w w w . L a w y e r S e r v i c e s . i n



H.P. Agro Industries Corporation V/S CCE, Chandigarh


Company & Directors' Information:- R K B AGRO INDUSTRIES LIMITED [Active] CIN = L17100KA1979PLC003492

Company & Directors' Information:- J R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15342UP1982PTC005792

Company & Directors' Information:- B M AGRO INDUSTRIES LIMITED [Active] CIN = U74899DL1992PLC049988

Company & Directors' Information:- R S AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15319DL1998PTC097025

Company & Directors' Information:- S N T AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U01122DL1997PTC086925

Company & Directors' Information:- D D AGRO INDUSTRIES LIMITED [Active] CIN = U24219PB1999PLC022487

Company & Directors' Information:- S S D AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100MH1998PTC113744

Company & Directors' Information:- S. A. B. INDIA AGRO INDUSTRIES LIMITED [Active] CIN = U01403UP2009PLC038365

Company & Directors' Information:- U K AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15114UP2003PTC028107

Company & Directors' Information:- R. K. AGRO INDUSTRIES PRIVATE LIMITED [Under Process of Striking Off] CIN = U15410WB2012PTC180269

Company & Directors' Information:- R J AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15311KA2005PTC035485

Company & Directors' Information:- S O I AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15310GJ2010PTC059966

Company & Directors' Information:- S I P AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01403WB2012PLC188362

Company & Directors' Information:- S. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15490PN2013PTC146574

Company & Directors' Information:- J J AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15130MH1980PTC023302

Company & Directors' Information:- A R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1992PTC050526

Company & Directors' Information:- G S AGRO INDUSTRIES PVT LTD [Active] CIN = U01132WB1990PTC049960

Company & Directors' Information:- D V AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1993PTC051892

Company & Directors' Information:- P AND G AGRO INDUSTRIES P LTD [Strike Off] CIN = U99999UP1985PTC007509

Company & Directors' Information:- R. K. G. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100UP2017PTC097391

Company & Directors' Information:- V G AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01400DL1993PLC051666

Company & Directors' Information:- T S AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U15209UP1987PTC008974

Company & Directors' Information:- CHANDIGARH AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U15499CH1982PTC004893

Company & Directors' Information:- B AND P AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U01110MH1972PTC015574

Company & Directors' Information:- J A S INDUSTRIES (CHANDIGARH) PVT LTD [Strike Off] CIN = U45202CH1904PTC002559

Company & Directors' Information:- P V R K AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U01119AP1988PTC008395

Company & Directors' Information:- K R P AGRO INDUSTRIES PVT LTD [Active] CIN = U01110MH1991PTC062304

    Appeal No. E/2552/2009-Ex (DB) (Arising out of OIA No. 208/CE/CHD-I/09 dt. 29.5.2009 passed by the CCE (Appeals), Chandigarh-i) and Final Order No. 62285/2018

    Decided On, 02 May 2018

    At, Customs Excise Service Tax Appellate Tribunal Chandigarh Bench

    By, THE HONORABLE JUSTICE: ARCHANA WADHWA
    By, MEMBER
    By, THE HONORABLE JUSTICE: DEVENDER SINGH
    By, MEMBER AND THE HONORABLE JUSTICE: ANIL G. SHAKKARWAR
    By, MEMBERS

    For Petitioner: Sudeep Singh, Advocate And For Respondents: G.M. Sharma, AR



Judgment Text


1. After hearing both sides, duly represented by Shri Sudeep Singh, learned Advocate and Shri G.M. Sharma, learned AR for the Revenue, we find that the appellant is engaged in the manufacture of pesticides. Prior to 1.4.2005, two notifications, granting exemption to Small Scale Industries were holding field. In terms of Notification No. 8/03-CE dated 1.3.2003, small scale assessee was entitled to the benefit at nil rate of duty subject to the conditions that he will not avail credit. Another notification No. 9/03-CE dt. 1.3.2003, provided the concessional rate of duty i.e. 16% of tariff rate, if the assessee avails credit.

2. The appellant had chosen to pay duty in terms of notification No. 9/03-CE dt. 1.3.2003 and as such they were availing the credit were paying duty @ 60% of the tariff rate on their final products. It so happened that Notification No. 09/03-CE was rescinded with effect from 6.4.2005. As the appellant did not realise the rescinding of the said notification, they continued to avail credit and discharge duty @ 60% of the normal rate during 1.4.2005 to July, 2006.

