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TMI Blog2003 (10) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... ters also imported raw marble slabs and cleared them on payment of basic duty (CVD is exempted) and then sent the blocks to job workers for conversion into slabs and after conversion into slabs, job workers cleared them to the appellants herein on payment of duty. On 23-9-1998 the officers of the Central Excise headquarters (Preventive), Mumbai, visited the factory of the appellants on receipt of specific intelligence that they were clearing the goods without following Central Excise procedure and without payment of excise duty. During the search following machines were found inside the cutting section of the factory premises : (i) Cutting machine with three motors having traversing system used for slab cutting. (ii) Cutting machine with 7.5 H.P. and 1 H.P. motor for reverse and forward movement used for slab cutting. (iii) Cutting machine with 7.5 H.P. motor and 1 H.P. motor for reverse and forward movement used for slab cutting. (iv) Two re-edge cutting machines with 2 H.P. motor each. (v) Cutting machine used for tiles cutting with 5 H.P. motors. (vi) Two cutting/slicing machines with 7.5 H.P. motors each used f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d where the electromotive force used exceeds ten horse power . 5. Show cause notice dated 22-3-1999 was issued to the appellants proposing recovery of duty of Rs. 31,03,303/- on marble slabs, tiles and novelty items under the proviso to Section 11A(1) of the Act, proposing confiscation of seized marble slabs and tiles, marble articles, and proposing recovery of interest and imposition of penalty. The notice was adjudicated by the Commissioner who confirmed the demand along with the interest, confiscated the seized goods with option to redeem the same on payment of a fine of Rs. 2,50,000/- and imposed penalty of amount equal to duty in terms of Section 11AC/Rule 173Q holding that the processes carried out on marble slabs amounts to manufacture, that conversion of slabs into tiles amounts to manufacture and that slabs fall for classification under 2504.21 as the total electromotive power used for several processors was in excess of 10 HP and similarly tiles were classifiable under CETA sub-heading 2504.31. Hence this appeal. 6. We have carefully considered the rival submissions and record our findings on the various issues as under : (i) Excisability of marble slabs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants on marble slabs for their conversion into marble tiles therefore satisfy the definition of manufacture. The appellants reliance upon the Tribunal s decision in the case of Associated Stone is misplaced. Learned DR is correct in pointing out that the Associated Stone decision is based upon the earlier order in the case of Fine Marble Minerals cited supra, which related only to the issue as to whether cutting of marble blocks to obtain marble slabs was a process of manufacture and the Tribunal was not called upon to consider the question as to whether conversion from slabs to tiles amounts to manufacture. We find that no independent reasoning has been given in the Associated Stone Industries case as how such processes do not amount to manufacture, and the findings in respect of marble slabs has been applied mutatis mutandis to marble tiles. Later decision in the case of Kotah Stone Pvt. Ltd. only follows the Fine Marble Minerals Pvt. Ltd s decision. Therefore there is no binding precedent on the excisability or otherwise of marble tiles obtained from marble slabs. Tiles being a distinct new commercial commodity are excisable goods, attracting duty liability and the tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-4-1997 to 2-4-1998) and Notification 8/98-C.E. (from 2-4-1998 to 24-9-1998) would be available to items falling under Heading 6807.00 has not been considered by the adjudicating authority. This plea requires consideration and therefore this issue is remitted to the adjudicating authority for fresh decision. (v) Whether the demand is barred by limitation : The appellants contention is that the demand is barred by limitation having been raised under show cause notice dated 22-3-1999 for the period 1-6-1996 to 29-9-1998 in view of the knowledge of the department of production of slabs and manufacture of tiles in July, 1996 and their release after due investigation and after due consideration of the appellants representations in this regard. In this context they rely upon letters dated 4-7-1996, 23-7-1996, 24-7-1996 and 25-7-1996 written by them, the Superintendent s letter dated 26-7-1996, their letters dated 9-8-1996 and 4-10-1996 and the Assistant Commissioner s letter dated 11-10-1996. We have perused the above correspondence. The relevant correspondence is reproduced below : Letter dated 25-7-1996 July 25, 1996 To, The