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Bajrang Wire Products (India) Ltd. and Others V/S CCE, Jaipur

    Appeal Nos. E/51854-51857/2015 (Arising out of Order-in-Original No. JAI-EXCUS-000-COM-82-14-15(Appeal No. E/51854-51855), No. JAI-EXCUS-000-COM-81-14-15 (Appeal No. E/51856-51857) both dated 29.01.2015 passed by Commissioner of Central Excise, Jaipur-I) and Final Order Nos. 57148-57151/2017

    Decided On, 16 October 2017

    At, Customs Excise Service Tax Appellate Tribunal New Delhi

    By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA
    By, PRESIDENT AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
    By, MEMBER

    For Petitioner: Vivek Sharma, Advocate And For Respondents: M.R. Sharma, DR



Judgment Text


1. These 4 appeals are against common impugned orders dated 29.01.2015 of Commissioner of Central Excise, Jaipur.

2. The brief facts of the case are that M/s. Bajrang Wire Products (India) Pvt. Ltd., Jaipur are engaged in the manufacture of steel wire of non-alloy steel. They have undertaken activities on job-work basis also. They obtained galvanized steel wire using high carbon steel rod and zinc ingots supplied by the principal manufacturer M/s. Sterlite Technologies Limited. The galvanized steel wire was cleared by M/s. Bajrang Wire Products (India) Pvt. Ltd. to M/s. Sterlite Technologies Ltd. without payment of duty by availing benefit of Notification No. 214/86-CE dated 25.03.1986. M/s. Sterlite Technologies Ltd. are engaged in the manufacture of aluminum conductors, steel reinforced, in their plant at Haridwar (UK). They were availing area based exemption from payment of excise duty in terms of Notification No. 50/2003 dated 10.06.2003. The goods manufactured by M/s. Bajrang Wire Products (India) Pvt. Ltd. on job-work basis are used by M/s. Sterlite Technologies Ltd. in their final product which are cleared for export/deemed-export under Notification No. 108/95-CE dated 28.08.1995 read with Rule 19 of Central Excise Rules, 2002.

3. The Revenue entertained a view that M/s. Bajrang Wire Products (India) Pvt. Ltd. are not eligible for exemption under Notification No. 214/1986 as the final product manufactured by the principal manufacturer are exempt under Notification No. 50/2003-CE. Accordingly, the benefit under Notification No. 214/1986 was sought to be denied to M/s. Bajrang Wire Products (India) Pvt. Ltd. Proceedings initiated against M/s. Bajrang Wire Products (India) Pvt. Ltd. and M/s. Sterlite Technologies Limited concluded in the impugned orders. The original authority held that M/s. Bajrang Wire Products (India) Pvt. Ltd. are liable to pay Central Excise Duty of Rs. 1,57,05,942/- (January, 2009 to September, 2012) and Rs. 79,21,207/- (January, 2011 to September, 2012). He also imposed equal amounts of penalties under Section 11AC of the Central Excise Act, 1944 on M/s. Bajrang Wire Products (India) Pvt. Ltd. Penalties of Rs. 20/- lakhs and Rs. 10/- lakhs were imposed on M/s. Sterlite Technologies Ltd. under Rule 26(1) Central Excise Rules, 2002.

4. The ld. Counsel appearing on behalf of both the appellants submitted on the following lines:

i) M/s. Bajrang Wire Products (India) Pvt. Ltd. acted as job-worker for M/s. Sterlite Technologies Ltd. and availed benefit under Notification No. 214/1986 correctly. The processes undertaken and the status of the principal manufacturer for exemption under the said Notification as well as area based exemption have been examined by the Jurisdictional Commissioner of M/s. Sterlite Technologies Ltd. He categorically clarified in writing to Jurisdictional Commissioner, Jaipur on these aspects. After such clarification, there can be no dispute on this issue.

