9911796707
TMI Blog2009 (3) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, 1999 to March, 2003 April, 2003 to November, 2003 December, 2003 to May, 2004 April, 2003 to November, 2003 and December, 2003 to May, 2004 Date of show cause notice 12-4-1999 to 13-8-2003 29-4-2004 3-12-2004 Penalty proceedings No. and date of Order-in-Original No. CE-25/2004 dated 16-8-2004 No. CE-26/2004 dated 16-8-2004 No. 15/2005 dated 20-4-2005 No.CE-26/2004 dated 16-8-2004 and No. 15/2005 dated 20-4-2005 No. and Date of Order-in-Appeal Order-in-Appeal No. 107 to 110/2005 (G) CE dated 30-12-2005 Duty demanded Rs. 1,96,21,555/- Rs. 31,93,304/- Rs. 14,00,712/- - Penalty imposed Rs. 20,00,000/- Rs. 31,93,304/- Rs. 14,00,712/- Rs. 1,00,000/- 2. We heard both sides. 3. The assessee are a 100% export oriented unit engaged in the manufacture of hydrogen peroxide. The hydrogen peroxide manufactured by the assessee is normally exported. However, with the permission of the Development Commissioner clearances are made to domestic tariff area (DTA). When an EOU sells in DTA, excise duty is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had used imported raw material in the manufacture of hydrogen peroxide. The lower authority passed orders dated 26-6-1998 and 28-2-2000 confirming the demands. The Commissioner (Appeals) in his Orders-in-Appeal dated 31-8-2000 and 4-9-2000 upheld the contentions of the assessees, however, the Tribunal vide Final Order No. 422 and 423/2004 dated 4-2-2004 [2004 (168) E.L.T. 201 (T)] reversed the Orders-in-Appeals and held that the assessees were not eligible for the benefit of Notification No. 8/97-C.E., dated 1-3-1997. The assessees filed an appeal before the Supreme Court against the aforesaid final order. The Hon ble Apex Court remanded the matter for fresh consideration by the Tribunal. 3.3 For subsequent periods, from March, 1999 to May, 2004 show cause notices were issued demanding differential duty. The adjudicating authority confirmed the demands in his Orders-in-Original. On appeal filed by the assessees, the Commissioner (A) passed a common impugned Order-in-Appeal No. 107 to 110/2005 (G) CE wherein he had upheld the three orders., confirming the duty demand, penalty and interest. The assessees had come before this tribunal appealing against the said Orders-in-Appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of other items which also go into the making of the finished product (but does not form part of finished goods) and which are not in the nature of raw materials, the condition regarding sourcing it indigenously is not applicable. In other words, in respect of other items like consumables or catalyst, whether it is sourced indigenously or through imports, the exemption would be available for the finished products so long as the raw material from which the finished products are manufactured have been sourced entirely indigenously. For the manufacture of hydrogen peroxide, the essential raw materials required are hydrogen and oxygen. Hydrogen is obtained from naphtha, which is purchased from M/s. Indian Oil Corporation. Oxygen is obtained from atmosphere. The hydrogen peroxide is not manufactured from any of the disputed items. Reliance was placed on the process of manufacture given in the affidavit of Shri T.C. Mukundan and the relevant pages from Kirk Othmer s Encyclopedia of Chemical Technology. The impugned Orders-in-Original extracts the role played by each one of the item in question in a table. The said table clearly demonstrates that the items are not in the nature of raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (218) E.L.T. 618 (Tri. -Bang) (d) CCE v. Sri Vajra Granites Ltd. - 2008 (229) E.L.T. 535 (T) = 2008 (86) RLT 459 (Tri.-Bang.) (v) The question whether even consumables would be eligible for the benefit under Notification No. 8/1997-C.E., dated 1-3-1997 and Notification No. 23/2003-C.E. as amended came up for consideration before the Apex Court in the case of Vanasthali Textiles Ltd. v. CCE -2007 (218) E.L.T. 3 (S.C.). The Apex Court while allowing the appeals of the assessees held that consumables refer only to materials which are utilized as an input in the manufacturing process but it is not identifiable in the final product by reason of the fact that it has got consumed bearing. The court relying on various decisions on Sales Tax stature held that the word consumable takes colour from and must be read in the light of the words that are its neighbour raw material , component part , sub-assembly part and intermediary part , hence, he prayed for dismissal of the department s appeal and allowing the assessees appeal. 4. The learned departmental representative reiterated the impugned orders which were based on the Final Order dated 4-2-2004 passed by this Bench w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing apparatus. 20. Dealing with a case under a Sales Tax statutes, i.e., Andhra Pradesh General Sales Tax Act, 1957, this court held that the word consumable therein refers only to material which is utilized as an input in the manufacturing process but is not identifiable in the final product by reason of the fact that it has got consumed therein. It is for this reason, a departure was made from the concept that consumables fall within the broader scope of the words raw materials . Reference in this connection can be made to the view expressed in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s. Thomas Stephen Co. Ltd., Quilon [1988 (2) SCC 264] and Coastal Chemicals Ltd. v. Commercial Tax Officer, A. P. and Ors. [1999 (8) SCC 465]. In the cases at hand consumable are treated differently from raw materials . 8. Since the CESTAT has not considered the materials on record in the above perspective, the impugned judgments are set aside. The matter is remitted to the CESTAT in each case for dealing with the matter afresh in accordance with law. The CESTAT while doing so shall keep in view the decision of this Court in Vanasthali Tex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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