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TMI Blog2022 (11) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... ,077/- (Rupees Seven crore twenty five lakhs thirty four thousand seventy seven only) under the provisions of Section 11AC(a) (erstwhile 11AC) of the Central Excise Act 1944. 4. I impose a penalty of Rs. 5,00,000/- (Rupees Five lakh only) on M/s.JMCIPL under the provisions of Rule 25 of the Central Excise Rules, 2002 5. I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) on Shri. Amit Burman under the provisions of Rule 26 of the Central Excise Rules, 2002 6. I do not order confiscation of the impugned goods, as they are not available for confiscation. Consequently, I also do not impose any fine in lieu of confiscation of the goods." 2.1 Appellant are engaged in the manufacturing of Nickel Catalyst falling under Tariff Item 3815 11 00 and 3815 1210 of the First Schedule to the Central Excise Tariff Act, 1985. 2.2 Intelligence received, by the Officers of the Hqrs. Preventive Section of Central Excise, Belapur Commissionerate indicated that appellant were misutilising the Advance Licence Scheme by mis- declaring their export goods as Catalysts of Palladium and Platinum, thereby importing Platinum Sponge, Palladium Sponge, Acticarbone, Charcoal powder, Carbon powder, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium on Carbon/Charcoal), Catalyst Type 10T487 Paste (10% Palladium on Carbon/Charcoal), etc. There was no mention of "Ash and residues" in the said Daily Stock Register (DSA). Therefore, the "Ash and residues" which actually were exported were not accounted for in the Daily Stock Register (DSA) which was in contravention of the provisions of Rule 10 of the Central Excise Rules, 2002, thereby rendering the goods exported liable to confiscation under Rule 25 of the Central Excise Rules, 2002. The details of all such exported goods mis-declared by M/s. JMCIPL as "Palladium/Platinum supported catalyst", detailed in Annexure-C to the show cause notice, were thereby liable to confiscation under Rule 25 of the Central Excise Rules, 2002. Therefore appellant were also liable for penal action under Rule 25 of the Central Excise Rules, 2002. 2.11 A show cause notice dated 30.08.2012 asking them to show-cause to the Commissioner of Central Excise, Belapur Commissionerate having office located at 1st Floor, CGO Complex, CBD Belapur, Navi Mumbai-400 614. as to why 1) the rebate of Central Excise duty amounting to Rs. 7,25,34,077/- (Rupees Seven crores twenty five lakhs thirty four thousand s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due containing precious metal, generated during the process of recharging spent catalyst are not manufactured goods and therefore not liable to excise duty, hence the demand made under Section 11A is not maintainable. o Indian Aluminium Co. [1980 (6) ELT 146 (Bom)] o Tata Iron & Steel Co. Ltd. [2004 (165) ELT 386 (SC)] o Dhakad Metals [2010 (257) ELT 535 (Guj.)] affirmed in [2010 (257) ELT A139 (SC)] o Hindalco Industries [2015 (315) ELT 10 (Bom)] ➢ The recovery of erroneous refund is incorrect as excise duty is not leviable on exports. o Chhotabhai Jethabhai Patel & Co. [1999 (110) ELT 118 (SC)] ➢ Extended period of limitation cannot be invoked ➢ As the demand cannot be sustained on merits and limitation there can be no question for imposition of fine and interest on the appellants. o Tirupati Udyog [2011 (272) ELT 209 (AP)] 3.3 Arguing for the revenue learned special counsel while reiterating the findings recorded in the impugned order submits: ➢ In case of Arun International [2015 (317) ELT 465 (T)] it has been observed that rebate of duty paid on goods can only be given as per the provisions of the Act and the rules made thereund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port product "Ash and Residues" in the daily Stock Register under Rule 25 of the Central Excise Rules, 2002 vi. Whether penalty is imposable on Shri Amit Burman, General Manager(Process Catalyst) under Rule 26 and/or Rule 27 of the Central Excise Rules, 2002 30. Regarding the point (i) stated above, I find that L M/s. JMCIPL in all their export documents viz ARE1, shipping bills, bill of lading, mate receipt and the Invoice issued under Rule 11 of the Central Excise Rules, 2002, had declared the description of their product exported as "Platinum/Palladium supported catalyst" ranging from 1.5% to 10% i.e. the percentage of metal content in the said catalyst. However, the internal records in the form of Assay Analysis Reports clearly establish that the good exported were "Ashes and Residues". I find that the Assay Analysis reports contained the Reference Lot No, the input material, the output material and the metal contents i.e. the quantity of precious metals in the said output material. On co- relating the Reference lot Nos. with the Batch Nos. appearing in the ARE1s, under which the impugned goods were exported, I find that the description of the goods pertaining to Batch Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des for granting of rebate of duty paid on such excisable goods which are exported. M/s. JMCIPL had claimed rebate of duty paid on "Platinum/Palladium supported Catalyst" which was shown to have been exported vide the 27ARE1s. However, investigations conducted by the department has proved that the goods actually exported were "Ash and residues" and not "Platinum/Palladium supported catalyst". This fact has not been disputed by M/s. JMCIPL. "M/s. JMCIPL had claimed rebate of duty paid on goods. which were never exported Under Rule 18 what is rebated is the duty paid on the goods exported. In this case, it has been proved beyond doubt that the goods exported was not 'Palladium/Platinum supported catalysts'. The goods actually exported was 'Ash and Residues'. There was no export of the goods Palladium/Platinum supported catalysts as declared in the ARE1's shipping Bills. Hence, the duty said to have been paid on the goods which were not at all exported cannot be rebated. 