ii) The impugned orders did not examine the fact that the goods which were manufactured by M/s. Sterlite Technologies Ltd. out of the materials supplied by M/s. Bajrang Wire Products (India) Pvt. Ltd., on completion of job work, were either exported or cleared as deemed-exports. The original authority brushed-aside the claims of the appellants without due examination.

iii) M/s. Bajrang Wire Products (India) Pvt. Ltd. have filed the declaration and undertaking in 2009 itself. Further, M/s. Sterlite Technologies Ltd. gave an undertaking under the said Notification on 18.07.2011 to the Dy. Commissioner, Jaipur. As such, the finding of the original authority regarding violation of procedural requirement is incorrect. In any case, M/s. Bajrang Wire Products (India) Pvt. Ltd. cannot be denied benefit of Notification No. 214/1986 even if it is assumed that M/s. Sterlite Technologies Limited did not file declaration/undertaking within time. Certain decided cases were relied upon in this regard.

iv) The impugned order has gone beyond the SCN with reference to advance authorization. The said discussion is irrelevant to the dispute in hand.

v) The clearances made by the principal manufacturer M/s. Sterlite Technologies Limited for export/deemed export were fully supported by documents. These were not examined properly. The impugned order virtually doubted the veracity of the report given by the Commissioner, LTU, Mumbai with reference to the eligibility of M/s. Sterlite Technologies Limited for exemption under Notification No. 214/1986 as well as Notification No. 50/2003.

vi) The demand is hit by limitation also. The department is aware of the activities of M/s. Bajrang Wire Products (India) Pvt. Ltd. as well as M/s. Sterlite Technologies Limited all along. There is no suppression of fact and there is no legal basis for invoking extended period of demand as well as for imposition of penalties.

5. The ld. AR supported the findings of the impugned orders. He submitted that the appellants could not establish the export/deemed export of finished goods, as made by M/s. Sterlite Technologies Limited. Accordingly, the original authority proceeded to deny the exemption under Notification No. 214/1986.

6. We have heard both the sides and perused appeal records.

7. The dispute in the present case is with reference to the duty liability of M/s. Bajrang Wire Products (India) Pvt. Limited for the processes undertaken by them. The original authority denied the exemption under Notification No. 214/1986 to M/s. Bajrang Wire Products (India) Pvt. Limited. We have perused the impugned orders and the grounds of appellants carefully. The original authority denied the exemption under Notification No. 214/1986 on two main grounds. The first being that the manufacturer is availing area based exemption and as such for job worker, exemption under Notification No. 214/1986 will not apply; secondly, M/s. Sterlite Technologies Limited failed to follow the procedure in terms of the said Notification No. 214/1986. In this connection, we note that the audit officers pointed out the dispute regarding eligibility of exemption under Notification No. 214/1986 for the processes undertaken by M/s. Bajrang Wire Products (India) Pvt. Ltd. A reference was made to the Jurisdictional Commissioner (Commissioner LTU Bombay) of principal manufacturer. The jurisdictional Commissionerate gave a detailed reply to Commissioner, Jaipur. The same is re-produced below:

"In this regard it is to report that M/s. Sterlite Technologies Ltd., II E Sidoul, Haridwar, have furnished their detailed process chart for manufacture of Aluminum Conductors Steel Reinforced (ACSR) to this office vide their letter dated 08.03.2013 (copy enclosed). Upon perusal of the same, it is obvious that the process conducted at their plant forms very significant portion of the entire production chain and amounts for almost 90% of the value addition. The basic premise of the Audit objection was that only peripheral activities are being carried out by the assessee in the exempted area. The finished product consists of 54 aluminum wire and 7 wire of steel (steel core).