3. Subsequently, a show cause notice was issued to them on 12.06.2007 raising the demand from 1.4.2005 to July, 2006, alleging that with the rescinding of Notification No. 9/03-CE, concessional rate of duty was not available and they should have paid full rate of duty. The show cause notice did not cover prior period probably on the ground of time bar as the appellants were filing the declaration with the Revenue and also providing other intimations. It may not be out of place to mention that as the appellant was paying duty at the concessional rate during the period under intimation to the Revenue and this fact was in the knowledge of the Revenue, they were never advised by the Revenue about rescinding of the notification in question and continued to accept the returns at concessional rate of duty.

4. The said demand raised stands confirmed by the authorities below to the extent of 2,94,624/- along with confirmation of interest and imposition of penalty. The appeal stands rejected by the lower authorities and hence the present appeal.

5. The main contention of the appellant is that they continued to avail notification in question under mistaken belief and inadvertently that the said notification was holding the field during the relevant period. However, they contended that if concessional rate was not available to them in terms of notification No. 09/03-CE, Notf. No. 8/03-CE which provided 'nil' rate of duty was admittedly available to them. Inasmuch as they fulfilled all the conditions being SSI industries. As such, they could have cleared the goods without payment of duty and without availing the credit. Learned Advocate submits that by availing the credit and paying concessional rate of duty, the appellant does not stand benefited in any manner, inasmuch as the credit so availed by them was used for payment of duty.

6. The lower authorities have not considered the admissibility of the notification No. 8/03-CE and passed orders against them thus giving rise to present appeal.

7. The contention of the learned AR appearing for the Revenue is that the said notification is conditional notification which requires the assessee not to avail credit. Inasmuch as the appellant had availed credit, the conditions of the notification No. 8/03-CE stands violated and the benefit cannot be now extended to them.

8. We find that there is no dispute about the facts and only a legal issue is required to be adjudged. Admittedly, during the period in question, the appellant could have availed the benefit of notification No. 8/03-CE It stands clarified that there is no condition of opting for the said notification though the same bars opting out, once availed. In terms of para 2(1) of the Notification No. 8/03-CE, the exemption is available subject to the following conditions:

"2. The exemption contained in this notification shall apply subject to the following conditions, namely:-

(i) a manufacturer has the option not to avail the exemption contained in this notification and instead pay the normal rate of duty on the goods cleared by him. Such option shall be exercised before effecting his first clearances at the normal rate of duty. Such shall not be withdrawn during the remaining part of the financial year."

9. As it is be become clear that the option was available to the assessee to avail exemption contained in the notification and to pay normal rate of duty on the goods cleared by them. It becomes clear that if the assessee does not want to avail the benefit of said the Notification No. 8/030CE, it could opt out the same. There was no condition for opting for the notification though the same provided for opting out of the notification. As the appellant paid duty on the final products in terms of notification No. 9/03-Central Excise and when Notification No. 09/03-CE was not available, having been rescinded from statuary book, the question of payment of duty under notification No. 9/03-CE does not arise. There was no other notification holding the field and as such the notification which is available to the assessee was only notification No. 8/03-CE, in the absence of notification No. 9/03-CE. There is no evidence indicating that the appellant opted out of notification No. 8/03-CE and as such, should have paid the normal rate of duty.

10. When the differential duty stands raised subsequently by the Revenue, it is well established legal position that the benefit of other notification, which an assessee may claim, has to be adjudged. The appellant subsequently raised the contention before the authorities below that in the absence of notification No. 9/03-CE, they would have availed notification 8/03-CE. The lower authorities have confirmed the demand on the ground that notification No. 9/03-CE was not on the statute book and as such, the appellant was not entitled to concessional rate of duty and are required to pay full rate of duty. In our view, the appellant's claim to examine the applicability of notification No. 8/03-CE is very relevant and should have been examined.

11. While examining the applicability of notification No. 8/03-CE, we find that the same extends the benefit of nil rate of duty to the assessee for the first clearances upto aggregate value of Rs. 1 crore. One of the conditions of the notification is that the appellant would not be entitled to credit. As such, it leads to a situation where no credit stands availed, no duty is payable on the final products. The Revenue's objection is that the appellant had availed the credit and paid duty on the final products by utilizing the same. We have to keep in mind that we are examining the applicability of notification No. 8/03-CE at a stage where the demand of differential duty stands already raised. It is not the regular case, where an assessee after availing the credit, availed the benefit of Notification No. 8/03-CE In such a situation, the objection of the Revenue that the appellant took credit and thereafter availed full exemption is to be upheld but not a situation where the demands are being raised subsequently and are being confirmed subsequently.

