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TMI Blog2018 (8) TMI 1669X X X X Extracts X X X X X X X X Extracts X X X X ..... tral excise duty is paid by them. The appellants availed MODVAT/CENVAT credit on the bought out items (components, assemblies) and exported the same under bond as inputs / capital goods cleared 'as such'. The department was of the view that the bought out items such as components and assemblies procured from other manufacturers were not used for manufacture or even intended for use in manufacture within the factory of appellant and therefore appellants are not eligible to avail credit on bought out items which were merely exported as such. Accordingly, the following show cause notices were issued proposing to recover the alleged wrongly availed credit which after due process of law, the adjudicating authority dropped the demand in one show cause notice and in respect of other show cause notice culminated in setting aside demand by Commissioner (Appeals). Sl. No. SCN Ref/ Date Period covered Amount O-in-O Ref. 1. 24/96 dated 29.3.1996 July 1994 to January 1996 67,67,684 15/97 dated 26.5.1997 2. Nil/97 dated 3.3.1997 Aug. 1996 to Jan. 1997 18,81,113 19/97 dated 30.6.1997 2.1 The Commissioner had dropped the proceedings on the following findings:- (a) The extended per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rule 57A and 57Q of erstwhile MODVAT Rules, specifically mention the words 'used within the factory / in his factory'. The bought out items were not used within the factory. The Board's Circular is with respect to utilization of credit and not eligibility to take MODVAT credit. The proceedings before Commissioner (Appeals) did not deal with issue of eligibility of credit but was with regard to eligibility on procedural lapses which was condoned. It was held that bought out items cannot be considered as eligible inputs or capital goods for availing credit and the sugar plant machinery on installation becomes immovable property and not goods. The Tribunal set aside the orders dropping the demand and the matter was remanded to the original authority for the limited purpose of computing and confirming the amount of irregularly availed MODVAT credit including imposition of appropriate penalty. 2.4 The appellants filed Civil Appeal No. 5509 & 5510/2003 before the Hon'ble Supreme Court against the said order of Tribunal. An interim stay was passed in the matter and the appeals were disposed by the Hon'ble Supreme Court on 3.9.2013 as reported in 2013 (295) ELT 353 (SC). The Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices that had been transferred to call book, adjudication proceedings were completed whereby the demands were confirmed along with interest and also imposed penalties vide Order-in-Original Nos.11 to 30/2014 dated 29.5.2014. Against these orders (Order-in-Original No. 8 & 9/2014 dated 29.4.2014 and Order-in-Original Nos. 11 to 30/2014 dated 29.5.2014), the appellants approached the Tribunal and vide Final Order No.41389 to 41410/2015 dated 21.9.2015 the Tribunal after observing that the issue has reached finality by the decision rendered by Hon'ble Supreme Court, remanded the matter to adjudicating authority with specific directions. Pursuant to such order of remand by the Tribunal, the Commissioner passed the Order-in-Original which are now impugned in these appeals. Out of the 22 show cause notices (2 + 20), only 9 Orders-in-Original are taken up for disposal by this common order. 3. On behalf of the appellants, ld. counsel Shri C. Manickam assisted by ld. consultant Shri D. Senthil Nathan appeared and argued the matter. His submissions are summarized as under:- i) Appellants had entered into contract with the Union of Sugarcane and Sugar Enterprises for the construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued vide O.C.No.58/95 dated 17.01.95, which was also dropped by Assistant Commissioner, Chennai - I Division, Chennai Commissionerate vide Order-in-Original No.46/95 dated 26.05.95 and since no further appeal was preferred by the Department, the issue had attained finality on all counts. The above referred two orders had determined and decided both substantive as well as procedural issues, which were subsequently accepted in Review as per the provisions of the Central Excise Act. Therefore, the revenue authorities are not entitled to issue show cause notice for the subsequent period. Moreover, the doctrine of res judicata mandates that a same dispute should not be repeatedly initiated on the same party. v) However, M/s.KCP Limited was again issued a Show Cause Notice No.24/96 dated 29.3.1996 for the period July 1994 to Jan 1996 covering the periods already dealt under the earlier show cause notices, which itself is not legally sustainable in terms of the ratio of the Hon'ble Supreme Court in the case of M/s.Nizam Sugar factory reported in 2006 (197) ELT 465 (SC). Further, another demand was issued vide Show Cause Notice No.Nil/97 dated 03.03.97 covering the period from Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been adequately considered in any of the proceedings. Hence, the entire issues require re-consideration afresh for administration of justice. ix) Even more, it is submitted that appellants are clearly entitled for MODVAT credit in terms of the