Asstt. Commissioner, Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s duty paid and modvat credit is not claimed by us there is no further duty payment involved and accordingly we may be given the consent to enable us to clear the stock as and when required by our customer as per the order placed on us. We confirmed we will not avail modvat credit on 2719.30 sq. mtr. cut to size marble tiles lying in Kanjurmarg Godown. On examining the excise duty structure applicable to marble tiles after taking into consideration the budgetary changes made by Finance Bill (No. 2) of 1996-97 we find that only those tiles are made dutiable which are manufactured with the aid of power where the electro motive force used exceeds 10 H.P. However, our marble tiles manufactured by us and lying in stock as well as those which are being manufactured on an on going basis are manufactured with aid of power where the electro motive force used is less than 10 H.P. Accordingly the said marble tiles get classified under chapter sub-heading no. 2504.39. Where the tariff duty itself is NIL . In support of the above we are enclosing herewith the list of cutting machine and other machine which are installed at Kanjurmarg Factory/Godown. Which confirm that the electro motive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ek. We would again state that the said stock is duty paid (C.V.D.) and modvat claim shall be made by us. The Raw Marble Slab and Cut to Size Tiles are imported and not indigenous and no other indigenous slabs. We do not fall in the Excise purview as such request you to have the matter disposed at the earliest. Thanking you, Yours faithfully, For NITCO TILES LIMITED sd/- AUTHORISED SIGNATORY Letter dated 11-10-1996 F. No. IV/B1/6-2/96/8073 Mumbai, the 11 Oct., 1996 To, M/s. Nitco Tiles Ltd. Plot No. 3, Kanjur Village, Road, Kanjurmarg (East), MUMBAI - 400 042. Gentlemen, Sub : Request for clearance or cut to size marble tiles aggregating to 2719.30 sq. mtrs. Please refer to your letter No. NTI/96-97/186/4 dtd. 4-10-1996 on the above subject matter. In this connection, you are permitted to clear the cut to size marble tiles lying in your factory at Kanjurmarg (East), Mumbai. Assistant Commissioner sd/- Central Excise, Division IV, Mumbai - II . The above would show that the appellants were manufacturing marble tiles with the aid of power. They had also furnished a list of machinery installed in their fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,89,833/- as against the demand of Rs. 31,03,303/- was admissible to them has been raised for the first time before the Tribunal and cannot be verified at this stage. The Larger Bench decision in the case of Jay Yuhshin Ltd. v. CCE, New Delhi - 2000 (119) E.L.T. 718 holds that if revenue neutrality results by way of availability of credit to the assessees themselves, extended period of limitation is not applicable. Therefore the factual position as to whether the applicants were eligible to credit equal to or in excess of the amount of duty confirmed is to be ascertained by the jurisdictional Commissioner to whom this issue stands remitted. If it is found on verification that revenue neutrality is brought out then the demand is required to be set aside in the light of the Larger Bench decision. If the appellants fail on the plea of revenue neutrality the alternative plea that Modvat credit is available is required to be considered by the Commissioner, who shall also recalculate the duty liability, if any surviving, by taking the sale value as cum-duty price on the basis of the Apex Court decision in the case of CCE, Delhi v. Maruti Udyog Ltd. - 2002 (141) E.L.T. 3 (S.C.) upholding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from June, 1996 to 9th August, 1996 is sustainable subject to verification of the plea that the appellants were eligible to credit equal to or in excess of the amount of the duty confirmed. The demand on articles of marble is also subject to verification of this plea. (vi) Duty liability, if any, remaining after considering the claim for SSI benefit and revenue neutrality, is to be recalculated by taking the sale value as cum-duty price. (vii) The issue of levy of interest for the period subsequent to 28-9-1996 shall be considered afresh in the light of the above. (viii) Penalty is set aside. Sd/- (Ms. Jyoti Balasundaram) Member (Judicial) Dated 1-8-2003 8. [Contra per : C. Satapathy, Member (T)]. - I have carefully gone through the order recorded by my learned Sister. I concur with the findings that marble tiles and articles of marbles manufactured by the appellants are classifiable and dutiable under sub-heading No. 2504.31 and Heading No. 68.07 respectively. In respect of other issues, my views are as under :- (1) Duty liability of marble slabs obtained by edge cutting, polishing, fibreglass reinforcement, coating of resin : In C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty paid on marble slabs (as per