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TAXAP/580/2009 8/ 10 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 580 of 2009
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COMMISSIONER
- CENTRAL EXCISE AND CUSTOMS - Appellant(s)
Versus
INDIAN
STEEL CORPORATION LIMITED - Opponent(s)
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Appearance
:
MR
DARSHAN M PARIKH for Appellant(s) : 1,
None for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 18/03/2010
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE H.N.DEVANI)
1.
Appellant Revenue has challenged order dated 26.08.2008 made by
the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal)
proposing the following two questions stated to be substantial
questions of law.
Whether
the respondent is eligible for benefit of exemption notification
no.39/2001-CE dated 31.07.2001 in respect of Galvanized Corrugated
Sheets (G.S. Sheets)/Defective Galvanized Corrugated Sheets even
though same are manufactured after 31.12.2005, which is the cut-off
date for availing the benefit of notification mentioned ibid?
Whether
the Tribunal could have allowed the benefit of the exemption
notification no.39/2001-CE dated 31.07.2001, without coming to the
conclusion that the respondent was utilizing the same machinery,
which was installed before the cutoff date.?
2. The
facts stated briefly are that the respondent is engaged in
manufacture of excisable goods falling under Chapters 72 and 79 of
the Schedule to the Central Excise Tariff Act, 1985. The respondent
set up its unit in Kutch District after 31.07.2001 and was availing
the benefit of area based exemption Notification No.39/2001-CE dated
31.07.2001. Under the said Notification, new units set up in Kutch
District on or after 31.7.2001 and commencing commercial production
before 30.12.2005 were entitled to the benefit of the said
Notification. A manufacturer entitled to avail the benefit of the
said Notification was first required to utilize the entire Cenvat
Credit available to him on the last date of the month under
consideration for payment of duty for goods cleared during such
months and the balance duty amount was required to be paid through
PLA. Duty paid in cash through PLA was liable to be refunded to the
manufacturer. The respondent satisfied all the conditions of the
Notification in relation to its main products and was availing of the
benefit of the Notification and was regularly filing refund claims,
which were being sanctioned by the authorities. The claim for refund
of duty paid on corrugated CR sheets and defective corrugated sheets
made by the respondent assessee came to be rejected by the
adjudicating authority on the ground that the respondent had
commenced production and clearance of corrugated sheets only after
31.12.2005, that is, the cut-off date stipulated in the aforesaid
Notification. Being aggrieved, the respondent carried the matter in
appeal before Commissioner (Appeals) who held in favour of
respondent. Revenue carried the matter in appeal before the Tribunal
and failed.
3. Mr.
D. M. Parikh learned Standing Counsel for appellant revenue
supported the order-in-original made by the adjudicating authority.
It was submitted that insofar as Galvanised Corrugated Sheets and
Defective Galvanised Corrugated Sheets are concerned, production and
clearance thereof had commenced only after 31.12.2005 which was the
cut-off date specified under the relevant notification and as such,
the respondent assessee was not entitled to the benefit of the said
notification in respect of the said product.
4. The
Commissioner (Appeals) in his order dated 20.11.2007 has recorded
that the respondent had already commenced commercial production of
specified goods, i.e., Cold Rolled Sheets and Galvanized Sheets
before 31.12.2005. That the corrugated sheets are produced from the
same Plant and Machinery used for manufacture of the above products
and that corrugation of Galvanized sheets is only a down stream
product of Cold Rolled Steel Sheets. The Commissioner (Appeals)
further observed that commercial production had commenced on
05.09.2005 as approved by the Committee as the respondent had
commenced production of C.R. Sheets and Galvanized Sheets and strips
on the said date. That it was the same C.R. Sheets or Galvanized C.R.
Sheets/strips which were either corrugated or cleared as plain
sheets/strips depending upon the demand and customer requirements.
Commissioner (Appeals) was of the view that corrugation of
C.R./Galvanised sheets/strips cannot be termed as a new product as
the basic character of C.R. sheets or G.C. Sheets does not undergo
any changes after corrugation and the product remains the same. That
it was established that the respondent had not set up any new plant
and machinery after the cut off date for manufacture of any new
product line. The Commissioner (Appeals) accordingly held that the
respondent was entitled to the benefit of the exemption notification
in relation to the Galvanized Corrugated C.R. Sheets and the
defective G.C. Sheets produced and cleared by the respondent from its
unit set up at Kutch and was accordingly eligible for refund of
excise duty paid in PLA on the said goods in terms of the said
Exemption Notification.
5. As
can be seen from the impugned order of the Tribunal, the Tribunal has
referred to the aforesaid findings recorded by Commissioner
(Appeals). Thereafter upon appreciation of the evidence on record,
the Tribunal has found that there was no dispute that the respondent
had satisfied the conditions of the Exemption Notification and was
being extended the benefit of the said Notification in respect of
other products. That the only objection raised was that insofar as
corrugation of sheets so manufactured was concerned, the same had
taken place after 31.12.2005 and hence the benefit of the
Notification could not be extended qua the said product. The Tribunal
found that it was not the case of the revenue that any plant or
machinery was installed in the factory of the respondent after the
cut-off date. Referring to the letter F.No.119/21/2006-CX.3 dated
10.7.2008 issued by the Central Board of Excise and Customs whereby
it had been clarified that where a unit starts producing some
products (after cut-off date) using the plant and machinery installed
upto the cut-off date and without any addition to the plant and
machinery, the unit would be eligible for the benefit of the
notification because the plant and machinery used for manufacture has
remained the same, the Tribunal noted that even if corrugated sheets
are considered to be a new product, the same were manufactured by the
respondent by using the plant and machinery which were already
installed in the factory upto the cut-off date and without addition
of new plant and machinery. According to the Tribunal in view of the
clarification given by the Board the benefit of the Notification was
required to be extended to the assessee. That it was well settled
that the revenue cannot argue against the clarifications issued by
the Board. The Tribunal further held that even in absence of the
clarification, no fault could be found with the order of Commissioner
(Appeals), inasmuch as, the entire plant and machinery were installed
and manufacture of plain C.R. sheets had commenced before the cut-off
date. That subsequent corrugation of plain sheets would not amount to
production of an altogether new and different product so as to deny
the respondent the benefit of the notification.
6. Thus,
it is apparent that both the Commissioner (Appeals) as well as the
Tribunal have found that the admittedly the respondent had installed
the plant and machinery and commenced manufacture of plain C.R.
sheets prior to the cut off date stipulated in the notification; that
the corrugated sheets were manufactured using the same plant and
machinery which were installed prior to the cut-off date; that
Corrugated C.R./Galvanized Sheets is not a new product as the basic
character of CR sheets does not undergo change after corrugation and
the product remains the same. Thus, in the light of the concurrent
findings of fact recorded by the Tribunal and Commissioner (Appeals),
after appreciation of the evidence on record, it is not possible to
state that the impugned order of the Tribunal suffers from any legal
infirmity. No questions of law as proposed or otherwise, much less
any substantial questions of law can be stated to arise out of the
impugned order of the Tribunal.
7. The
Appeal is accordingly dismissed with no order as to costs.
(D.A.Mehta, J.) (H.N.Devani, J.)
sompura
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