2014 (12) TMI 323 - AT - Central Excise

Waiver of pre deposit - rice bran fatty acids and rice bran wax - Exemption under Notification No.89/95-CE dated 18.5.1995 - Held that - Additional Commissioner of Central Excise, Lucknow had concluded that the by products viz., rice bran oil, wax and fatty acids were eligible for exemption under Notification No.89/95-CE dated 18.5.95. They sought to surrender their registration certificate and this was in reply to the letter of Range Officer dated 27.01.2011 wherein they had been advised that the exemption is not available. They intimated that they feel that they are not liable to tax and accordingly they requested that suitable clarification may be issued and their request for surrender of registration certificate may be accepted. Thereafter the surrender of registration certificate was accepted on 9.2.2011. On 16.3.2011 the Range Officer again wrote to them informing them that they could not have collected Central Excise duty from the customers since the goods were exempted in respect of these products. department had considered the issue and had taken a view that they were not liable to pay Central Excise duty on these products. Nevertheless, show-cause notice was issued in 2013 which has resulted in the impugned order demanding duty on these products. It can be seen that there was Additional Commissioner s order taking a view that products are exempted; department had also after considering the letter of the appellant allowed the surrender of registration certificate; subsequently also in March 2011, appellants were told that they could not have paid the tax and should not have taken CENVAT credit on capital goods; under such circumstances, invoking extended period and confirming demand on the ground that appellants have suppressed facts or mis-declared, in our opinion, prima facie, cannot be sustained. appellants have deposited substantial portion of the duty demanded - Stay granted.

Issues:
1. Eligibility for exemption under Notification No.89/95-CE dated 18.5.1995 for rice bran fatty acids and rice bran wax.
2. Applicability of the decision in the case of S.S.D Oil Mills Co. Ltd. 2014 (303) E.L.T. 402 (Mad.) and A.G. Flats Ltd.: 2012 (277) ELT 96 (Tri.-Del.).
3. Timeliness of show-cause notice issuance and departmental actions leading to confusion regarding tax liability.
4. Validity of invoking the extended period for demand on the grounds of suppression of facts or misdeclaration.
5. Grant of complete waiver of pre-deposit and stay considering the deposited amount.

Analysis:

1. The primary issue in this case revolves around the eligibility of rice bran fatty acids and rice bran wax for exemption under Notification No.89/95-CE dated 18.5.1995. The appellant argued citing the decision in Maheswari Solvent Extraction Ltd. 2014 (299) E.L.T. 116 (Tri.-Mumbai) in support of their claim for exemption. Conversely, the respondent relied on the decision of the Hon'ble High Court of Madras in the case of S.S.D Oil Mills Co. Ltd. 2014 (303) E.L.T. 402 (Mad.) to contest the eligibility. The tribunal analyzed the facts and held that the decision in the Madras case concerning palm fatty acid did not directly apply to the present case involving rice bran fatty acids and wax. The tribunal emphasized the need for a final adjudication on the matter.

2. Regarding the applicability of precedents, the tribunal discussed the decision in A.G. Flats Ltd.: 2012 (277) ELT 96 (Tri.-Del.) where it was held that wax, gum, and soap stock are taxable due to their significant value. However, the tribunal distinguished this case by noting that the products in question were deemed ineligible for exemption based on their value, which was not the case with rice bran fatty acids and wax.

3. The issue of timeliness arose concerning the issuance of the show-cause notice in 2013 for a period ranging from November 2010 to December 2012. The tribunal highlighted the appellant's communication with the department in early 2011, where they sought clarification on tax liability and eventually surrendered their registration certificate based on the department's initial view that the products were exempted. Despite these interactions, the notice was still issued in 2013, leading to confusion and questioning the validity of invoking the extended period for demand.

4. The tribunal scrutinized the grounds for invoking the extended period for demand, focusing on whether the appellant suppressed facts or misdeclared information. Given the department's prior acknowledgment of exemption and the appellant's actions based on that understanding, the tribunal found it prima facie unsustainable to confirm the demand on the grounds of suppression or misdeclaration.

5. Finally, considering the substantial amount already deposited by the appellant, the tribunal deemed it a fit case for granting a complete waiver of pre-deposit and stay. This decision was made in light of the circumstances, including the department's actions, the confusion regarding tax liability, and the substantial deposit made by the appellant.

This detailed analysis encapsulates the tribunal's thorough examination of the issues at hand, the application of legal precedents, the timeline of events leading to confusion, the validity of invoking the extended period, and the ultimate decision to grant a waiver and stay based on the facts and circumstances of the case.

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