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TMI Blog2015 (1) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be available to an assessee if henna powder is mixed with a liquid, so far that the liquid is a medium to change the form of henna powder into paste. The liquid is not restricted to water. It can be any liquid which is a medium to change the form of henna powder into paste. What has been excluded are products like henna dye and such other products which are cosmetics. In Prem Henna [ 2019 (3) TMI 847 - CESTAT NEW DELHI ], in the matter of the appellant itself and in the matter of manufacture of henna paste from henna powder, the show cause notice that was issued to the appellant alleged that the appellant was mixing clove oil with henna powder for the manufacture of henna paste and, therefore, since another ingredient was added to henna powder, the appellant would not be entitled to the benefit of the Exemption Notification. Rejecting this contention, the Tribunal held that clove oil is a liquid used to make henna paste from henna powder and make it marketable as such paste in cones. Such a process for making the paste marketable/usable by the customers would not mean that the appellant would not be entitled to the benefit of the Exemption Notification. In this connection, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 01.03.2013, when manufacturing henna paste from henna powder. The order dated 30.12.2020 passed by the Commissioner is, accordingly, set aside - Appeal allowed. - MR. DILIP GUPTA, PRESIDENT AND MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) Shri Rupesh Kumar, Senior Advocate with Shri Jitin Singhal, Advocate for the Appellant Shri Bhagwat Dayal, Authorized Representative for the Department ORDER Prem Henna Pvt. Ltd [the appellant] has sought the quashing of the order dated 30.12.2020 passed by the Commissioner for recovery of central excise duty from the appellant under section 11A(5) read with section 11A(10) of the Central Excise Act, 1944 [the Central Excise Act] with interest under section 11AA of the Central Excise Act. The order also imposes penalty upon the appellant under section 11AC (1)(c) of the Central Excise Act. 2. The appellant is engaged in the manufacture and clearance of mehandi paste and mehandi powder. The dispute in the present appeal relates to availment of Notification No. 12/2012-CE dated 17.03.2012 [the Exemption Notification] , as subsequently amended by Notification No. 12/2013CE dated 01.03.2013, by the appellant on the manufacture of mehandi paste. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod from 01.08.2014 to 30.06.2017 mentioning therein that under the amended Exemption Notification dated 01.03.2013 henna powder cannot be mixed with any other ingredient and should contain pure henna. The show cause notice states that to ascertain the presence of other ingredients in the henna paste manufactured by the appellant, the Superintendent sent samples drawn on 21.05.2014 to the Central Revenue Control Laboratory, New Delhi, which submitted a test report dated 27.08.2014. The Superintendent also drew sample on 25.10.2015 and sent it to the Central Revenue Control Laboratory, New Delhi which submitted a test report dated 22.01.2016. Both the test reports were enclosed as relied upon document no. 6 to the show cause notice. The show cause notice drew a conclusion from the aforesaid two reports that there were some extraneous dyes/material other than henna powder/leaves present in the samples and thus henna paste manufactured and cleared by the appellant did not satisfy the description given for claiming exemption under the Exemption Notification. The show cause notice also alleges that the appellant is mixing other ingredients like Benzyl Alcohol, Terpineol, Clove Oil, Eu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant also pointed out that neither the extended period of the limitation could have been invoked in the facts and circumstances of the case nor penalty could have imposed or interest charged from the appellant. 9. The Commissioner, however, did not accept the contentions raised in the reply submitted by the appellant and by order dated 30.12.2020 confirmed the demand of duty with interest and penalty. 10. In respect of the two test reports dated 27.08.2014 and 21.02.2016 the Commissioner observed as follows: 13. Xxxxxxxxxx Both the above reports clearly indicate that there was some extraneous dyes/material other then Henna Powder/leaves present in the sample of Heena Paste. 