31.1 In their submission, M/s JMCIPL stated that under Rule 18 of Central Excise Rules 2002, what is rebated is the duty paid. So, even if the goods were mis-declared, the duty paid was liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ash and Residue". However I find from the records that the Preventive Officers of Belapur Commissionerate had booked a case against M/s. JMCIPL in the month of March 2011 and during the course of investigation statement of Shri B.K.Srivastava, Deputy Operations Manager of M/s. JMCIPL was recorded on 17.3.2011, wherein he admitted the fact that the goods exported were actually ash mixed with impurities containing less than 5% metal content and not "Platinum/Palladium supported catalyst". It was only subsequent to 'the visit of the Preventive Officers and when the investigation was in progress that M/s. JMCIPL approached the Customs Department vide their letter dated 13.4.2011 and paid the Customs duty along with interest and 25% penalty amounting to Rs. 11.66 crores. Therefore, the contention of M/s. JMCIPL that they had found out the mis- declaration/misclassification of their export product at the time of internal review is an afterthought to mislead the department. I also find that M/s. JMCIPL were very well aware at the production stage itself that the batch nos. pertaining to the product exported were "Ash and residues", but with the deliberate and malafide intention to ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of the goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, quantity removed, assessable value, the amount of duty payable, and particulars regarding amount of duty actually paid. Though M/s. JMCIPL had produced and exported "Ash and Residues" the same were not entered/accounted for in the Daily Stock Register maintained by them which is a clear contravention of the provisions of Rule 10 of the Central Excise Rules, 2002 and as such M/s. JMCIPL are liable for penal action under Rule 25 of the Central Excise Rules, 2002 35. ..... 4.3 The basic principle which govern the export of the goods from one jurisdiction to another is that "goods are exported and not the taxes and levies on them made in the jurisdiction from where they are exported." This principle of the international Trade across the borders is essential not only to promote the exports but is fundamental, basic levy of indirect taxes and for making the export goods competitive in the international market. Indirect taxes such as Central excise duty with which we are concerned is tax on the consumption of the goods and should be levied to the taxes in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o de-burden the goods of the excise duty paid in respect of the goods exported, Rule 18 of the Central Excise Rules, 2002 provide as follows: 18. Rebate of duty.- Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. Explanation.-"Export" includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft. In terms of the rule 18, Central Government issued Notification No 19/2004-CE (NT) for prescribing the conditions and limitations along with the procedure for making the scheme envisaged under this rule operational. Notification 19/2004-CE (NT) inter alia provided as follows: "In exercise of the powers conferred by rule 18 of the Central Excise Rules, 2002 and in supersession of the Ministry of Finance, Department of Revenue, notification No. 40/2001- Central Excise (NT), dated the 26th June 2001,[G.S.R.46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factory or warehouse shall export the goods sealed at the place of dispatch by a Central Excise Officer; iv. For the sealing of goods intended for export, at the place of dispatch, the exporter shall present the goods along with four copies of application in the Form ARE-I specified in the Annexure to this notification to the Superintendent or Inspector of Central Excise having jurisdiction over the factory of production or manufacture or warehouse; v. The said Superintendent or Inspector of Central Excise shall verify the identity of goods mentioned in the application and the particulars of the duty paid or payable, and if found in order, shall seal each package or the container in the manner as may be specified by the Commissioner of Central Excise and endorse each copy of the application in token of having such examination done; vi. The said Superintendent or Inspector of Central Excise shall return the original and duplicate copies of application to the exporter; vii. The triplicate copy of application shall be - a. sent to the officer with whom rebate claim is to be filed, either by post or by handing over to the exporter in a tamper proof sealed cover after posti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the place of export in case rebate is to be claimed by electronic declaration on Electronic Data Inter- change system of Customs; xiii. On arrival at the place of export, the goods shall be presented together with original, duplicate and quadruplicate(optional) copies of the application to the Commissioner of Customs or other duly appointed officer; xiv. The Commissioner of Customs or other duly appointed officer shall examine the consignments with the particulars as cited in the application and if he finds that the same are correct and exportable in accordance with the laws for the time being in force, shall allow export thereof and certify on the copies of the application that the goods have been duly exported citing the shipping bill number and date and other particulars