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TMI Blog2022 (11) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... t the fact that such Forms in Annexure A were duly filed with the department; that after receipt of the duty paid goods in the factory for repairs and after giving intimation thereof to the department, particulars of the same were duly recorded in Form V Register - The said statutory records/ documents viz. Forms Annexure A bearing Received Stamp/ signature of the Inspector, Form V Register, Forms Annexure C bearing receipt stamp/ signature of the Inspector and Invoices clearly establish the receipt of the goods cleared earlier, for the purpose of repairs, and the removal after carrying out of repairs. That the show cause notice has not disputed the genuineness of the aforesaid documents/ records; no statement has been recorded of the central excise officers who had acknowledged the said intimations and thus in the face of the said statutory documents/ records, the case of the department that no goods were received under Rule 173H for repairs and that what was cleared as repaired goods were in fact freshly manufactured goods cannot be sustained. That the Commissioner s finding that rejection of Bottles was without any reasonable ground or that the nature of the defects were such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relying on a trade notice which stipulated the said limitation period of 6 months. When no limitation period was stipulated in Rule 173H, no such limitation period can be introduced in the statutory Rule 173H by means of a Trade Notice which has no statutory force. Even otherwise since in view of above there was no manufacture of fresh goods there cannot be a duty demand merely for reason of clearance after 6 months. Since no duty was payable on the said goods and since the said goods are not liable to confiscation, the imposition of fine and penalties on appellants are liable to be set aside - confiscation of land, building, plant and machinery and in imposition of redemption fine, since the duty demand itself is unsustainable in law, the said order of confiscation and fine is liable to be set aside. Appeal allowed. - Excise Appeal No. 10700-10702 of 2019, 10704 of 2019, 10706-10707 of 2019 - Final Order No. A/11204-11209/2022 - Dated:- 17-10-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri J C Patel Shri Rahul Gajera (Advocates) for the Appellant Shri G. Kirupanandan, Superintendent (AR) for the Respondent ORDER Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty on clearances of Polycarbonate Bottle made during the period after 2-6-1998 to 15-2-1999 and subsequent clearances were made by AIL on payment of duty. 1.4 It appears that AIL received rejection in respect of Polycarbonate Containers from its buyers on account of quality issues and it is a matter of record that AIL has given Intimation to department in Form Annexure A of received back polycarbonate containers rejected by buyer and the received back goods were accounted in Form V Register and thereafter Intimation of the clearance of the goods post reprocessing was also given and Invoices of clearances effected after reprocessing indicated that clearance was made under Rule 173H and contained cross-reference to the earlier Invoice. 1.5 The Commissioner of Central Excise, Surat-II issued a Show Cause Notice dated 7-3-2000 principally on the following two counts: a) demand for duty of Rs.1,00,00,000/- on 80,000 pieces of Bottles which were cleared in March 1998 with benefit of exemption under Notification No.4/97-CE dated 1-3-1998 and which according to the department were manufactured in May 1998 and cleared in June 1998 after Notification No.4/97 was withdrawn and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epaired/reprocessed bottles and that AIL s Annual Report showing much higher production of 1,32,591 bottles as compared to statutory central excise records. She further held that AIL was not eligible to exemption under sr. n. 69 of notification no. 5/98-CE dated 2-6-1998 on the ground that AIL has not fulfilled the condition no. 10 of the said notification. 02. Shri J C Patel Shri Rahul Gajera, Learned Counsels appearing for Appellants assailed the aforesaid order of the Commissioner and interalia submitted that complete procedure under Rule 173H had been followed by AIL and that the show cause notice has not disputed the genuineness of the said documents/ records; he submitted that no reliance can be placed on the Statement of Security Supervisor, Gopal Singh Ram Singh Bhandari, as this Tribunal in earlier round of litigation vide Order dated 16-9-2011 has clearly held that his statement and registers maintained by him are unreliable. He further went on to submit that Commissioner could not have relied upon the Inward-Outward register maintained by the Security Supervisor to discredit the statutory documents and records maintained by AIL; that if Outward Register maintained b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused the records. At the outset, we find that the entire case built up by the department on the face of it is improbable. As is evident from the record, up to February 1999 AIL was clearing the Polycarbonate Bottles under the belief that the same were exempt from duty and duly reflecting such duty-free clearances in the RT-12 Returns. There could therefore be no motive or reason for AIL to wrongly declare freshly manufactured Bottles as repaired Bottles under Rule 173H. 4.1 We further observed that upon perusal of records, it is clear that on receipt back of the Bottles earlier cleared, the AIL had duly