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TMI Blog2002 (11) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri B.S. Grewal, Managing Director, Parsin. Shri Y.S. Satyendranath, Executive Director, Parsin (Finance Manager at the material time). Shri M. Sarva Rao, Commercial Manager, Parsin Hyderabad. M/s. Raghu Chemicals and Pharmaceuticals Pvt. Ltd., -the receiver/buyer of the goods. Shri K. Rahasekhar, Managing Director, M/s. Raghu Chemicals and Pharmaceuticals Pvt Ltd. In the said show cause notice it was, inter alia, alleged - Parsin had cleared 5,078 kg. of Sodium Azide into Domestic Tariff Area (DTA) without making entries in the statutory records, without following the prescribed procedures and without payment of Central Excise Duty. Accordingly they were asked to show cause as to why - duty amounting to Rs. 22,24,958.69 cleared for sale within India shall not be paid by them under Rule 9(2) of the Central Excise, and Salt Act, 1944. the quantity of 5,078 kgs of Sodium Azide thus clandestinely removed should not be confiscated under Rule 209 of the Central Excise Rules, 1944 and penalty not be imposed under that rule. Capital goods imported, by virtue of Notification No. 13/81-Cus., d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e removal of the impugned goods, particularly, in view of the fact that N.A. Reddy who was the Commercial Officer at the material time was responsible for the Customs and Central Excise functions, in terms of his Employment Contract/ Order of Appointment. Whether the role of N.A. Reddy, who was exonerated, has been examined in the light of the plea of the Appellants that he was responsible at the material time for compliance with the Central Excise and Customs Laws and Regulations. Whether there was any wilful suppression of facts with an intent to evade payment of duty on the said export waste or whether the Appellants were under the bona fide belief that the impugned goods were not liable for duty. Whether the said goods are marketable and whether a Report of the Chemical Examiner was obtained in this regard, as directed by the Hon ble Tribunal. Whether the assessable value adopted for demanding duty was correct, in the light of the settled law that the selling price should be treated as cum-duty price, and an abatement is required to be given for the duty, for arriving at the assessable value. The Department has contended: The ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter was adjudicated by the then Commissioner vide his Order (Original) No. C.Ex. 16/96, dated 11-3-1996 in file O.R. No. 99/94-Adjn., wherein he had while confirming the demand of Rs. 14,16,918/- under Rule 9(2) of Central Excise Rules, 1944 read with proviso to sub-section (1) of Section 11 of the Central Excises and Salt Act, 1944, as against the proposed demand of Rs. 22,24,958.60, had imposed penalties on Parsin under Rule 9(2) and 173Q of Central Excise Rules, 1944 and Section 112(a) of the Customs Act, 1962. He also imposed penalties under Rule 209A of the Central Excise Rules, 1944 as well as under Section 117 of the Customs Act, 1962 on Raghu Chemicals. Penalties were also imposed on S/Shri Satyendra Nath and Sarva Rao of M/s. Parsin Chemicals Ltd., under Rule 209A of Central Excise Rules, 1944 as well as under Sections 112(b) and 117 of Customs Act, 1962. Penalties were imposed on Shri Rajasekhar of Raghu Chemicals under Rule 209A of Central Excise Rules, 1944 and under Section 117 of the Customs Act, 1962. However, he had dropped the proceedings initiated against Shri B.S. Grewal, M.D. of Parsin. On appeal filed by Parsin, the Hon ble CEGAT, Madras Bench, vide its Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to improve the quality of sold in the market if acceptable to the purchaser. Production or about 5 tonnes of a product in a plant of 1 tpd capacity works out to five days capacity of the plant. It is not unusual to generate this quantity of non-saleable spec. product over a period of time considering the factors mentioned in 3 4 above . And affidavits from the chemists looking after the quality assurance functions in the factory, to claim that the Sodium Azide produced during November-December, 1989 was like brown sand colour which contained various metallic impurities mainly iron from loose particles in the brand new plant and equipment used and had very high level of unreacted raw materials and it did not comply with customer requirements/specifications and was not approved for export and could be treated as rejects. The Commissioner after relying upon the statements recorded along with the documents of correspondence which indicate that certain samples were removed and taken to Bombay for testing and cash entries were received and therefore he concluded that the Sodium Azide removed was the material and would be classified under heading 2850. The Commissioner in Para 16 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the relevant period for a consideration ranging from Rs. 200/- to Rs. 300/- per Kg. and that Raghu Chemicals had sold major portion of it as such to other actual users during the period when the factory of Raghu are required to export all their production but for the rejects Chemicals was closed. Since Parsin is a 100% E.O.U. who not exceeding 5% in D.T.A., the Sodium Azide produced during the commissioning periods being in the nature of export order had been sold in a limited extent to Raghu Chemicals and the receipt of sale proceeds is not disputed. Therefore, I am of the view that the goods manufactured during the relevant period by Parsin satisfied the test of marketability in terms of decisions referred to by the Hon ble CEGAT. As represented by Parsin, when their technology had been upgraded there were no rejects and as such there was no need for them to try domestic market. What we are concerned is the marketability of low grade goods produced by them during the commissioning periods and not regarding the marketability of standard goods required by the buyer abroad. From these findings arrived at by the Commissioner, it can be safely concluded that the Sodium Azid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if