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TMI Blog2011 (5) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... termed as excisable goods. Where no duty is levied or collected because the rate of duty in the Tariff itself is NIL, then such goods cannot be treated as goods being subject to duty of excise. - Held that:- even if attracting nil rate of duty, the goods remain excisable and they do not become non-excisable. Therefore, just because the goods listed in the schedule attract nil rate of duty, it cannot be said that they become non-excisable. Therefore, the question of proviso going beyond the main section does not arise. Appropriate duty - held that:- the decision of Hon’ble Supreme Court, in the case of Dhiren Chemicals (2001 -TMI - 1709 - SUPREME COURT OF INDIA) would not be applicable to the present case - In that case, Hon’ble Court was concerned with the interpretation of the phrase “on which appropriate amount of duty of excise has already been paid”. Therefore, the Hon’ble Court interpreted the term “appropriate” and “has already been paid’. The Hon’ble Court was not at all concerned with the interpretation of the term “excisable goods”. Similarly, since we are not concerned with the term “suffered’ in this case, the other submissions made in that connection are also not releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02. 2. Before ld. Counsel for the appellants could present his arguments, the ld. Jt. CDR raised preliminary objections, which are as follows :- (i) Appellant's Miscellaneous Application No. 602/2010 is on record and has not been disposed of by the Hon'ble Tribunal vide their Stay Order No. S/348/10EB/C-II, dt. 6-12-2010, though a Miscellaneous Order No. was also quoted. This was substantiated by reading para (2), para (9) and para (10) of the said order which clearly mention that Miscellaneous Application has not been entertained and their application is on record and the Tribunal has not discussed further on this aspect. In the operative portion of the order at para (10), the Tribunal has not mentioned anything about the disposal of the said Miscellaneous Application. Accordingly, it was urged that the Miscellaneous Application be listed along with Appeal for final disposal. A Miscellaneous application can be disposed of in three manners viz. (a) It stands allowed; if that be the case, the appellant's affidavit dtd. 7-3-2011 could not have been filed as the direction of filing the affidavit was in the earlier Miscellaneous application. (b) If the Miscellaneous applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (Emphasis supplied) (iii) The third preliminary objection was taken that the present appeal is not maintainable on the following ground. At the date of filing of appeal i.e. on 28-5-2009, the appellant named "M/s. Eco Valley Farms & Foods Ltd." has no legal existence. A copy of annual report of M/s. Weikfields Foods Pvt. Ltd. for the year 2007-2008 was submitted to the Bench to show that the whole of the undertaking of M/s. Eco Valley Farms & Foods Ltd., constitution food business was merged and transferred to the company called, "Weikfields Foods Pvt. Ltd." with effect from 11-7-2008. It was further submitted that even the share holders of M/s. Eco Valley were allotted the shares of M/s. Weikfields. Since, there is no existence of M/s. Eco Valley on the date of filing of appeal, even authorization/vakalatnama signed by the Managing Director M/s. Eco Valley in favour of the Counsel is non est. The Id. JCDR submitted that the entity called Eco Valley still exists, but could not submit any piece of evidence in support of such claim. He could not refute the contents of the An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Miscellaneous application filed by the appellants for amendment of the appeal has not been disposed of. 5. We are unable to accept this argument. First of all, the miscellaneous application has been listed and a separate order number in respect of the miscellaneous application has also been given as can be seen from the cause title of the stay order. Further, in para 2, the Tribunal observed that if they want the memorandum of appeal to be amended, they should have made it clear in the amendment application and if necessary they could have filed an affidavit in support of the application. It was clearly observed that in the absence of these pre-requisites, amendment application cannot be accepted, Since in para 2 itself, the discussion was there about the miscellaneous application and it was clearly observed that amendment application in the present form could not be considered, there was clearly a disposal of the miscellaneous application. The Tribunal gave liberty to take remedial steps to the appellant. Therefore, we do not consider that Miscellaneous application has not been disposed of and is pending. If the fact of disposal was not mentioned in the last paragraph, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the second preliminary objection raised by the ld. Jt. CDR. He has relied upon the decision of the Hon'ble Delhi High Court in the matter of Gunvat & Ors. [1987 (32) E.L.T. 53 (Del.)] to support his submission that additional evidence could not be permitted even in an appeal to enable one of the parties