Acme Telepower Pvt. Ltd vs Cce, Delhi-Ii

[Arising out of Order-in-Original No.25/2009-10 dated 30.03.2010 passed by the Commissioner, Central Excise, New Delhi ]

For approval and signature:

HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

1. Whether Press reporters may be allowed to see the

order for publication as per Rule 27 of the CESTAT

(Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the

CESTAT (Procedure) Rules, 1982 for publication in

any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy

of the Order?

4. Whether Order is to be circulated to the Departmental

authorities?

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M/s. MI Telecom Solutions Pvt. Ltd.

Shri Ashok Kumar, Director of M/s.MI Telecom

ACME Telepower Pvt. Ltd. Appellants

Vs.

CCE, Delhi-II  Respondent

Present for the Appellant : Shri.R.K.Philips, Advocate

Present for the Respondent: Shri.Pramod Kumar, JCDR

Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)

HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 07/01/2015

FINAL ORDER NO. 50325-50327/2015

PER: RAKESH KUMAR

All these appeals arise out of order in original No.25/2009 dated 30th March, 2010 Passed by the Commissioner, Central Excise, Delhi-II

2. The facts leading to filing of these appeals are in brief as under:-

2.1 M/s. Acme Tele Power (P) Ltd. Kasauli Road, Parwanoo (Himachal Pradesh) (hereinafter referred to as M/s.Acme) are manufacturers of telecommunication green shelter system for supply to telecommunication companies. The telecommunication green shelters consist of four major components battery management system electrical panel, air-cooling system and voltage regulators, all of which are covered by heading 8536 of the Tariff. M/s.Acme were located in the area specified under Notification No.50/2003-CE and were availing full duty exemption under this Notification and there is no dispute that in this regard they had submitted the required declaration to the Jurisdictional Central Excise Officers M/s.MI Telecom Solutions Pvt. Ltd., A-46, Okhla Indl. Area, Phase-I, New Delhi (hereinafter referred to as MI Telecom) are also engaged in manufacture of telecommunication equipment and during the period of dispute they were doing the job work for Acme. MI Telecom were availing the SSI exemption. The period of dispute in this case is 2003-04 & 2004-2005. During this period M/s. Acme were sending blank cabinets for battery management system, blank cabinet for electrical panels and air-cooling panel and cabinets for regulators to MI Telecom for certain job work.

M/s.MI Telecom were fitting switches, heat sinks and meters in the cabinets for battery management system. Similarly they were fixing some components like mounting rails, MCBs, condensers and cooling coils in the air-cooling panels received from M/s.Acme and were also filling the refrigerant gas. Similarly in the cabinets for regulators they were fitting transformer with some components. The semi finished battery management systems, electrical panels, air-cooling systems and regulators were being sent by MI Telecom to M/s.Acme-without payment of duty under Notification No.214/86-CE as M/s.Acme had given an undertaking that they will use these goods for manufacture of the finished goods which would be cleared on payment of duty. The Department was of the view that since M/s.Acme were availing full duty exemption under Notification No.50/2003-CE, the goods manufactured by MI Telecom on job work basis for M/s. Acme and sent to M/s.Acme would not be eligible for exemption under Notification No.214/1986-CE. It is on this basis that the Commissioner, Central Excise Delhi II after issue of show cause notice, passed the order dated 30th March, 2010 by which he confirmed the duty demand of Rs.2,48,18,445/- against MI Telecom under proviso to section 11A (1) of the Central Excise Act 1944 alongwith interest thereon under section 11AB and ordered appropriation of an amount of Rs.1,13,00,000 paid by M/s.MI Telecom before adjudication of the matter towards duty liability and besides this imposed penalty of Rs.2,48,18,445/- against M/s.MI Telecom under section 11 AC of Central Excise Act, 1944. Besides this, the Commissioner imposed penalty of Rs.25,00,000/-on Shri Ashok Kumar, Director of MI Telecom and penalty of Rs.1,25,00,000/- on M/s.Acme under Rule 26 of the Central Excise Rules, 2002. Against this order of the Commissioner these three appeals have been filed by M/s. MI Telecom, Shri Ashok Kumar, Director of MI Telecom and M/s. Acme.