their own statement marble blocks imported did not pay any additional duty) and entitlement to small-scale exemption in respect of the articles of marble before the Tribunal. Entitlement to such credit and small-scale exemption are subject to various conditions under the relevant rules and notification. Hence, such entitlement has to be decided by the Adjudicating Commissioner with reference to such conditions and the matter, therefore, requires to be remanded to him for decision. (3) Whether the demand is barred by limitation : The issue of limitation is to be examined with reference to the question of revenue neutrality and the correspondences exchanged between the appellants and the department. As regards the question of revenue neutrality, my learned Sister has expressed the view that the matter requires to be remanded to the original adjudicating authority. As regards the question of exchange of correspondence between the appellants and department, in the case of Awdhoot Industries (supra), the Tribunal took the view that such correspondences have a significant bearing on the aspect of limitation and remanded the case for consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility to Modvat credit and small-scale exemption is to be re-examined for marble slabs, marble tiles and articles of marble; whether the issue of limitation is to be remanded both for the period from 9-8-96 onwards as well as for the prior period, and whether the issue of penalty is also required to be remanded, as held by Member (Technical). Sd/- (C. Satapathy) Member (Technical) Dated 26-8-2003 Sd/- (Ms. Jyoti Balasundaram) Member (Judicial) Dated 26-8-2003 10. [Order per : Gowri Shankar, Member (T)]. - Although the appellant s Assistant General Manager is present, appellant s letter dated 23-10-2003 requests a decision on the basis of the submissions made in the grounds of appeal and the written submissions made to the Bench after the matter was heard. I have read these and heard the Departmental Representative. 11. I shall deal with each of the questions referred to me separately. 12. The Member (Judicial) has held that the process undertaken by the appellant of cutting, polishing, resin coating and fibreglass reinforcement of marble slabs does not amount to manufacture. The Member (Technical) has said that this issue needs to be re-exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t credit and small-scale exemptions for determining the duty liability on marble tiles and marble articles. This issue would not apply to marble slabs since I have agreed with the Member (Technical) that no duty would be payable on them. The Member (Judicial) has remanded the matter to the adjudicating authority to consider the availability of the small-scale exemptions contained in Notifications 1/93, 16/97 and 8/98. The Member (Technical) has said that entitlement to Modvat credit and small-scale exemptions are subject to various conditions under the relevant rules and notifications hence such entitlement should be decided by the Adjudicating Commissioner with reference to such conditions and the matter is, therefore, required to be remanded to him for decision. 15. Therefore, so far as the availability of the small-scale exemption is concerned, I am not able to find any point of disagreement between the two members, each of whom held that its availability is to be considered by the adjudicating authority. 16. So far as Modvat credit is concerned, Member (Judicial) has remanded the matter to Commissioner to verify revenue neutrality by way of availability of Modvat credit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to limitation. The Member (Judicial) has held that the demand on marble tiles for the period from 9th August, 1996 is barred by limitation and the Member (Judicial) has remanded the matter to the Commissioner to consider whether demand is barred by limitation. The issue revolves around letters written by the appellant to the Departmental Officers between July and October, 1996. The Member (Judicial) has found that through these letters, the appellant had informed the Department that it was manufacturing marble tiles with the aid of power and had also furnished a list of machinery installed in its factory. Although the letter of 9-8-1996 stated that tiles were manufactured with the aid of power where the EMF use was less than 10 HP, the list of machinery showed that the machinery of EMF exceeding 10 HP was used for manufacture. It appears that this correspondence was not cited in the proceedings before the Commissioner. There is no ground of appeal that effect. The only ground so far limitation is concerned is that the slabs and tiles which were seized in 1996 were released for investigation. In this situation of fact where it has not been established that the correspondence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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