Commissioner, Central Excise & Service ... vs M/S Varsana Ispat Ltd

Appeal No.E/1425,1451,1533/2010 [Arising out of OIA No.308-309/2010/COMMR-A-/CMC/RAJ 30/06/2010 OIA No.401/2010/COMMR-A-/CMC/RAJ 31/08/2010, passed by Commissioner (Appeals), Central Excise & Customs, Rajkot]

Commissioner, Central Excise & Service Tax, Rajkot Appellant

Vs

M/s Varsana Ispat Ltd. Respondent

Represented by:

For Appellant: Dr. J. Nagori, Authorised Representative For Respondent: Shri P.M. Dave, Advocate

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing/Decision:02.03.2015

Order No. A/10188-10190 / 2015, dt.02.03.2015

Per: P.K. Das

1. Revenue filed these appeals against the order of the Commissioner (Appeals), whereby the Adjudication order was upheld and the appeals filed by the Revenue were rejected.

2. The relevant facts of the case, in brief, are that the Respondents were engaged in the manufacture of the excisable goods namely Billets and M.S. TMT Bars falling under Chapter 72 of Central Excise Tariff Act, 1985. The Respondents was operating in the Kutch District in the state of Gujarat and availing the benefit of area based exemption under Notification No.39/2001-CE, dt.31.07.2001, as amended. They filed refund claims of the amount which had been paid towards Basic Excise Duty from PLA in terms of Notification No.39/2001-CE, dt.31.07.2001. The Adjudicating Authority sanctioned the refund claim in terms of Notification No.39/2001-CE as amended. Revenue filed appeal before the Commissioner (Appeals). By the impugned order, the Commissioner (Appeals) rejected the appeal filed by the Revenue. Hence, the Revenue filed these appeals before the Tribunal.

3. Learned Authorised Representative for the Revenue reiterates the grounds of appeal. He submits that the Notification No.39/2001-CE (supra) as amended, provides that it shall apply to a new industrial unit which has set up on or after the date of publication of the notification in Official Gazzette, but not later than the 31.12.2005. In the present case, the Respondent set up the Billete Concast Plant for manufacturing the Billets after 31.12.2005 and therefore, they are not eligible to get the benefit of exemption notification. He submits that the Commissioner (Appeals) failed to appreciate that the manufacturing process of Billets and Ingots are not identical. He submits that initially, the Respondents were engaged in the manufacturing of Ingots. The Concast Plant for manufacturing of Billets was set up after the cut of date on 31.12.2005 and therefore, they are not eligible to avail the benefit of Notification No.39/2001-CE as amended. He relied upon the decision of Honble Gujarat High Court and the Tribunal as under:-

a) M/s Saurashtra Ferrous Pvt. Ltd Vs UoI 2014 (309) ELT 49 (Guj.)

b) M/s Plastene India Ltd vs UoI & Others in judgment dt.05.12.2013 in SCA No.13627/2013.

c) M/s Ratmani Metals & Tubes Ltd Vs CCE Rajkot 2012 (276) ELT 230 (Tri-Ahmd)

4. He submits that the Commissioner (Appeals) erroneously proceeded on the basis that the Billets and Ingots are same. It is submitted that the Billets and the Ingots are classifiable under different sub-headings. In support of his contention, he submitted the Notes on difference between Billet and Ingot from WIKIPEDIA. The Honble Supreme Court in the case of Commissioner of Central Excise, Jaipur Vs Mahavir Aluminum Ltd  2007 (212) ELT 3 (SC) held that Ingots and Billets are two different commercial commodities. Merely because in earlier cases, the Revenue allowed the refund claim, there is no bar of filing of the appeal against the subsequent period. It is also submitted that there is no res judicata in the tax matter relied upon the decision of the Honble Supreme Court in the case of C.K. Gangadharan Vs Commissioner of Income Tax Cochin  2010 (228) ELT 497 (SC) and Commissioner of Central Excise Chandigarh Vs Doaba Steel Rolling Mills  2011 (269) ELT 298 (SC). He submits that it is revealed from the order of the Commissioner (Appeals) that they have installed Concast Machine for the manufacture of the Billets after the cut of date i.e. 31.12.2005.