3. Heard both the sides.

4. Shri R.K.Philips, Advocate, the ld. Counsel for the appellants, pleaded that M/s.MI Telecom during the period of dispute were only fitting some parts in the blank cabinets for battery management system, blank cabinets for electrical panel and air-cooling system and the cabinets for regulators, that they were not manufacturing complete battery management systems, electrical panels, air-cooling systems and regulators, that complete battery management systems, electrical panels, air-cooling systems and regulators were coming into existence only in the premises of M/s.Acme, who were clearing the same by availing full duty exemption under Notification No.50/2003-CE, that the goods which were being cleared by MI Telecom after doing the job work were not marketable goods and hence the same are not excisable, that this plea had been made before Commissioner in the course of hearing and the details of the job work being done by M/s.MI Telecom alongwith the photographs of the goods which were being cleared by MI Telecom and the photograph of the finished goods emerging at the end of M/s.Acme had been submitted before the Commissioner, but he has not given any finding on this point, that M/s.MI Telecom would be liable to pay duty only if the goods being cleared to M/s.Achme are marketable and if the goods are not marketable there would be no duty liability for M/s.MI Telecom, that in this regard, he relies upon the judgment of the Tribunal in the case of M/s. Alumeco India Extrusion Ltd. vs. CCE, Hyderabad-I reported in 2010 (249) ELT 577 (Tri.-Bang.) wherein in the background of similar facts, where M/s.Alumeco India Extrusion Ltd. were making Aluminium profiles out of the aluminium ingots received from the principal manufacturers located in the exempted area and availing area based exemption, the Tribunal held that burden of proving the marketability of the aluminium profiles being cleared by M/s. Alumeco India Extrusion Ltd. to the principal manufacturers on job work basis is on the department and in absence of any evidence of marketability of the aluminium profiles, duty cannot be charged from M/s.Alumeco India Extrusion Ltd. by denying the exemption under notification No.214/1986-CE, as even if the exemption is not applicable, duty liability in respect of aluminium profiles cleared by M/s. Alumeco India Extrusion Ltd., would arise only if the aluminium profile are marketable, and that the ratio of this judgment of the Tribunal is squarely applicable to this case.

Shri Philip therefore, pleaded that the impugned order confirming duty demand against M/s. MI Telecom Solutions Pvt. Ltd. and imposing penalty on its Director Shri Ashok Kumar, and on the principal manufacturer M/s. Acme is not correct.

5. Shri Promod Kumar, ld. D.R. defended the impugned order by reiterating findings of the Commissioner.

6. We have considered submissions from both the sides and perused the records. M/s. MI Telecom having their factory in Okhla Industrial area of Delhi, are manufacturers of power panels, power regulator units, air-cooling systems and battery management systems meant for telecom and power sector and during the period of dispute, they were availing full duty exemption under SSI exemption Notification. Besides the manufacture of goods on their own account, they were also doing job work for M/s.Acme, whose unit is located in Parwanoo (Himachal Pradesh) and who were availing full duty exemption under Notification No.50/2003-CE. M/s. Acme manufactured telecommunication green shelter systems for telecom Companies, which consists of battery management system, electrical panel and air cooling system and regulator. The undisputed facts are that M/s. Acme were sending cabinets for battery management system, blank cabinets for electrical panel and air-cooling system panel and cabinets for regulators to MI Telecom for certain job work. M/s. MI Telecom were fixing switches, heat sinks and motors in the cabinet for battery management system.

Similarly in the blank electrical panel, M/s.MI Telecom were fixing DIN Rails / conduits with the help of screws and there after were mounting transformer MCBs etc. However, no PCBs mounting or wiring was being done. In the air-cooling panel received from M/s.Acme, MI Telecom were fixing cooling coil, compressor and fan and were also filling compressor with gas, but no wiring has been done. Similarly, in the cabinet for regulators received from M/s. Acme, MI Telecom were fitting the transformers, DIN Rail with MCB plate heat sink etc. From the process diagrams in the premises of MI Telecom and in the premises of M/s Acme and the photograph of the goods which emerge in the premises of M/s.MI Telecom and which emerge in the premises of M/s. Acme, it appears that the goods being cleared by M/s MI Telecomm from their premises to M/s. Acme are only incomplete battery management systems, electrical panels, air-cooling systems and line-regulators and complete and finished battery management systems, electrical panels, air-cooling systems and line regulators come into existence only in the premises of M/s. Acme.

The appellants plea is that though in the course of hearing before the Commissioner the details of the processes undertaken in the premises of M/s. MI Telecom and in the premises of M/s.Acme had been given alongwith photographs and it had been pleaded that the goods which are cleared from the premises of M/s. MI Telecom are semi finished/incomplete battery management systems, electrical panels air cooling systems and line regulators the same are not marketable, no finding has been given by the Commissioner on this point. On going through the impugned order, we find that this plea of the appellant is correct. If the goods being cleared by M/s.MI Telecom are incomplete battery management system, electrical panel, air-cooling system and line regulators and complete goods emerged only in the premises of M/s. Acme, the incomplete goods being cleared by M/s.MI Telecom cannot be presumed to be marketable and hence excisable unless the Department leads the evidence in this regard, which we do not find in this case. In such a situation, the judgment of Tribunal in the case of M/s.Alumeco India Extrusion Ltd. would be applicable.

The impugned order is, therefore, set aside and the matter is remanded to the Commissioner for de-novo adjudication for giving a specific finding after considering the appellants plea based on the documents produced by them that the goods which are being cleared by them, to M/s.Acme are incomplete battery management systems, incomplete electrical panel, incomplete air-cooling system and incomplete line regulators and as such are not marketable and, therefore, are non-excisable.

[Dictated & Pronounced in the open Court].

(S.K.MOHANTY) (RAKESH KUMAR)

MEMBER (JUDICIAL) MEMBER (TECHNICAL)

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