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TMI Blog2024 (4) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... the SSP was removed and sold to IPL, IPL further sold it to Mahadhan who, further sold it to Hindustan who misused the SSP for agriculture use to manufacture other products in their industry - HELD THAT:- The diversion of SSP meant for and clearly marked as meant for agriculture use to non-agricultural use was done by Hindustan alone. It is undisputed that all bags of SSP were clearly meant for agriculture use only . Such being the case, there was absolutely no reason for Hindustan to have put the subsidized SSP cleared under concessional rate of excise duty and intended for agricultural use to industrial use. The submission of Hindustan in its appeal that the SSP, which it purchased, was of sub-standard quality holds no water. As rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt Ltd. [Hindustan] to assail the order-in-appeal dated 22.02.2018 passed by the Commissioner (Appeals) Central Excise, CGST, Jodhpur whereby he reduced the penalty under rule 26 of the Central Excise Rules imposed on the appellant by the Assistant Commissioner by order dated 31.05.2016 to Rs. 50,000/-. 3. It needs to be pointed out that order-in-original dated 31.05.2016 is the same in both these appeals, but the Commissioner (Appeals) passed different orders-in-appeals in appeals filed by Manglam and Hindustan. 4. Manglam manufactures single super phosphate [SSP], a fertilizer, under an agreement with India Potash Limited [IPL] which is the nodal agency for distribution and the marketing of SSP throughout the country. As per the agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used by Hindustan. 7. Acting on intelligence, the officers of Central Excise visited the manufacturing unit of Hindustan and found that the SSP meant for agriculture was being used for other purposes. Accordingly, the SSP was seized under section 110 of the Customs Act, 1962 as made applicable to central excise. 8. Investigation was completed and the show cause notice was issued to the Manglam proposing to recover the differential central excise duty of Rs. 2,13,965/- under section 11A(4) of Central Excise Act along with interest under section 11AA and to impose penalties under rule 25 of the central excise rules, 2002 read with section 11AC of the central excise act. The show cause notice was also issued to Hindustan, IPL, Mahadhan etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPL. There was no scope for Manlgam to have sold the SSP to any other person; (c) IPL further sold the SSP to Mahadhan who sold it to Hindustan. It is Hindustan which had, used the SSP meant for agriculture used to manufacture Calcium Phosphate; (d) Manglam's responsibility ended with paying duty as applicable and selling to IPL. What happened thereafter was not under control of Manglam; (e) The department should recover the duty either from Mahadhan which had sold the SSP to Hindustan or from Hindustan, who had use the SSP meant for agriculture use for non-agriculture purpose; (f) The Assistant Commissioner has clearly erred in asking Manglam to pay the excise duty. This decision was wrongly upheld by the Commissioner (Appeals); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 of the Central Excise Tariff and were chargeable to a concessional rate of duty only 1% as per the Exemption Notification unless they were clearly not meant for agriculture use. At the time of clearance, the bags clearly indicated that the SSP manufactured by Manglam was "for agricultural use only". Therefore, the duty was assessed accordingly as per the law. 17. The case of the revenue is that after the SSP was removed and sold to IPL, IPL further sold it to Mahadhan who, further sold it to Hindustan who misused the SSP for agriculture use to manufacture other products in their industry. 18. By no stretch of imagination can it be held that Manglam had any knowledge of how the SSP manufactured by it will be used by its buyer's buyer's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods manufactured and cleared availing the exemption notification were liable for confiscation under rule 25(1)(b) of the rules and upheld the confiscation of the seized goods by the adjudicating authority; (iii) Hindustan purchased the SSP from Mahadhan who, in turn, had purchased it from IPL. The SSP was of non-standard grade. Therefore, the confiscation of the SSP was illegal and unwarranted. Consequently, the imposition of redemption fine of Rs. 50,000/- in lieu of confiscation was also illegal. Consequently, the penalty of Rs. 20,000/- imposed under rule 26 also needs to be dropped; 24. Learned authorized representative appearing for the revenue supports the impugned order. 25. We have considered the submissions. 26. The diversi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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