5. On the other hand, the learned Advocate on behalf of the Respondent submits that it is not a case of classification dispute. It is the case of eligibility of the benefit of exemption Notification No.39/2001-CE (supra) as amended. He strongly relied upon the Boards Circular F.No.110/21/2006-CX-3, dt.10.07.2008. It is submitted that in the present case, the Respondents increased the capacity of the production by installation of Concast Machine and to enhance the quality of the product. There is no evidence that the Respondents installed machinery for manufacturing of a new product. It is also contended that the Respondents installed the machinery for manufacturing the Billets and the Ingots prior to 31.12.2005. The installation of the Concast Machine after the cut of date is for the purpose of increasing the production capacity. In this context, he strongly relied upon the Chartered Engineers certificate. It is also submitted that both the authorities below proceeded on the basis of the Chartered Engineers certificate, which is not disputed by the Revenue in their appeal. He strongly relied upon the decision of the Tribunal in the case of Commissioner of Central Excise & Customs, Rajkot Vs Rudraksh Detergent & Chem Pvt. Ltd  2010 (260) ELT 469 (Tri-Ahmd). He also submits that on earlier occasion, Revenue allowed the refund on the same notification and therefore, they cannot change their stand in the present case. He relied upon the decision of the Tribunal in the case of Commissioner of Central Excise Hyderabad Vs Priyanka Refineries Ltd  2010 (249) ELT 70 (Tri-Bang).

6. After hearing both the sides and on perusal of the records, we find that the Notification No.39/2001-CE (supra) as amended exempted the goods specified in the First Schedule to the Central Excise Tariff Act, 1985 other than the goods specified in the Annexure appended therein, cleared from a unit located in Kutchh District in Gujarat from payment of duty of Excise or the Additional Duty of Excise, as the case may be leviable thereon, under any of the said Act or it is equivalent to the amount of duty paid by the manufacturer of the goods to other than the amount of duty paid by utilization of CENVAT credit under the CEVANT Credit Rules. The benefit of exemption of the notification shall be given to the manufacturer who will submit a statement of the duty paid other than the amount of duties paid by utilization of CENVAT credit to the Assistant Commissioner, as the case may be, by 7th day of the month in which the duty has been paid. The Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, after verification, shall refund the amount of duty paid other than the amount of duty paid by utilization of CENVAT credit during the month under consideration to the manufacturer. Notification No.39/2001-CE (supra) as amended by Notification No.55/2004-CE, dt.09.11.2004, it shall apply only to new industrial unit, that is to say, units which was set up on or after the date of publication of the notification in the Official Gazette, but not later than 31.12.2005.

7. Honble Gujarat High Court in the case of M/s Saurashtra Ferrous Pvt. Ltd (supra) held that the benefit of the said notification are not available to the petitioner with respect to the production of Pig Iron as plant/unit and machinery for its production had not been commissioned/fully installed prior to 31.12.2005. In that case, the petitioner set up a plant and machinery/unit of the factory for two different products i.e. cast iron articles and pig iron articles. The commercial production of cast iron was done prior to 31.12.2005. But, the entire plant and machinery for production/manufacturing of Pig iron was not commissioned and installed prior to 31.12.2005. Honble Court held that the petitioner is not eligible to the benefit of exemption Notification No.39/2001-CE (supra) as amended in respect of manufacturing of Pig iron. The relevant portions of the said decision are reproduced below:-

10. Considering the aforesaid decision and even the? original Scheme contained in Notification No. 39/2001, dated 31-7-2001, and the purpose and object of granting the benefit to the industries to be established in the Kutchh District, at the relevant point of time, it can safely be concluded that so far as the exemption/benefits contained in the Notification No. 39/2001 are concerned, same shall not be available to the petitioner with respect to the production of Pig Iron, as admittedly, the plant/unit and machinery for production of Pig Iron were not commissioned/installed (Fully) prior to 31-12-2005. Under the circumstances, no error or illegality has been committed by the concerned respondents in denying the exemption/benefit of Scheme contained in the Notification No. 39/2001, with respect to the production of Pig Iron.

