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2020 (2) TMI 1252 - AT - Central ExciseViolation of condition of N/N. 5/99 CE dt. 28.02.99, 6/2000 CE dt. 01.03.2000 - concessional duty on clearances of sheets and pipes subject to the condition that the products should have contained not less than 25% by weight of fly ash or phosphorous Gypsum or both by usage, is denied - denial on the ground that actual weight mixtures report seized from the factory and production shown in the actual wet mixture, the goods contain fly ash less than 25%. HELD THAT - The exemption notification in question i.e 5/99 CE dt. 28.02.99, 6/2000 CE dt. 01.03.2000 and other analogues notification during the material time provided exemption to the goods falling under chapter 68 of the CETA of Description Goods, in which not less than 25% by weight of fly-ash or phosphor-gypsum or both have been used subject to condition of maintenance of proper accounts. The undisputed position emerging from actual production and consumption based upon actual wet mixture reports the use of Fly ash in Sheets were above 25%. The CBEC vide Circular No. 6/92 dt. 21.10.92 clarified to maintain shift wise register for ascertaining the percentage of fly ash in final product. Vide Circular No. 477/43/99 CX.4 dt. 10.08.99, the Board clarified that the percentage by weight of fly ash has to be calculated taking into account the weight of fly ash used with reference to the weight of the finished product in dry condition. It is an accepted position of revenue that weight of fly ash used should be with reference to the weight of the finished product in dry condition and thus the percentage of fly ash has to be determined with respect to weight of finished goods without moisture content. In case of ETERNIT EVEREST LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE 1999 (8) TMI 888 - CEGAT, NEW DELHI , the percentage use of raw material was Asbestos fibre 5% to 9%; Pulp 1.5% to 2%, Cement 50% to 55%, Fly ash 35 to 36%; H.G. waste 1.5% to 2%. The tribunal held that the weight of goods with respect to which the percentage has to be arrived at should be determined as if no water is contained in these goods - In the present case the raw material for use in production i.e fly ash, cement, pulp and asbestos fibre are bone dry. The water used in process has to be ignored for computing the ash percentage and weight of finished goods. Since the fly ash used in production is more than 25% as is apparent from the wet mixture content report, therefore it has to be considered that the goods fulfil the condition of the Exemption notification. The fly ash content in sheet is more than 25% and the Appellant are eligible for the exemption on Asbestos Sheet. However in respect of some quantity of Asbestos Sheet it was admitted by the appellant that fly ash quantity is less than 25% on which duty liability comes to ₹ 2,80,000/- which is liable to be upheld - Accordingly duty demand of ₹ 21,31,29,778/- in respect of Asbestos Cement Sheet and corresponding, Interest and penalty are set aside. Asbestos pipes - HELD THAT - The Appellant could not establish that the contents of fly ash in asbestos pipe are more than 25%. Unlike in sheet, the use of fly ash in pipe is much lower than 25% even after excluding the water content. The appellant also not pressed much upon the issue related to pipe - the duty demand on the Asbestos Pipe shall be re-quantified after allowing the benefit of cum duty price and modvat credit. Confiscation of Asbestos Cement pipe and sheets - HELD THAT - The appellant in the various correspondences informed the department regarding the stage of making entries in RG-1. It is also observed that the appellant, apart from RG-1 register have been maintaining various other records such as Wet Mixture Reports, Daily Production Reports/Register, Physical Lab Register, General shift furnishing report, Stock register,RG-1 register. Maintenance of these records were not in dispute, as some of these records were relied upon in show cause notice raising the demand, therefore, it cannot be said the stock of goods not entered in RG-1 register is with intent to clear the goods without payment of duty - the adjudicating authority has erred in confiscating the goods on the pretext of non accountal of the same in RG-1 register - Confiscation alongwith redemption fine set aside. Personal penalty imposed upon various persons related to the appellant company - HELD THAT - The penalty was imposed commensurate to the quantum of total duty and in view of gravity of offence. The duty demand has been reduced substantially and the issue involved is of interpretation of notification, therefore the personal penalty also need to be reduced - quantum of penalty reduced. Appeal allowed in part.
Issues Involved:
1. Eligibility for concessional duty exemption based on fly ash content. 2. Confiscation of finished goods. 3. Demand for duty on asbestos pipes. 4. Personal penalties imposed on company officials. 5. Appeal abatement due to the demise of Shri Basant Kumar Bangur. Detailed Analysis: 1. Eligibility for Concessional Duty Exemption Based on Fly Ash Content: The primary issue was whether M/s GCL met the exemption criteria under Notification No. 5/99-CE and 6/2000-CE, which required asbestos products to contain at least 25% fly ash by weight. The investigation and show cause notice alleged that M/s GCL's products contained less than 25% fly ash based on the Wet Mixture reports. The adjudicating authority confirmed the demand based on the dry weight of the finished goods. However, the tribunal found that the actual wet mixture report indicated the fly ash content was consistently above 25% when considering the dry weight of finished goods, excluding moisture. The tribunal referenced CBEC Circular No. 6/92 and Circular No. 477/43/99-CX.4, which clarified that the percentage of fly ash should be calculated based on the dry weight of the finished product. Consequently, the tribunal set aside the demand of ?21,31,29,778/- for asbestos sheets, except for a small quantity where the fly ash content was indeed less than 25%, resulting in a duty liability of ?2,80,000/-. 2. Confiscation of Finished Goods: The adjudicating authority had confiscated asbestos cement sheets and pipes on the grounds that they were fully finished and not recorded in the RG-1 register, implying an intention to clear them without payment of duty. The tribunal found that M/s GCL maintained various records, including Wet Mixture Reports, Daily Production Reports, and Physical Lab Registers, which were not disputed by the revenue. The tribunal concluded that there was no intent to clear goods without payment of duty, as no incidents of clandestine removal were recorded. Therefore, the tribunal set aside the confiscation and consequential redemption fine. 3. Demand for Duty on Asbestos Pipes: The tribunal noted that M/s GCL could not establish that the fly ash content in asbestos pipes was more than 25%. The appellant's main contention was for the adjustment of cum duty price and Modvat credit on the inputs used in the manufacture of asbestos pipes. The tribunal agreed that M/s GCL was entitled to these adjustments and directed the adjudicating authority to re-quantify the duty demand. The re-quantified duty on asbestos pipes was determined to be ?2,32,20,340/-, subject to verification. 4. Personal Penalties Imposed on Company Officials: The tribunal observed that the penalties imposed on various company officials were commensurate with the total duty and the gravity of the offense. However, since the duty demand was substantially reduced and the issue involved was the interpretation of the notification, the tribunal decided to reduce the penalties. The penalties were reduced as follows: - Shri A.K. Chaturvedi (Vice-president, Works): ?3,00,000/- - Shri N.K. Bangur (Managing Director): ?3,00,000/- - Shri Purshottam Soni (Senior G.M- Finance): ?50,000/- - Shri H.N.Maheshwari (Executive Director): ?2,00,000/- 5. Appeal Abatement Due to the Demise of Shri Basant Kumar Bangur: The tribunal noted that Shri Basant Kumar Bangur had expired during the pendency of the appeal, and therefore, his appeal was abated. Conclusion: The appeals were partly allowed. The tribunal set aside the majority of the duty demand on asbestos sheets, upheld a reduced duty demand on asbestos pipes subject to re-quantification, set aside the confiscation of finished goods, and reduced the personal penalties imposed on the company officials. The appeal filed by Shri Basant Kumar Bangur was abated due to his demise.
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