11. In regard to the reliance placed by the appellant on earlier decisions of the Tribunal, the Commissioner observed: 14.5 xxxxxxxxxxxxx In the instant case, CESTAT Final Order No. 53529/ 2018 dated 19.12.2018 in the case of M/s Prem Mehandi Centre Vs CCE, Jaipur and Final Order No. 53561/2018 dated 19.12.2018 in their own case have been accepted by Department on ground of monetary limit which. Hence, in terms of the provisions of Section 35R of the Central Excise Act, 1944, such non filing of appeal did not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils mixed with henna powder water constitutes other ingredients in the henna paste. The noticee's plea that paste cannot be made without mixing oils to henna powder is not legally tenable and recognise oils as a liquid medium to change form of henna powder to henna paste because oils in henna paste are used as preservatives and/or used to enhance quality of the product. Oils make henna paste that stained quickly, darkened rapidly with glossy finish and make product ready to use with added values. Thus, I find that water is the only liquid can be used as liquid to change form of henna powder to henna paste. Moreover, burden to prove that all the conditions of notification have been fulfilled, lies on the noticee and not on the Department. In view of the concrete and conclusive CRCL report dated 27.08.2014 exhibiting that extra spot on the Chromatogram have been found which indicates extraneous dyes are present in the sample. I hold that the Henna paste manufactured by the noticee during the impugned period is mixed with other ingredients and is not genuine (pure) henna. Thus, the benefit of effective rate of duty on Henna paste under the Notification No. 12/2013-CE dated 01.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly concluded that the appellant would not be entitled to avail the benefit of the Exemption Notification; (ii) The extended period of limitation was correctly invoked; and (iii) The Commissioner was justified in imposing penalty upon the appellant and demand of interest is also justified. 16. The submissions advanced by the learned senior counsel for the appellant and the learned authorized representative appearing for the department have been considered. 17. The period of dispute in the present case is from 01.08.2014 upto 30.06.2017. The Exemption Notification, dated 17.03.2012, against serial no. 134, describes the excisable goods as henna powder, not mixed with any other ingredient . This was subjected to six percent excise duty. The amendment made on 17.03.2012 substituted serial no. 134 as henna powder or paste, not mixed with any other ingredient . It was subjected to Nil rate of duty. It is the said amendment that would be applicable to the facts of the present case. 18. The Commissioner has found that the appellant was using henna powder, water and oils to manufacture henna paste and addition of oils to henna powder to make henna paste would deprive the appellant from taki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the Tribunal placed reliance upon the letter dated 10.07.2014 issued by the Board regarding the Exemption Notification. 22. It also needs to be noted that by an order dated 13.03.2018, the Tribunal in Prem Henna remanded the appeals to the adjudicating authority to follow the standard tests specified for henna paste instead of following the tests prescribed for henna powder to determine whether other ingredients had been used for manufacture of henna paste from henna powder. The relevant portion of the order dated 13.03.2018 of the Tribunal is reproduced below: 6. Having heard both the sides, we note that we are constrained by the lack of clarity in the proceedings initiated by the Revenue. First of all, when the nature of product is in dispute, it is necessary to have it tested by the competent laboratory to get a clear view. Such tests were done by the Chemical Examiner. Unfortunately, the methodology adopted is apparently not proper. The standard specified for testing the Henna Powder cannot be applied to paste. The IS Standard clearly states that the comparison of samples should be done with the standard plants source, which has not been got done. We note while re-testing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnature (emphasis supplied) 24. Thus, when the methodology specified for henna paste as per IS-173 18:2020 was followed, a finding was recorded in the test report that the tested sample meets the requirement of henna paste. 25. The relevant portions of the order dated 31.01.2023 passed by the Commissioner, after the remand by the Tribunal by order dated 13.03.2018, in respect of the show cause notice dated 06.04.2015 issued for the period 01.04.2014 to 31.08.2014 and the show cause notice dated 06.10.2015 issued for the period 01.09.2014 to 31.03.2015 are reproduced below: 10.1 . In view of the fact that the CESTAT order dated 18.03.2018 has been accepted by the department the third report dated 17.11.2022 and 22.11.2022 for the sample drawn on 19.10.2022 (Para 8.5 above), which are also the latest reports in this case, are most relevant to decide the present case. The said reports says that the Heena Powder and Heena paste manufactured by the does not contain any extraneous dyes/chemical dyes. xxxxxxxxxxx 11.2 In the present case as per the CRCL report dated 17.11.2022 and 22.11.2022 the Heena p0aste and Heena Powder manufactured by the assessee does not contains any extraneous dy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heena dye and such other products which are cosmetics. I find that Heena paste also does not contain any other ingredients except that Heena powder is mixed with liquid. I also find that in the notice as well as in impugned OIO, the allegations and findings are not that it is Heena dye or cosmetic, therefore benefit of board's circular deserves to be extended . 