12. The demand stands confirmed against the assessee for raising differential duty. Tariff rate applicable was @ 16% and after availment of 60% concession, 9.6% of the tariff rate, the duty was paid at the balance rate. The said demands stands confirmed raising demand of 40%. Whatever credit was availed stand utilized by them for payment of 60% of duty. However, if any balance credit is available the same stands reversed by the appellant which leads to a situation where the entire credit so availed by the appellant stand either utilized for payment of 40% tariff rate or stands reversed and is not available with the appellant. It can be concluded that no credit stands availed by them so as to benefit them at any point of time. It will amount to Revenue neutral situation as credit availed by the appellant would become nil and as such the condition of the Notification No. 8/03-CE, stands fulfilled by the assessee. Instead of raising differential duty, at full rate of duty, the Revenue should have extended the benefit of Notification No.8/03-CE to the assessee. As such, we are of the view that confirmation of duty against the assessee along with confirmation of interest and imposition of penalty is not warranted. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief.

(dictated & pronounced in the open court)

Devender Singh, Member (T)

13. Having gone through the order of the Ld. Sister Member (J), I pass a separate order.

14. The brief facts of the case are that the appellant who manufacture pesticides, were working under small scale scheme during the financial year 2006-07. From their quarterly returns, it was found that the appellant had paid Central excise duty @ 9.6% instead of tariff rate of duty of 16% throughout the financial year. Since the benefit of Notification No. 8/03-CE dated 1.3.2003, is admissible provided the manufacturer does not avail the credit on inputs and since the appellant had availed the Cenvat credit right from 1.4.2006 during the financial year 2006-07, but paid excise duty @ 9.6% instead of 16% tariff rate of duty, the Department issued them show cause notice demanding differential duty of Rs. 2,89,435/- along with interest and imposition of penalty. The matter was adjudicated and the demand of duty along with interest was confirmed. Penalty of equivalent amount was also imposed under Section 11AC. The appellant went in appeal but the same was dismissed. Aggrieved from the same, they have filed this appeal.

15. Since the contentions of the appellant's Advocate and the AR have been brought out in para 5, 6 and 7, the same are not being repeated.

16. From the facts, it emerge that the notification No. 9/03-CE, under which an assessee was allowed to take Cenvat credit and concessional rate of duty @ 9.6%, was no longer in existence during the impugned period because the same had been rescinded with effect from 1.3.2005. Hence, the appellant had been availing the benefit of notification which did not exist. Further, the contention of the appellant that the lower authorities have not considered the admissibility of the Notification No. 8/03-CE is not factually correct as the same has been duly considered by the adjudicating authority and Commissioner (Appeals) and the same was rejected by relying upon the judgment of Hon'ble Supreme Court in the case of CCE, New Delhi vs. Harichand Sri Gopal : 2005 (188) ELT 353 (SC). Since it is an exemption notification, the settled position of law is that the burden to apply for correct Notification and to fulfill the conditions thereof is entirely on the appellant. I also find that the Commissioner (Appeals) has given the finding that the appellant was filing classification list/declaration with the department and no objection was raised. There can be no quarrel with his observation that the Revenue was not required to respond to the declaration, which was not required to be filed.

17. I find that the Notification No. 8/03-CE is subject to the following conditions:

2. The exemption contained in this notification shall apply subject to the following conditions, namely:-

(i) a manufacturer has the option not to avail the exemption contained in this notification and instead pay the normal rate of duty on the goods cleared by him. Such option shall be exercised before effecting his first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year;

(ii) while exercising the option under condition (i), the manufacturer shall inform in writing to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise with a copy to the Superintendent of Central Excise giving the following particulars, namely:-

(a) name and address of the manufacturer;

(b) location/locations of factory/factories;

(c) description of inputs used in manufacture of specified goods;

(d) description of specified goods produced;

(e) date from which option under this notification has been exercised;

(f) aggregate value of clearances of specified goods (excluding the value of clearances referred to in paragraph 3 of this notification) till the date of exercising the option;