11. Now, so far as the non-granting of the exemption/benefits contained in the Notification No. 39/2001, on production/ manufacturing of cast iron articles is concerned, it is not clear as to whether on production/manufacture of cast iron articles on the unit/plant and machineries fully installed and commissioned prior to 31-12-2005, the petitioners have been denied the said benefits or not? However, considering the decision of the Division Bench of this Court, if, the unit/plant and machineries have been commissioned/installed (Fully) prior to 31-12-2005, the petitioner may be entitled to the benefits contained in the aforesaid Notification, on manufacture/production of cast iron articles for a period of five years from the date of commencement of the first commercial production of such goods on such unit. Under the circumstances, the concerned respondent are required to consider the case of the petitioner for grant of the benefit under the Notification No. 39/2001 with respect to the production / manufacture of cast iron articles, considering the observations made herein above and the decision of this Court in the case of M/s. Plastene India Ltd. (Supra).

8. In the present case, the Respondents set up the machinery for manufacturing of the Ingots. According to the Revenue, the Respondents installed the Concast Machines for manufacturing of Billets after 31.12.2005. The learned Advocate submits that the machineries installed prior to 31.12.2005 were capable to manufacture Billets and Ingots. The installation of Concast Machine is mainly for the purpose of enhancement of the production capacity. He relied upon the Chartered Engineers certificate dt.07.08.2009. The relevant portion of the said certificate is reproduced below:-

2. The process involves the charge mix of raw material mainly sponge iron pig iron/C.I. scrap/M.S. Scrap into molten bath with constant power track. In case of production of Ingots the liquid metal is moulded manually to make ingot and for billet the liquid metal is moulded through caster. Basically Concast machine is installed for quality improvement and upgradation of Rolled products etc.

9. The Commissioner (Appeals) observed that the Concast Machine is used for automatic moulding purpose and it enhance the quality of the product. It has also observed that the Revenue has not produced any evidence that with the help of Concast Machine there is an increase in the installed capacity. It is also observed that the Billets and Ingots are classifiable as two different items in the Central Excise Tariff. But, the Ingots and the Billets are similar cast semi-finished products, manufactured by melting metal in a furnace and casting of melted metals in different kind of moulds.

10. We are unable to accept that the findings of the Commissioner (Appeals). The Honble Supreme Court in the case of Mahavir Aluminum Ltd held that the Ingots and Billets are two different commercial commodities. They have separate, distinct and identifiable marketability and saleability. As per Steel Industry Glossary of Terms, Mass of metal obtained from casting liquid steel into a mould. The resulting ingot  a semi-finished product  is typically then hot rolled or forted. A Semi-finished long product of upto 150 mm square cross-section with round corners. Billets can be continuously cast or hot rolled from either ingots or larger Concast billets and blooms. On perusal of the Chartered Engineers certificate, we find that the liquid metal is moulded manually to make Ingots. But in the case of production of Billets, liquid metal is moulded through caster. The Respondents in their Cross Objection No.E/Cross/82/2011 stated that the Billets are being manufactured with the help of automatic moulding machine i.e. Concast Machine. So, it is clearly evident from the records that the Concast Machine was installed for manufacturing of the Billets after 31.12.2005. So, the Respondents are not eligible to avail the benefit of the exemption notification.

11. Learned Advocate strongly relied upon the decision of the Tribunal in the case of Priyanka Refineries Ltd (supra). In that case, it has been held that when the appeal was not filed against the order on the same issue for prior period, the issue has attained finality. The Honble Supreme Court in the case of C.K. Gangadharan (supra) held that non-filing of the appeal in similar cases does not bar filing of appeal in other case. We find that in the present case, it is clearly evident from the Chartered Engineers certificate filed by the Respondents and the averment made in the Cross Objection, that the Respondents installed the Concast Machcine for manufacturing of Billets after 31.12.2005 which may not be available in the earlier proceedings. So, the case laws relied upon by the learned Advocate would not apply in the present case.

12. In view of the above discussion, we set aside the impugned order of both the authorities below. All the appeals filed by the Revenue are allowed.

(Dictated & Pronounced in Court)

(H.K. Thakur) (P.K. Das) Member (Technical) Member (Judicial)

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