of export: Provided that if the Superintendent or Inspector of Central Excise sealed packages or container at the place of dispatch, the officer of customs shall inspect the packages or container with reference to declarations in the application to satisfy himself about the exportability thereof and if the seals are found intact, he shall allow export. xv. The officer of customs shall return the origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly goods were exported as per the provisions of the Rule under claim for rebate by following the procedure as prescribed by the notification. Appellants had filed 27 ARE-1's against which the export goods were cleared by them and subsequently after export of the said goods the rebate claims were filed in the prescribed manner. These rebate claims were allowed in their favour. There is no dispute that the goods which were cleared under the ARE-1's were not exported and diverted elsewhere. The facts as recorded in the order acknowledge the fact of actual shipment of these goods. It is also not in dispute that these goods were cleared on payment of the duty which has been sought to be rebated after the export of the said goods. In our view the facts that the goods cleared were exported is enough to allow the claim of rebate in the favour of the appellants. 4.5 Admittedly there was misdeclaration of the description of the goods on the export documents to the effect that the goods were declared as "Platinum/ Palladium supported catalyst" instead of "Ash and Residue". This misdeclaration resulted in appellants claiming certain benefits under the Advance License DEEC Scheme. As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roof of fulfilment of conditions laid down by Rule 12, the concerned exporter of such goods will be able to get rebate as per the terms and conditions laid down by the notification issued by Central Govt. under sub- rule (1) of Rule 12. So far as Rule 13 is concerned, other excisable goods mentioned in the rule may in the like manner meaning thereby as prescribed by Rule 12, can be exported without payment of duty from warehouse or licensed factory, provided that export is made in accordance with the procedure set out in the relevant provisions of Chapter IX of these Rules and the owner enters into a bond in the proper form, with such surety or sufficient security under such conditions in the sum equivalent to that chargeable on the goods for the due arrival at the port of the export. And such bond shall not be discharged unless the goods are duly exported to the satisfaction of the Collector. It therefore, appears clear that Rules 12 and 13 deal with excisable goods which are exported from the country of their manufacture to outside countries. If the excisable goods are exported after payment of duty they may earn refund as per notification laid down by Rule 12. While if these exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner v. Suncity Alloys Pvt. Ltd. - 2007 (218) E.L.T. 174 (Raj.), a Division Bench of the Rajasthan High Court was concerned with a claim for rebate of duty, on the goods exported by the assessee. The Revenue raised a similar contention as they have raised now to the effect that the goods were exempt from payment of duty and that therefore the amount paid by the assessee cannot be treated as duty paid so as to enable the manufacturer to claim rebate. But the said contention of the Revenue was repelled by the Rajasthan High Court on the ground that even in cases where the manufacturer pays duty which is not leviable, he may be entitled to claim refund of the same. Therefore, the Department may not be right in retaining the duty paid by the petitioner." 4.9 In case of Tata engineering and Locomotive Company [2018 (360) E.L.T. 607 (Bom.)] Hon'ble Bombay High Court has held as follows: 6. Rule 12 of the Central Excise Rules, 1944 reads as under :- "RULE 12. Rebate of duty on goods exported - (1) The Central Government may, from time to time, by notification in the Official Gazette, grant rebate of duty paid on excisable goods, if exported outside India, to such extent, and subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before the Commissioner (Appeals), who rejected the same by upholding the impugned Order-in-Original. 9. Government observes that in this Revision Application, the applicant has mainly contended that the Commissioner (Appeals) in their earlier order dated 14-7-2009 specifically held that duty was payable on such aggregates and hence Commissioner (Appeals) order in this case is contrary to stand taken by him in earlier order dated 14-7-2009. The applicant also submitted that Sr. No. 296 of the Notification No. 6/2002-C.E., dated 1-3-2002 as amended by Notification No. 23/2004-C.E., dated 9-7-2004 and entry No. 92 of Notification No. 6/2006-C.E., dated 1-3- 2006, which exempts the parts of tractors, is conditional in nature as it specify the condition that they are to be captively consumed in the manufacture of tractor and as such the entry not is absolute in nature. The applicant further submitted that in case the drawback is not allowed to them the duty paid on aggregates may be allowed to be re-credited. Government observes that the respondent Department in their counter reply have mainly stated that in the earlier case the issue before the Commissioner (Appeals) was the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate authority had taken a view which is contrary to his Order-in-Appeal dated 14-7-2007. In this regard Government observes that the appellate authority decided the issue of interest payment on duty in their order dated 14-7-2007 and not dutiability of aggregates. No specific question of dutiability on aggregates has been dealt by the appellate authority and