the condition "for use in manufacture of coin blanks" mandated in the said notification. Hence there cannot .....

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terest liability thereon will sustain. So ordered. 7.10 In respect of the remaining quantity of 457.113 MTs, there is no allegation or dispute about their not having been used in the manufacture and supply of coin blanks supplied to the Mint. Hence no differential duty liability against the said quantity can be demanded. 7.11 Appeal C/234/2008 is therefore partly allowed as aforesaid with consequential relief, if any, as per law. 8.1 Appeal No.E/440/2005 This matter is intrinsically connected wi .....

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on 11.3.2003. The department took the view that the credit taken was irregular for the following reasons :- (i) Credit has been taken on T.R. 6 challans which are not prescribed as registered document under Rule 7 of Cenvat Credit Rules. (ii) The amount has been paid on goods already imported and involved in the offence case registered against the appellant under Customs Act, 1962. Hence credit equivalent of CVD amount could not be availed by the appellant. 8.2 After going through the facts on .....

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f such Bill of Entry. On this score, the plea of the appellant will succeed. 8.3 The next argument for denying the credit is that duty has been paid consequent to investigation being initiated. Hence the availment of credit is hit by Rule 7 (b) of the CCR 2002. We find no merit in this ground also. In this first place, Rule 7 (b) is confined to supplementary invoice issued by a manufacturer or importer of the inputs or capital goods for evidencing payment of additional amount excise duty or addi .....

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benefit of Notification No.21/2002-Cus., Sl.No.196. No doubt, an offence case has been booked by the department on the grounds that, except for 457.113 MTs, the remaining quantity (out of 2000 MTs imported), would not be eligible for the notification exemption as post-importation condition has not been fulfilled. However, in respect of 1178.570 MTs converted into CRSS coils and supplied to the Mint, who, in turn, converted them further into blanks, it has been held herein above that the entire e .....

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