deeming provision as though inputs/capital goods were manufactured in the same factory under Rule 57F (1)(ii) and Rule 57S (1)(ii) of Central Excise Rules, 1944 and also that we have filed various declarations mentioning that the items were meant for export and these items are specified items as mentioned in the Rules, which qualify as inputs and capital goods. Rule 57 (F)(1)(ii) / 57(S)(1)(ii) of the erstwhile Central Excise Rules, 1944, specifically deals with two dimensions of manufacturing and export of goods. As a conscious measure, the Government has encouraged availment of MODVAT Credit even the goods were "removed as such" with a deeming fiction "as if the goods were manufactured". Al the bought out items were brought into the factory. This aspect of "deeming legal fiction" has not been appreciated properly by the Tribunal during the earlier stages whereas the original adjudicating authority had clearly appreciated and mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficers. Therefore, there cannot be any suppression of facts or willful misstatement and accordingly, the extended period of limitation cannot be invoked. xiv) Further, during the second round of litigation before the Tribunal it was held that regarding time bar aspect is concerned, "we understand the difficulties experienced by the appellant that because it succeeded on that count before adjudicating authority in original adjudication, there was no necessity to argue on the same point before Tribunal. But we are helpless when neither there was any plea in this regard before the Tribunal nor there was decision by the Apex Court on that aspect. Therefore, subscribing to the view advanced by the Appellant, it is not possible at this stage after the order of the Tribunal merged with the order of the Apex Court. Accordingly, time bar plea is rejected" (Para 7.5) There was no prayer regarding the extended period of limitation by the Department. Regarding the observation, that there was no decision by the Hon'ble Apex Court, it is submitted that the Apex Court merely upheld the Tribunal order and did not go into the aspect of limitation. The Tribunal's order discussed about the merits o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner is legal, correct and proper order and the Tribunal may remand the case back for de novo adjudication. (d) Whether by an order passed under Section 35 C of the Act, the Tribunal should modify or set aside the order passed by the Commissionerate on the points indicated and pass an order confirming the duty demanded in show cause notice and imposing suitable penalty or pass such other order as may be deemed fit." It is seen that there was a specific request for denovo adjudication and there was no specific prayer on the issue of time bar aspect which was decided by the Commissioner in his order in favour of the appellant and therefore, the issue had attained finality on that count. xvii) This is further substantiated by the fact that the order of Tribunal in 2003 which is nothing but de novo Order specifically mentioned that the case was remanded for "computing and confirming the amount of irregularly availed credit including imposition of appropriate penalty, after giving an effective opportunity of hearing to the appellants, in accordance with law. The appeals are thus allowed by remand". Therefore, it is submitted that the issue of limitation is still open and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o their factory and sent for export along with other manufactured products of the appellant. The factual aspects regarding the essentiality of the said bought out items which were sent along with the core manufactured machines, without which the contract for which the appellant had entered into with the buyer in Vietnam cannot be completed, had been proven in terms of facts of the case. It is not only in terms of the business practice that is required to be followed in such cases but also in terms of the enormity and logistical requirements needed for execution of the erection of a sugar plant abroad, the said bought out items are required to be brought into the factory and therefore, they are definitely in the nature of inputs/capital goods as per the Notifications issued under Rule 57A of Central Excise Rules, 1944. xxii) The crux of the Hon'ble Supreme Court's decision considering the exported goods as non-levy of excise duty, is not only erroneous because it considered non-payment as non-levy. The factum of exports being exempted and not non-levied had been conveniently ignored all along. Secondly, the finding that there is non-payment of duty on the said plant erected in Viet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR Shri A. Cletus supported the findings in the impugned order. He submitted that the issue whether appellants are eligible to avail credit on the bought out items as inputs and capital goods was decided by the Tribunal vide Final Order dated 2.5.2003. The Tribunal after confirming the disallowance of demand of credit had remanded the matter only for the requantification of credit and for imposing revised appropriate penalty. The contention of the ld. counsel that such order of Tribunal is a denovo order is without basis and not in accordance with any provisions of law. This Tribunal order was maintained by the Hon'ble Supreme Court as the Civil Appeals filed by appellants were dismissed. The Tribunal order therefore has merged with the Hon'ble Supreme Court's order and the appellant cannot now contend that the Tribunal failed to appreciate the law correctly or that the issue on limitation was not addressed. 