any, that was required to be demanded in the facts of this case. During the relevant period these removals would not be part of quota of goods allowed to be sold to DTA. Proceeding to decide, the Central Excise duty, that could be charged on the subject clearance of rejects , it is found......... (i) Demand of duty made by invoking proviso to Section 3(1) of the Central Excise Act, 1944, the case of the Revenue is that a certain unaccounted quantities have been cleared to Domestic Tariff Area (D.T.A.), without applying for any permission and/or obtaining the same from the concerned authorities. Relying on the case law of Kunthal Granites v. Commissioner - 2001 (132) E.L.T. 214 (T) and Siv industries v. Commissioner 2000 (117) E.L.T. 281 (S.C.) = 2000 (37) RLT 583 (S.C.) it was contended by the learned advocate for the appellants that the levy of Central Excise duty under Section 3 first proviso to the Central Excise Act, 1944 in case of an EOU is sui generis, it cannot be equated with the concept of levy as on other goods produced or manufactured in another unit. It was submitted in the case of Siv Industries v. Commissioner 2000 (117) E.L.T. 281 (S.C.), it has been held, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 (37) RLT 583 (S.C.) in para 8 thereof it was held as .........It also becomes apparent that in view of the EOU scheme as modified from time to time and corresponding amendments to Section 3 of the Act, the expression if allowed to be sold in India . And any proviso to Section 3(i) of the Act is applicable to sales made up to 25% of production by 100% EOU in DTA and with permission of the Development Commissioner. . In view of this interpretation of the term allowed to be sold in respect of levy of duty in case of EOUs by the Hon ble Supreme Court, which was arrived at, as it appears from Para 22 of the reported decision on an interpretation placed on the term in the affidavit filed by the Union of India, there can be no duty on Export Rejects when they are not part of DTA quota. (v) The clearance of rejects up to 5% or such percentage as may be fixed by the Board of approvals is not subject to any such prior export obligation or value addition norms stipulations. In fact no material has been placed before us to show that the permission to clear the rejects is required to be obtained from the Development Commissioner. Such clearances of rejects as is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estic Tariff Area rejects as permitted....... Therefore, no further permission was required from any other authority for such clearance of rejects, whose clearance is permitted by this order as made in this case at the relevant time. These clearances were also not to be reckoned within the 25% quota of DTA. It is also found that in the present case, that the sub-standard Sodium Azide should be considered as rejects as per definition in this order of Central Government and were an unavoidable feature and should have been allowed to be cleared. Since no permission of the Development Commissioner is required for clearance of such rejects which were in addition to the 25% DTA quota sales which only required permission of Development Commissioner, then clearance of such rejects could not be covered under the term allowed to be sold used in proviso to Section 3 of the Central Excise and Salt Act, 1944 or the Notification No 125/84-C.E., dated 26-5-84. Therefore these rejects would be covered by the exemption vide Notification 125/84-C.E., dt 26-5-84 as soon as they were manufactured/ready in the EOU. On their removal from the EOU premises no amount of duty therefore could be cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Supreme Court in the case of Siv Industries v. CCE - 2000 (117) E.L.T. 281 (S.C.). Further, the amendment made to proviso (ii) to Section 3 of the Act, through the Finance Act, 2001, is not retrospective and cannot be applied to past cases, interpreting a statute the court is required to interpret the law and cannot legislate it. In this connection the Appellants would like to place reliance on the decision of the Hon ble Supreme Court (Five Judge Bench) in the case of Padmasundara Rao v. State of Tamil Nadu [AIR 2002 (SC) 1334]. In this decision the Hon ble Supreme Court held as follows : While interpreting a provision the Court only interprets the law and cannot legislate it. If a provision of law is misused and subject to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary (See Rishabh Agro Industries Ltd. v. PNB Capital Services Ltd., (2000 (5) SCC 515)). The legislative casus omissus cannot be supplied by judicial interpretative process. Language of S.6 (1) is plain and unambiguous. There is no scope for reading something into it, as was done in Narasimhaiah s case (supra)......... (Copy enclosed) 3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonableness is an essential element of equality. The concept of reasonableness does not exclude notions of morality and ethics. I do not see how it can be disputed that in the circumstances of a given case considerations of morality and ethics may have a bearing on the reasonableness of the law in question. We have carefully considered the submissions made by the learned SDR, especially the conclusions, that the interpretations which the appellants are seeking to give to the proviso to Section 3 of the Act read with Section 11A, Rules 100A, 173A and Notification 125/89-C.E. will result in the appellants availing/taking undue advantage of the provisions of the law and this will not be correct. This submission, in the face of the specific reply made by the learned Advocate, based on Supreme Court decisions induces us with great respect to conclude that submissions made by the learned SDR can- not be upheld. It is well settled that levy of duty and its collection have to be effected in clear, unambiguous terms which could be understood by the person who is being taxed by the State. No question of ethics and equity could be invoked in matters of taxation especially in this Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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