2017 (5) TMI 1444 - AT - Central Excise

Classification of goods - untrimmed sheets and circles - classified under CTH 74.09 of schedule to CETA, 1985 - benefit of N/N. 134/94-CE dated 27.10.94 and 8/96-CE dated 23.07.96 - extended period of limitation - validity of SCN - Held that - the SCNs dated 03.07.2003 onwords up to 17.03.2008 are not tenable in law because the Department has referred the issue of admissibility of N/N. 67/95-CE by CBL when the original authority had decided the matter in favour of CBL through the Order in Original dated 27.04.2000 which was not challenged by revenue. In first 06 SCN dated 01.08.1996 to 22.07.1997 that only 14111.625 Kg of untrimmed copper sheets attracted Central Excise Duty @ ₹ 2000/- per MT for the period from January, 1996 to July, 1996 and attracted duty @ ₹ 3500/- per MT from August, 1996 to December, 1996 and the entire amount of duty that could have been confirmed was ₹ 36,844/-. We therefore, modify the Order-in-Original to the extent that duty of ₹ 36,844/- is confirmed and appellant is directed to pay interest on the same. The duty of ₹ 17,49,185/- and ₹ 89,698/- already paid to be taken into consideration for refund of excess duty paid after taking into consideration the interest that is liable to be paid. The remaining part of the impugned Order-in-Original dated 31.12.2008 is set aside. Appeal allowed - decided partly in favor of assessee.

Issues Involved:

1. Admissibility of Notification No. 67/95-CE dated 16.03.1995.
2. Marketability of untrimmed sheets and circles of copper and brass.
3. Applicability of Notification No. 134/94-CE dated 27.10.94 and Notification No. 8/96-CE dated 23.07.96.
4. Invocation of extended period of limitation in the show cause notice dated 03.07.2003.
5. Imposition of penalties under Rule 173-Q of Central Excise Rules, 1944 and Rule 25 of Central Excise Rules, 2002.
6. Personal penalty on Shri I.S. Chadha under Rule 26 of Central Excise Rules, 2002.
7. Refund of excess duty paid.

Analysis of Judgment:

1. Admissibility of Notification No. 67/95-CE dated 16.03.1995:
The original authority had previously decided in favor of the appellant (CBL) regarding the admissibility of Notification No. 67/95-CE. The Tribunal noted that the department did not challenge this decision, and thus, the subsequent show cause notices from 03.07.2003 onwards were deemed not tenable in law. The Tribunal referenced the Supreme Court ruling in the case of Mewar Bartan Nirman Udyog, which clarified that copper and brass are distinct commodities and provided specific duty exemptions under various notifications.

2. Marketability of Untrimmed Sheets and Circles of Copper and Brass:
The Tribunal did not delve deeply into the marketability issue, as it had previously remanded the matter back to the adjudicating authority. The Commissioner (Appeals) had earlier held that untrimmed sheets and circles were marketable and liable to appropriate duty. The Tribunal, referencing the Supreme Court ruling, found that only 14111.625 kg of untrimmed copper sheets attracted duty, confirming a duty amount of ?36,844/-.

3. Applicability of Notification No. 134/94-CE and Notification No. 8/96-CE:
The original authority denied the benefit of these notifications due to the appellant's availing of credit under Rule 57-Q and Rule 57-A, which violated the conditions for these notifications. The Tribunal upheld this decision, noting the ineligibility of the appellant for these benefits due to non-compliance with the specified conditions.

4. Invocation of Extended Period of Limitation:
The Tribunal found that the show cause notice dated 03.07.2003, invoking the extended period of limitation, was issued without proper authority. The matter was already within the knowledge of the authorities at the appellate stage, making the invocation of the extended period untenable, as supported by the Supreme Court ruling in Nigam Sugar Factory.

5. Imposition of Penalties:
The Tribunal set aside the penalties imposed under Rule 173-Q of Central Excise Rules, 1944, and Rule 25 of Central Excise Rules, 2002. The original authority had imposed a penalty of ?5,47,65,956/-, which the Tribunal found excessive and not justified given the circumstances and legal precedents.

6. Personal Penalty on Shri I.S. Chadha:
The Tribunal waived the personal penalty of ?25 lakhs imposed on Shri I.S. Chadha under Rule 26 of Central Excise Rules, 2002, finding no substantial grounds for such a severe penalty.

7. Refund of Excess Duty Paid:
The Tribunal directed that the duty of ?17,49,185/- and ?89,698/- already paid should be taken into consideration for a refund after accounting for the confirmed duty of ?36,844/- and the applicable interest. This decision was based on the excess amount paid by the appellant, ensuring they received the appropriate refund.

Conclusion:
The Tribunal partially allowed Appeal No. E/1128/2009, confirming a duty of ?36,844/- and directing the refund of excess duty paid. Appeal No. E/1129/2009 was fully allowed, setting aside the remaining part of the impugned Order-in-Original dated 31.12.2008, including the penalties imposed. The Tribunal emphasized adherence to legal precedents and proper application of notifications and exemptions.

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