(iii) the manufacturer shall not avail the credit of duty on inputs under rule 3 or rule 11 of the CENVAT Credit Rules, 2002 (herein after referred to as the said rules), paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearances of which, as calculated in the manner specified in the said Table does not exceed rupees one hundred lakhs;"

18. From the reading of above conditions, it is evident that the third condition 2(iii) requires that the manufacturer shall not avail the credit of duty on inputs under Rule 3 or Rule 11 of Cenvat Credit Rules. Admittedly, the appellant have availed the Cenvat credit on inputs and utilized the same for payment of duty. Therefore, condition 2(iii) is not fulfilled. Hence, without fulfilling the condition mentioned in para 2(iii) of the notification, which is clearly spelt out, the benefit of notification is not available to the appellant. I find that therein a number of judicial pronouncements, the Hon'ble Apex Court has held that the assessee is required to fulfill the conditions of the notification in strict sense if it wants to avail the benefit of exemption notification. Once it is found that the conditions have not been fulfilled, obvious consequence would be that the assessee was not entitled to the benefit of notification No.8/03-CE Hence, there is no infirmity in the order of the lower authorities in denying the benefit of the notification and confirming the demand and interest.

19. The appellant have also relied upon the decisions of this Tribunal in the case of Salvi Chemicals Industries Vs.CCE, Mumbai : 2005 (182) ELT 170 (Tri.-Mum.) and Final Order No. 837/98 dated 26.3.1998 in the case of CCE vs. Chhabra Tubes Products Ltd.

20. The case of Salvi Chemicals Industries (supra), in the said case, the party had filed the classification list in which they had opted to avail the exemption for both their products but had paid duty at normal rate for a limited period in respect of one of the products whereas in the instant case the party had opted for the benefit of a notification, which had been rescinded. Besides, system of classification list did not exist in impugned period. As the facts and circumstances are completely incomparable, the ratio in that case does not support the contention of the noticee.

21. In the case of Chhabra Tubes Products (supra), it was affirmed that the neither buyer nor the assessee, had taken the Cenvat credit under modvat scheme. Hence, the matter was remanded by the Bench for verification. In the present case, it is an admitted fact that the Cenvat credit has already been availed and utilized as well. Hence, the said case law is not applicable to the facts of the present case.

22. As far as the penalty is concerned, in a case like this where it seems to be a mistake that was bona fide, probably because they were availing concessional rate of duty under Notification No. 9/03-CE in previous year, the penalty would not be justified. Hence, penalty is set aside.

23. In view of foregoing, demand of duty and interest are upheld. However, penalty is set aside.

24. As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to appoint the Third Member for resolving the following issues:-

DIFFERENCE OF OPINION

(1) Whether in view of Revenue neutral situation, the benefit of Notification No. 8/03-CE should be extended to the assessee and the appeal be allowed, as held by

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the Member (Judicial); or (2) Whether in view of the appellant not fulfilling the condition of Notification No. 8/03-CE demand of duty and interest be upheld, as held by the Member (Technical) Anil G. Shakkarwar, Member (T) 25. Heard on difference of opinion. 26. Heard learned AR has submitted that the contention of the Revenue is that the Notification No. 9/03-CE is not available with effect from 6.4.2005 and therefore the benefit of the same cannot be enjoyed by the appellant, after 6.4.2005. 27. Heard learned Counsel for the appellant. He has submitted that for many years two notifications were being issued one with facility of credit and without facility of credit for small scale units and on 6.4.2005 one was withdrawn. It is not the case of the Revenue that the appellants have only availed the cenvat credit. The appellants have also paid duty of Central Excise as provided in the Notification No. 9/03-CE, therefore, it should be treated as mistake of law. He therefore, pleaded for allowing the appeal. 28. Having considered the rival contentions. I find that Notification No. 9/03-CE dated 1.3.2003 has prescribed effective rate of duty at the rate of 60% of tariff rate. It is settled position of law that if the duty is paid under mistake of law it should be compensated towards recovery of cenvat credit. In view of the said settled position of law, I agree with the view expressed by Member (J). 29. With the aforesaid opinion, I return the back the file to the Division Bench. (order dictated and pronounced in the court on 22.03.2018) FINAL ORDER No. 62285/2018 In view of the majority order, the impugned order is set aside and the appeal is allowed with consequential relief.
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