Processes carried out in Principal Manufacturer's factory at Haridwar (exempted area)

- The main raw materials such as Aluminum inputs, High Carbon Rods and inc inputs are procured by STL;

- The Aluminum ingot undergoes the process of melting at the furnace and then goes to Rolling Mill to form Aluminum Rods;

- The Aluminum Rods are further taken to Rod Break down Section to draw wire;

Processes carried out at job-worker's premises at Jaipur

- High Carbon Rods and Zinc Ingots are sent to the Job-worker and Steel wire is drawn from the High Carbon Rods;

- The steel wire is galvanized with Zinc by the job-worker and is received back in the factory.

Manufacture of finished product i.e. ACSR at Haridwar

- In the final stage, Aluminum and Steel wire are put on spools/bobbins and then loaded on the standing machine with the Steel wire at center spools (based on the number of strands in a particular Conductor); and

- The final product i.e. Conductor is packed in Wooden or Steel drums based on the customers' requirement for dispatch.

On going through the process conducted by the job workers i.e. wire drawn from high carbon rods and galvanizing with zinc thereafter is also a substantial activity amounting to 10% of the value addition and not a peripheral activity as illustrated in para 4 of exemption Notification No. 50/2003-CE dated 10.06.2003 and CBES Circular No. 863/1/2008-CX darted 18.01.2008 followed by clarificatory Circular No. 908/28/2009-CE dated 23.12.2009.

Also since the exemption notification No. 50/2003-CE dated 10.06.2003 (as amended) does not prohibit the manufacturer to avail job work facility under notification No. 214/86 which is an independent exemption notification granting exemption to all goods used in the manufacture of final products subject to fulfillment of certain conditions. It appears that the stand taken by Audit Department of Jaipur-I Commissionerate alleging wrong availment of exemption notification 50/2003-CE dated 10.06.2003, is not correct. In fact the assessee has duly fulfilled the condition of 214/86 in as much as they have either exported the final product or removed under notification No. 108/95-CE to M/s. Power Grid Co. of India.

In the light of the above discussion demand notice to M/s. Sterlite Technologies Ltd. II E Sideul, Haridwar, mayn't stand scrutiny of law.

The letter issues with the prior approval of Commissioner(LTU)."

8. The above letter of the jurisdictional authority of the principal manufacturer would make it clear that the benefit of notification No. 214/1986 cannot be denied to either of the appellants.

9. The original authority still proceeded to deny the exemption stating that the evidences produced to support the export or deemed export of finished goods by M/s. Sterlite Technologies Ltd. appear to be not reliable. In fact, we note that the original authority had brushed-aside the letter dated 30.05.2013 of the Jurisdictional Commissioner, LTU, Bombay stating that no documentary evidence was submitted by the Jurisdictional Commissioner along with his letter. It is surprising that one central excise authority will question the bona fideness and legal correctness of a letter issued by another Commissioner. In case of difference of opinion or doubt, the matter should have been referred back to the Commissioner, LTU, Bombay for due consultation and to arrive at a final decision. Instead, we note that, the original authority went ahead and gave his own interpretation on all the legal issues and denied the exemption to the appellants and also imposed penalties. Admittedly, also, the original authority has in fact travelled beyond the scope of the SCN by discussing the aspects of ad

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vance licence etc. 10. The finished goods manufactured by M/s. Sterlite Technologies Ltd. using the job work processed goods by M/s. Bajrang Wire Products (India) Pvt. Ltd. were claimed to be cleared for export or deemed export. These were excluded categories of clearance of finished goods which will not bar the eligibility for the said notification. This aspect has been categorically asserted by the Jurisdictional Commissioner of principal manufacturer. However, the original authority in Jaipur still proceeded to confirm the demand by denying the exemption. As such, the impugned order is unsustainable. We set-aside the same. The original authority should re-examine all the aspects and in consultation with the jurisdictional authority of the principal manufacturer, should verify the facts as claimed by the appellants regarding the export and deemed export of finished goods before taking a fresh decision. The appellants shall be provided adequate opportunities to submit their side of the facts before a decision is taken afresh. With these observations, we set-aside the impugned orders, remand the matter to the original authority for a decision afresh. 11. The appeals are allowed by way of remand.
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