4.1 The Tribunal as well as Hon'ble Supreme Court has considered the issue on merits in detail. The bought out items were neither used nor required to be used in the factory of appellant for the manufacture of final product. These were exported in the same condition, as recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was appealed before the Hon'ble Supreme Court did not consider the facts fully and therefore such order of Tribunal is only a denovo order and therefore the issue has not attained finality. He has relied upon the judgment in the case of Mt. Chauli alias Subhadra Devi Vs. Mt. Meghoo and Others - AIR (32) 1945 Allahabad 268 to argue that being an order of remand, the earlier order of Tribunal cannot be considered to have decided the issue on merits. We fail to understand the logic or basis of such an argument. The operative potion of the Tribunal Final Order reported in 2003 (161) ELT 589 has been already reproduced by us. It is clear from such order that the Tribunal had given a reasoned decision that appellant is not eligible for credit. Only for limited purpose of quantification and imposing penalty, the matter was remanded. The appellants preferred appeal before the Hon'ble Supreme Court against such Final Order, and vide judgment reported in 2013 (295) ELT 353 (SC), the Hon'ble Supreme Court had maintained the decision of the Tribunal. The relevant portion of the Hon'ble Supreme Court's judgment is reproduced as under:- "3. The appellant-assessee entered into a contract with M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant, were not capital goods as per the provisions of Rule 57Q of the Rules. It was also submitted that such goods were not used in the factory premises of the appellant in any manufacturing process and therefore, the said goods were not capital goods as claimed by the appellant. It was also the case of the department that the said goods had been exported by the appellant along with parts of machinery manufactured by the appellant in a container and the said parts i.e. the parts purchased by the appellant had been exported in the same condition i.e. even without opening the packages or testing them. Thus, the role of the appellant was merely like a trader who had purchased certain goods including parts of machinery, cables, etc., from dealers in our country and thereafter exported the same in the exact condition in special containers along with the machinery manufactured by it. 8. The department was also of the view that the parts of machinery which had been exported by the appellant could not have been said to be in Completely Knocked Down condition because the parts manufactured by the appellant and the parts purchased by the appellant from other dealers in the country ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and therefore, the appellant had rightly claimed and availed the MODVAT credit. 15. He had further submitted that the entire sugar machinery plant was to be sent to Vietnam in Completely Knocked Down condition. After receipt of the complete machinery in Vietnam, the plant was to be set up and therefore, even the machinery which had been purchased by the appellant from other manufacturers or dealers and which had been transported to Vietnam by sea was part of the inputs. In the circumstance, without considering whether the plant set up in Vietnam was movable or immovable, the respondent authorities ought to have given the benefit of the MODVAT credit to the appellant. 16. According to the learned counsel for the appellant, the whole sugar machinery was cleared from the factory in unassembled or dis-assembled condition. In view thereof, it was not open to the respondent Authorities to contend that parts of machinery which had been purchased by the appellant from other manufacturers would not form part of the inputs. 17. To substantiate his submissions, the learned counsel had cited several judgments. 18. The learned Additional Solicitor General appearing for the Revenue had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of the judgment delivered in the case of Madras Cements Ltd. v. CCE, 2010 (6) SCC 606 = 2010 (254) E.L.T. 3 (S.C.) as under : "15. In order to avail of MODVAT/CENVAT credit, an assessee has to satisfy the assessing authorities that the capital goods in the form of components, spares and accessories had been utilized during the process of manufacture of the finished product. Admittedly, in this case the appellant was not able to identify the machinery for which the goods in question had been used. In the absence of such identification, it was not possible for the assessing authorities to come to a decision as to whether MODVAT credit would be given in respect of the goods in question." Looking to the above legal position, in our view, the impugned orders passed by the Tribunal cannot be said to be incorrect. 