11.7.1 The above mentioned order of the Commissioner (Appeals) has already been accepted by the Committee of Commissioners on 24.05.2021 on merit. 12 . In view of the above discussions and findings, I hold that:- 12.1 I find that Heena powder and Heena paste manufactured by the assessee in this case does not contain any other ingredients except that Heena powder is mixed with oils, this is in consonance with the clarification issued under Board s D.O.F. No. 334/15/2014 TRU dated 10.07.2014 , I also find that in the show cause there was no allegations that it is Heena dye or cosmetic, therefore, benefit in terms of board s D.O.F. No. 334/15/2014 TRU dated 10.07.2014, can be extended in this case. (emphasis supplied) 28. In Prem Mehandi Centre decided on 19.12.2018, the Tribunal held as follows: 2. The appellant is engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may also be noted that, wherever it is decided not to file appeal in pursuance of these instructions, which are aimed solely at reducing Government litigation, such cases shall not have any precedent value . In such cases, Commissioners should specifically record that even though the decision is not acceptable, appeal is not being filed as the amount involved is less than the monetary limit prescribed by the Board. Further, in such cases, there will be no presumption that the Department has acquiesced in the decision on the disputed issues in the case of same assessee or in case of any other assessees, if the amount involved exceeds the monetary limits. Thus, in case any prior order is being cited on facts and law, it must be checked whether such order(s) were accepted only on account of the monetary limit before following them in the name of judicial discipline. In respect of an order where it is decided not to file appeal in pursuance of these instructions, a data base needs to be created so that all the Commissionerates are made aware of the orders that are accepted solely on the ground that the revenue involved is below the threshold prescribed herein and which should not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appeal, application, revision or reference has been filed by the Central Excise Officer pursuant to the orders or instructions or directions issued under sub-section (1), no person, being a party in appeal, application, revision or reference shall contend that the Central Excise Officer has acquiesced in the decision on the disputed issue by not filing appeal, application, revision or reference. (4) The Commissioner (Appeals) or the Appellate Tribunal or court hearing such appeal, application, revision or reference shall have regard to the circumstances under which appeal, application, revision or reference was not filed by the Central Excise Officer in pursuance of the orders or instructions or directions issued under sub-section (1). (5) Every order or instruction or direction issued by the Central Board of Excise and Customs on or after the 20th day of October, 2010, but before the date on which the Finance Bill, 2011 receives the assent of the President, fixing monetary limits for filing of appeal, application, revision or reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-section (1) and the provisions of sub-sections (2), (3) and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely because the department takes a decision not to file an appeal because of the monetary restrictions or otherwise. Unless a decision of the Tribunal is set aside by the High Court or the Supreme Court, it will continue to bind the revenue authorities empowered to decide matters under the provisions of the Central Excise Act. The Circular dated 20.10.2010, which was issued by the Central Board of Indirect Taxes after the insertion of section 35R of the Central Excise Act on 20.10.2010, cannot also render any decision of the Tribunal to have no precedence value if a decision is taken by the department not to file an appeal against the decision of the Tribunal because of monetary restrictions. At best, in such cases, a party would be precluded from contending that the decision against which appeal was not filed had attained finality. It cannot, under any circumstances, be contended by the department that the decision of the Tribunal in such cases would not have any binding effect. 