to remove lacunae in presenting its case at the proper stage and to fill in gaps. While discussing the objections raised by the ld. Jt. CDR on the miscellaneous application, we have considered this aspect also. In this case, no additional evidence has been produced by the appellants. In fact, the affidavit only clarifies that while working out the duty demand, two entries were duplicated and duty demand in respect of an item not in dispute was taken into account. As already observed by us, if the appellants were able to convince the Tribunal that amount demanded needs to be re-worked out, the obvious course taken by the Tribunal is to remand the matter for quantification of duty. In view of the fact that the affidavit talks of the amounts paid by the appellants and the details relating thereto, this cannot be called as additional evidence but existing evidence which was omitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned counsel for the appellant is that the identical issue was decided earlier by the Commissioner (Appeals) vide OIA No. P-III/47/2004, dated 27-5-2004 in respect of demands for the period 1998-99 and 1999-2000. It was submitted that the present demand is not sustainable since the department did not challenge the order-in-appeal dated 27-5-2004 and it has attained finality and is binding on the department. First of all, as submitted by the learned Jt. CDR, the Tariff itself has undergone a change after 28-2-2005. Prior to 28-2-2005, Dried Vegetable including mushroom was classifiable under CETH 0701 attracting NIL rate of Excise Duty and sub-heading 0702 covered other vegetables. The department's case was that the fresh mushrooms were classifiable under CETH 0701.00. It was contended by the appellants vis-a-vis the Department's proposal that mushrooms were not covered by Central Excise Tariff at all and further, their product was fresh mushroom and not dried mushroom and, therefore, not covered under CETH 0701.00. The department's appeal before the Commissioner (Appeals) against the OIO dropping the demand was that duty should have been charged as per the proviso to Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court cited by the appellant would not help them. The appellants also submitted that the ratio of the decision in the case of Cotspun Ltd. was relied upon for the proposition that without filing an appeal against the order dated 27-5-2004, no duty can be demanded. This aspect has already been dealt with by us. 9.3 Further, we also find ourselves in agreement with the submissions made by the learned Jt. CDR that an order passed by the Commissioner in a different factual situation cannot bind the department perpetually. We also find the reliance of the learned Jt. CDR on the decisions of the Hon'ble Supreme Court in the case of M/s. Jain Shudh Vanaspati reported in 1996 (86) E.L.T. 460 (S.C.) and Re-rolling Mills reported in 1997 (94) E.L.T. 8 (S.C.) to support his contention that the power to raise a demand includes an inherent power to review a past assessment. Moreover, in the case of Central Excise, at present, there is no system of an assessment by the proper officer of all the returns filed by the assessee. The system at present is self-assessment and only when an assessing officer requires the need for assessment, he may call for relevant documents and record and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 892/12/09-CX dated 23-7-2009 and submit that the Circular treats agricultural produce as non-excisable goods, in the context of self-sealing for the purpose of export from a factory. We do not intend to deal with this contention in depth since this is not supported at all by any legal or .judicial decisions or by any statutory provisions. Agricultural products had been subjected to Excise Duty and examples are coffee, tobacco, etc. in the past. 9.7 The next submission made by the appellants was that goods figuring in a Schedule attracting NIL rate of duty are not excisable goods and, therefore, when the goods are not excisable at all, the question of levy of Customs Duty does not arise. The issue requires to be considered in the light of submissions made by both sides. Definition of "excisable goods" as per Section 2(d) of the Central Excise Act, 1944 is as follows :- "goods specified in the first schedule and the second schedule to the CE Tariff Act, 1985 as being subject to a duty of excise and includes sale". According to the learned counsel for the appellants, in order to term the goods as "excisable", the following have to be satisfied; (a) the goods are specified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock. Basically, excisability is linked to taxable event and taxable event is manufacture. Therefore, we find considerable force in the learned Jt. CDR's submissions that the requirement under Section 2(d) of the Central Excise Act is that the description of the goods should be available under First or Second Schedule of the Tariff and not actual levy of duty. We also find the reliance of the learned Jt. CDR on the decision of the Hon'ble High Court of Punjab & Haryana in the case of M/s. Hind Rubber Factory [1990 (48) E.L.T. 363] affirmed by the Hon'ble Supreme Court in 2000 (119) E.L.T. A178 (S.C.) also appropriate. Paragraphs 21, 