hence, applicants contention is not tenable" This decision is not on the issue of rebate claim in terms of Rule 18 of the Central Excise Rules, 2002 but is in the case of Fixation of Brand Rate and would not be applicable, to the facts of the present case. 4.11 Even if the it is assumed that appellant had paid the duty on ash and residue which was not required to be paid as the said goods were non excisable then also the amount of the duty paid needs to be refunded to the appellant as per the provisions of Section 11B of the Central Excise Act, 1944. However we are not concerned with that case as the rebate have been sanctioned by the departmental authorities in favour of appellant and we are concerned with the Show Cause Notice issued to the appellant under Section 11A of the Central Excise Act, 1944. Further we also no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all of orders already passed sanctioning the refund in terms of "M/s. SRD Nutrients (supra)". The refund orders passed cannot be unilaterally revoked by application of Section 11A unless the requirements of sub-section (4) of Section 11A are satisfied. This will amount to impeaching collaterally a finding rendered by a quasi judicial authority. The Apex Court in "Abdul Kuddus" reported in (2019) 6 SCC 604 has very succinctly laid down the law regarding impermissibility of collateral impeachment of orders passed by Quasi Judicial bodies. The relevant paragraphs of the Judgment is extracted as under :- "23. The procedure prescribed by the post 2012 amendment under the 1964 Order mandates compliance with the principles of natural justice. All the allegations and grounds are required to be served by the Tribunal in the form of a show-cause notice to the person who is alleged to be a foreigner [see para 60 in Sarbananda Sonowal (2) [Sarbananda Sonowal (2) v. Union of India, (2007) 1 SCC 174]]. Thereupon, the person has to be given a reasonable opportunity to file representation and also produce evidence. The Tribunal has been authorised to consider and allow prayer for production and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the opinion of the Foreigners Tribunal, as the case may be, can be challenged by way of writ proceedings. Thus, it would be incorrect to hold that the opinion of the Foreigners Tribunal and/or the consequential order passed by the Registering Authority would not operate as res judicata. Both the opinion of the Tribunal and the order of the Registering Authority result in determination of rights/status under the statute and by an authority after a contest on the merits which would necessarily operate as a bar to subsequent proceedings before the same authority for redetermination of the same issue/question. This Court in Ujjam Bai v. State of U.P. [Ujjam Bai v. State of U.P, AIR 1962 SC 1621] has held that the principles of res judicata equally apply to quasi-judicial bodies. Whenever a judicial or quasi-judicial tribunal gives a finding on law or fact, its findings cannot be impeached collaterally or in a second round and are binding until reversed in appeal or by way of writ proceedings. The characteristic attribute of a judicial act or decision is that it binds, whether right or wrong. Thus, any error, either of fact or law, committed by such bodies cannot be controverted other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made only after the adjudication as envisaged under scheme of Section 11B. In the present case, petitioner-company had made an application for refund which was adjudicated on 5-11-2015 and it was directed to refund excise duty to tune of Rs. 1,02,75,633/- which was in excess. This order was never challenged by revenue in appeal and it attained finality. 36. Thus, once the order of adjudication has been validly passed under Section 11B and a refund has been made on 5-11- 2015, the next question which crops up for consideration is as to whether Section 11A can be invoked thereafter. 37. As Section 11A(1)(a) uses the word "Central Excise Officer" who is empowered for recovery of any refund, Central Excise Officer is defined in Section 2(b) of the Act, to mean Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Joint Commissioner of Central Excise, Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise or any other officer of Central Excise Department invested by Central Board of Excise and Customs constituted under Central Board of Revenue Act, 1963 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department are not applicable in the present case, as it is neither a case of fraud, nor where incidence of duty was passed on. 42. Secondly, the argument of alternative remedy under Section 35 is concerned, the said fact is of no rescue to the department as specific case of petitioner is that show cause notice dated 17-8-2017 was issued after more than two years from finalisation of assessment order dated 24-7-2015, and where there is change of opinion by issuance of show cause notice, writ petition is maintainable as held in Shahnaaz Ayurvedics (supra), Simplex Concrete Piles (supra) and Samsung India Electronics Pvt. Ltd. (supra). 43. As seen above that Section 35E and 11A operate in different fields and are invoked for different purposes, we are merely concerned in this case with the interplay between Sections 11A and 35E. We are also concerned with what happened in the form of an adjudication under Section 11B. What happens in a case wherein adjudication takes place under Section 11B and authorities do not take recourse available to them, whether after having allowed adjudication under Section 11B to attain finality, was there any remedy available to department at all un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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