filed with the Excise department, intimation of receipt of the goods in Form Annexure A; the said Forms Annexure A were duly received by the department as is evident from Received Stamp/ signature of the Inspector on the said Forms Annexure A and that the fact that such Forms in Annexure A were duly filed with the department; that after receipt of the duty paid goods in the factory for repairs and after giving intimation thereof to the department, particulars of the same were duly recorded in Form V Register. The intimation to the department in Forms Annexure C was duly gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as herself in Para 31.15 referred to the AIL s defence submission in which it is pleaded that no reliance can be placed on the said Statement unless the Appellants are given an opportunity for cross-examination. That in fact this Tribunal itself has in Para 16 of the Order 16-9-2011 held that no reliance can be placed on the Statements without granting cross-examination. 4.3 That if the Inward-Outward registers maintained by the said Security Supervisor were complete record of the movement of goods into the factory and from the factory, the demand ought to be restricted to only such number of Bottles as find mention in the Outward Register; that as per the entries of Bottles which find mention in the Outward Register only 8440 Bottles were cleared during the period 1997-98 and 1998-99; thus, if the registers maintained by the Security officer were complete record of the movement of goods into the factory and from the factory, there is no question of demanding duty on 90,613 pieces of Bottles because as per the said Registers the number of Bottles cleared was only 8440. That on the one hand, Commissioner is relying on the Inward-Outward register maintained by the Security Supervi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as cleared by the AIL to Atco Healthcare were not return of repaired goods but were clearances of freshly manufactured goods. The said finding of the Commissioner cannot be agreed with for the reason that perusal of the said Purchase Ledger shows reference of the Invoice numbers and the Invoices in turn mention that the clearances are under Rule 173H and the said Invoices give the cross reference of the Invoices under which the goods were earlier cleared on payment of duty. Further, the said Ledger does not show a single payment made by Atco Healthcare towards the said transactions; shows that these were not purchases of freshly manufactured goods. On the other hand, department has not produced any evidence of payment by Atco Healthcare in respect of the said clearances. Also, upon perusal of sales return ledger and the chartered accountant s certificate it is clear that the effect of the returned goods was given in the accounts in the next financial year 1999-2000. per the AIL s Annual Report for 1998-99 there was production 4.8 The Commissioner has held that since as of 1,32,591 bottles in 1998-99, the clearances have to be of fresh manufactured bottles and not return of bottl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s does not negate allegation of illicit clearance is contrary to the law laid down in the aforesaid decisions. 4.11 That the details of the quantity of raw materials procured by the Appellant-AIL are reflected in their Stock Register, and as explained in the Appellant s submissions contained in their letter dated 25-9-2008 submitted on 26-9-2008, it is impossible to manufacture the quantity of Bottles which the department alleges was freshly manufactured. The Commissioner s finding of clandestine removal of goods cannot be agreed with without their being evidence of procurement of such quantity of raw materials as is required for production of the goods alleged to be clandestinely manufactured and cleared. 4.12 That as regards the issue of eligibility to exemption, serial No.69 of Notification No.5/98-CE dated 2-6-1998 grants exemption to All goods of headings 39.23, 39.24 and 39.26 except goods of Polyurathanes, insulated ware and certain bags and sacks and fabrics. The goods in the present case are Polycarbonate Bottles of heading 39.23 and they are not hit by the said three exceptions. The said exemption is subject to condition No.10 which is duly fulfilled in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h limitation period can be introduced in the statutory Rule 173H by means of a Trade Notice which has no statutory force. Even otherwise since in view of above there was no manufacture of fresh goods there cannot be a duty demand merely for reason of clearance after 6 months. 4.14 We also find that Commissioner erred in ordering confiscation of 23,887 bottles. Out of a quantity of 1,15,440 bottles which were received back in the factory under Rule 173H, a quantity of 91,553 bottles were removed after repairs and the balance quantity of 23,887 bottles was physically found within the factory at the time of Panchnama made by the department. The Commissioner erred in ordering confiscation of these 23,887 Bottles on a mere presumption, without any evidence, that the same were freshly manufactured Bottles. In the absence of any evidence cited in the Notice that these Bottles were freshly manufactured, there is no warrant for confiscation of these Bottles. Further, in any event since these Bottles were within the factory and were not cleared or attempted to be cleared, there is no question of these bottles being liable to confiscation. The Commissioner erred in ordering confiscation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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