22 and 23 of the decision of the Hon'ble Punjab & Haryana High Court are relevant and are reproduced below :- 21. The same view was taken by Karnataka High Court in Karnataka Cement Pipe Factory Industrial Estate v. Superintendent of Central Excise and another, 1986 (23) E.L.T. 313 (Karnataka). In this decision, the learned Judge explained some of the authorities in which a contrary view had been taken and relied on the decisions of High Courts of Madras, Andhra Pradesh and Delhi. It was held that character of a product, as excisable goods, does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In support of the same conclusion, we may add some more reasons. The definition of the expression "excisable goods" consists of two peris. The first part lays down that such goods are those which are specified in the First Schedule. The second part is that such goods arc subject to a duty of excise. It is significant to note that the two parts of the definition are not disjunctive and, therefore, it cannot be held that being subject to a duty in the context means actual levy of the excise duly. The expression "being subject to" according to Shorter English Oxford Dictionary, means - exposed or open to; prone to or liable to ….. having a tendency prone or disposed of It follows that the goods mentioned in the Schedule to the Act are liable to attract excise duty. The definition does not mean that the duty must be imposed in order to make the goods excisable goods. To understand the significance of the expression 'subject to', it would be profitable to compare it with the expression 'subjected to'. If the latter expression had been used it could be said that exemption from excise duty under Rule 8 would make the 'excisable goods' non-excisable or outside the definition. The ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows :- "In case of DTA sale of goods manufactured by EOU/EHTP/STP/BTP, where basic duty and CVD is nil, such goods may be considered as non-excisable for the purpose of payment of duty." Admittedly, basic customs duty leviable on the goods is not nil. Therefore, in terms of Foreign Trade Policy, the goods are not non-excisable. Therefore, the objective in terms of EXIM Policy as well as Central Excise Act, the goods under consideration cannot be considered as non-excisable. We also agree with the submission of the learned JCDR that the decision of Hon'ble Supreme Court, in the case of Dhiren Chemicals would not be applicable to the present case, In that case, Hon'ble Court was concerned with the interpretation of the phrase "on which appropriate amount of duty of excise has already been paid". Therefore, the Hon'ble Court interpreted the term "appropriate" and "has already been paid'. The Hon'ble Court was not at all concerned with the interpretation of the term "excisable goods". Similarly, since we are not concerned with the term "suffered' in this case, the other submissions made in that connection are also not relevant. 9.10 The next submission was that even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of articles in an amount equal to the customs duty leviable on such articles as if imported as such. In order to remove this anomaly, all the notifications governing duty free import of goods by STP/EHTP/EPZ units and EOUs including those in Aquaculture and Agriculture sector have been amended so as to bring the provisions of these notifications in harmony with the provisions of corresponding Central Excise notifications. Notification No. 56/2001-Cus., dated 18-5-2001 may be seen for details." Further, we also agree with the submissions of the learned JCDR that the Circular has to be read with para 6.8(j) of the Foreign Trade Policy. As regards the reliance of the appellants on the decision in the case of M/s. Zygo Flowers Ltd. [2006 (196) E.L.T. 431], it was submitted that in the case of L.R. Bros, and Indo Flora Ltd. [2009 (235) E.L.T. 324 (Tri. - Del.)], the Tribunal had clarified that during the material period, cut flowers were liable to duty under proviso to Section 3(1) of the Act when cleared to DTA. The learned counsel for the appellant also relied upon Circular No. 54/04-Cus., dated 13-10-2004 to submit that the legislative intention was to treat DTA units and EOU uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fiction, and it is often said, it should not allow its imagination to be boggled by any other considerations. Fiction must be given its due play and there has to be no half-way stop. In this case, a separate mechanism has been created for calculation of excise duties and that has to be measured as customs duties leviable. Therefore, if customs duty is leviable on a product and if it is excisable, there cannot be any other option. In the case of Sarla Performance Fibers Ltd. [2010 (253) E.L.T. 203 (Tri.-Ahmd.)], a view was taken that in respect of goods cleared to DTA by a 100% EOU, duty has to be charged under the proviso to Section 3(1) only and not under the main section. Further, in the case of Vikram Ispat [2000 (120) E.L.T. 800 (Tri.-LB), it has been held that the nature of duty levied on the goods manufactured by a 100% EOU is Central Excise Duty whereas measure of collection of duty is Customs. If the contention of the appellant is accepted, the proviso to Section 3 will become virtually non-existent. 