38. In such circumstances that portion of the Circular that provides that wherever it is decided not to file appeal in pursuance of these instructions, which are aimed solely at reducing Government litig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the decision of Supreme Court in The Bhopal Sugar Industries Ltd. vs. the Income-Tax Officer, Bhopal [AIR 1961 SC 182 ]. The Supreme Court pointed out that it would result in chaos in the administration of justice if a subordinate Tribunal refuses to carry out directions given to it by a superior Tribunal as this would be destructive of one of the basic principles of administration of justice. The observations of the Supreme Court are as follows: By that order the respondent virtually refused to carry out the directions which a superior tribunal had given to him in exercise of its appellate powers in respect of an order of assessment made by him. Such refusal is in effect a denial of justice , and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the direction of the Appellate Court is binding on the courts subordinate thereto and that judicial discipline requires and decorum known to law warrants that appellate directions should be taken as binding and followed. In this connection, the Supreme Court referred to the observations made by the House of Lords and the relevant portion of the judgment of the Supreme Court is reproduced below: The direction of the appellate court is certainly binding on the courts subordinate thereto. That apart, in view of the provisions of Article 41 of the Constitution, all courts in India are bound to follow the decisions of this Court. Judicial discipline requires and decorum known to law warrants that appellate directions should be taken as binding and followed. It is appropriate to usefully recall certain observations of the House of Lords in Broom v. Cassell Co.(1) Therein Lord Hailsham, L. C. observed: The fact is, and I hope it will never be necessary to say so again, that in the hierarchical system of courts which exist in this country, it is necessary for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tier. Lord Reid added: It seems to me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the Assistant Collectors who functions under the jurisdiction of the Tribunal and that the principles of judicial discipline require that the orders of higher appellate authorities are unreservedly followed by the subordinate authorities. The relevant portion of the order of the Supreme Court is reproduced below: 6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insurance Company Limited vs. Commissioner of Central Excise and Service Tax [ (2007) 2 SCC 326] consisting of the Acting Chief Justice R. Mahadevan (now Hon ble Judge of the Supreme Court) and Justice Mohammed Shaffiq also examined this issue. What was assailed before the Madras High Court was a reference order in which Member (Judicial) and Member (Technical) differed in their views. The Madras High Court noticed that the issue that had come up for consideration before the Division Bench of the Tribunal had been dealt with and decided by co-ordinate benches of the Tribunal and so there was no reason to make a reference to a third Member. In this connection, the Madras High Court also made reference to various decisions and the observations made by the Madras High Court are reproduced below: 14. Referring to the decisions of the Honourable Supreme Court in Union of India vs. Kamlakshi Finance Corporation Limited reported in 1992 Suppl (1) Supreme Court Cases 443 and in East India Commercial Co. Ltd vs. Collector of Customs, Calcutta reported in 1983 (13) E.L.T. 1342 (SC), the learned Senior counsel for the petitioner submitted that judicial discipline demands that the decision rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso placed reliance on the decision of the Supreme Court in Official Liquidator vs. Dayanand and others [ (2009) 1 SCC (L S) 943] , in which the aspect of judicial discipline has been discussed in detail. Paragraph 90 of the decision of the Supreme Court in Official Liquidator, on which reliance has been placed by the Division Bench of the Madras High Court, is reproduced below: 90. We are distressed to note that despite several pronouncements on the subject, there is substantial increase in the number of cases involving violation of the basics of judicial discipline. The learned Single Judges and Benches of the High Courts refuse to follow and accept the verdict and law laid down by coordinate and even larger Benches by citing minor difference in the facts as the ground for doing so. Therefore, it has become necessary to reiterate that disrespect to constitutional ethos and breach of discipline have grave impact on the credibility of judicial institution and encourages chance litigation. It must be remembered that predictability and certainty is an important hallmark of judicial jurisprudence developed in this country in last six decades and increase in the frequency of conflictin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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