24. It is also not in dispute that the appellant had purchased some machinery from others and such machinery had not even been unpacked by it and in the exact condition it had been transported along with the machinery manufactured by it to Vietnam. Thus, the appellant did not use the purchased machinery in its premises or in its factory and therefore, necessary condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment. Only one thing that comes up for consideration is whether the appellant has maintained any record under the law to show the nature of goods bought out and filed before statutory authority in that regard. Tribunal had directed in its order to compute the irregular MODVAT credit availed. This implies that the MODVAT credit relating to input as well as capital goods is to be ascertained in accordance with law for right application of law. We are not able to see from record whether the goods are capital goods or input since the appellant is held to be trader of the bought out items by the Apex Court in para 25 of the reported judgment. 7.2 CBE&C while permitting filing of appeal had observed that the appellant was a merchant exporter as is apparent from para 2 of the reported decision of the Tribunal. Be that as it may, if the bought out goods have entered into statutory record as is pleaded by learned counsel either as input or capital goods that needs verification to segregate and ascertain value of each type of goods and MODVAT credit availed on each such category of goods can be ascertained for proper application of law in Rule 57F and 57I as well as Rule 57S and 57U of MO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and speaking order shall be passed by the learned adjudicating authority. 7.5 So far as time-bar is concerned, we understand the difficulties expressed by the appellant that because it succeeded on that count before adjudicating authority in original adjudication, there was no necessity to argue on the same point before Tribunal. But we are helpless when neither there was any plea in this regard before the Tribunal nor there was decision by the Apex Court on that aspect. Therefore subscribing to the view advanced by the appellant is not possible at this stage after the order of Tribunal merged in the order of Apex Court. Accordingly, time bar plea is rejected. 7.6 Appellant lastly pleaded that it is entitled to rebate. But such plea fails when the inputs were not used in manufacture but were exported as traded goods and even unpacking the same but dispatched as was received from suppliers. Appellant also pleaded that the appellant being found to be merchant exporter by the CBE&C in its review direction, the authority below in the course of readjudication may consider the benefit available to appellant in that regard. We do not consider any such benefit shall be available whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as fully considered the directions of remand by the Tribunal. 6.5 The ld. counsel has contended that the remand order of the Tribunal as reported in 2003 (161) ELT 569 (Tri. Chennai) has got merged with the Hon'ble Supreme Court's judgment in appeal as reported in 2013 (295) ELT 353 (SC) and hence can be considered only as a denovo order. However, on perusal of the Supreme Court's judgment, we find that the Supreme Court had taken note of the arguments made by Senior Advocate for the appellant in paragraphs 9 to 17 therein. The argument of the ld. counsel that appellant had filed appeal only against denovo order in the Supreme Court is also not supported by facts. Para 1 of the Supreme Court's judgment (supra) it clearly indicates that the appeal has been filed "Being aggrieved by the Final Order No. 301 & 302/2003 dated 2.5.2003 (2003 (161) ELT 569 (Tri Chennai) ...... the instant two civil appeals have been filed by the appellant-assessee ......". In para 11, the Hon'ble Apex Court has observed that "The ld. Senior Advocate appearing for the appellant had submitted that the impugned orders passed by CEGAT are bad in law as the CEGAT did not appreciate the facts and law correctly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items included therein. 7. Notwithstanding all these factoids, the undeniable fact is that the earlier order of this Bench, in the appellant's own case had concluded, "that bought out items both inputs and capital goods in question cannot be considered as eligible capital goods for availing MODVAT credit .....". The remand directions given by the Tribunal in that order dated 2.5.2003 was only for 'computing and confirming the amount of irregularly availed MODVAT credit .... etc." based on the above conclusion reached by them. This decision has been upheld by the Hon'ble Supreme Court reported in 2013 (295) ELT 353 (SC). On the subsequent occasion, when the same matter came up to this Tribunal, vide Final Order dated 21.9.2015, the Tribunal had once again gone into this issue and inter alia held that the matter has reached finality by the decision of the Hon'ble Supreme Court. Judicial propriety requires us to follow the Hon'ble Apex Court view in the appellant's own case as reported in 2013 (295) ELT 353 (SC). Such conduct is enjoined on us by the principle of 'stare decisis' namely, 'to stand for things decided'. Hence as a lower court, we are definitely required to follow the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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