9.13 An alternative submission was made that the unit should be treated to have withdrawn from the EOU scheme w.e.f. 1-12-2006 in view of the change in the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion and submitted that there is no legal provision for any deemed de-bonding or giving effect to de-bonding from an earlier date. He also relied upon the decision of the Hon'ble Supreme Court in the case of Jagdish Cancer and Research Centre reported in 2001 (132) E.L.T. 257 (S.C.) wherein the apex court held that "the purpose of the Notification for grant of exemption from payment of Customs Duty would not be served by making payment of expenditure incurred on same inpatients in some other Hospitals as alleged. It has also not been shown that alleged arrangements had the approval of the concerned authority or that it was brought to their notice at all." He also relied upon the decision in the case of Sant Lal Gupta v. Modern Co-operative Group Housing Society Ltd. reported in 2010 (262) E.L.T. 6 (S.C.) to submit that what cannot be done directly, is not permissible to be done obliquely or neutralized. He submitted that in this case, the appellant had already availed an inadmissible benefit in violation of the provisions of Policy and the conditions of Notifications by not paying appropriate Central Excise duties on the DTA clearances and, therefore, the Tribunal which does not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive effect to the date of de-bonding. Further, the de-bonding permission is given in principle by the Development Commissioner and after the duties are discharged and certificate is issued by Customs, final de-bonding order is issued. No evidence has been produced before us to show that the appellant sought to get the approval for de-bonding w.e.f. 1-12-2006 from either of the authorities. In respect of the query, the appellant did not show any specific statutory provision or any judicial precedent in support of this claim. The submission was that when there is no prohibition from de-bonding from retrospective effect, the appellant is entitled to exit from an earlier date. The decisions of the apex court cited by the learned JCDR are relevant and in this case, after the show-cause notice has been issued by the Revenue, on finding that the duty liability is much more than the benefit availed by them, the appellant is seeking retrospective effect of de-bonding date and that too with an offer to pay the differential duty with interest and that too before an appellate authority viz. the Tribunal since no evidence has been produced to show that such application has been made before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 4(4)(d)(ii) of Central Excises and Salt Act, 1994 the normal wholesale price is the cum-duty price which the wholeseller has to pay to the manufacturer-assessee. The cost of production, estimated profit and taxes on manufacture and sale of goods are usually included in the wholesale price. Because the wholesale price is usually the cum-duty price, the above section 4(4)(d)(ii) lays down that the "value" will not include duty of excise, sales tax and other taxes, if any, payable on the goods. It was further held that if, however, a manufacturer includes in the wholesale price any amount by way of tax, even when no such tax is payable, then he is really including something in the price which is not payable as duty. He is really increasing the profit element in another guise and in such a case there cannot be any question of deduction of duty from the wholesale price because as a matter of fact, no duty has actually been included in the wholesale price. It was further held that the manufacturer has to calculate the value on which the duty would be payable and it is on that value and not the cum-duty price that the duty of excise is paid. Therefore, unless it is shown by the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act 'nil' rate of duty, they are non-excisable cannot be ruled out. Consideration of various judgments, statutory provisions and an analysis only leads to the conclusion that goods are excisable. Having referred to these facts, we consider that imposition of penalty is not at all justified in this case. There is no doubt that interest on the duty is payable. 13. In view of the above discussion, we uphold the decision of the learned Commissioner that fresh mushrooms cleared by the appellant to the DTA are classifiable under Central Excise Tariff sub-heading 0709 15 00 of the first schedule to the Central Excise Tariff Act, 1985 and chargeable to duty of Central Excise under proviso to Section 3(1) of the Central Excise Act, 1944. However, the amount demanded will have to be re-quantified after considering the judicial precedents, statutory provisions and submissions which the appellants wish to make before a decision is taken as to whether in the facts and circumstances of the case, the value at which goods have been sold can be treated as cum duty value or not. Since the question of computation of duty has been kept open, interest liability will also have to be determined afr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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