M/S Chandralon Tex Pvt Ltd (Unit 1 & Ii) vs Commissioners Of Central Excise

[ Arising out of OIA-BC/301/SURAT-II/2011 dtd 20.10.2011 and OIA-BC/296/SURAT-II/2011 dtd 19.10.2011 Passed by Commissioners of Central Excise, Customs and Service Tax-SURAT-II ]

1. M/s Chandralon Tex Pvt Ltd (Unit 1 & II) - Appellant(s)

2. Shri Krishnakant C Kapadia (Director)

Vs

Commissioners of Central Excise, Customs and Service Tax-SURAT-II - Respondent (s) Represented by:

For Assessee : Shri K I Vyas, Advocate. For Revenue : Shri J Nair, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

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

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial)

Date of Hearing / Decision : 29/1/2015

ORDER No. A/10392-10395/2015 dtd 29/1/2015

Per : Mr.P.K. Das,

Common issue involved in these cases and therefore, both are taken up together for disposal.

2. The relevant facts of the case, in brief, are that M/s Chandralon Texturising Pvt Ltd have two units viz., Unit I and II. Both the units are 100% EOU. Unit I was engaged in the manufacture of Polyester Texturised Yarn (PTY) out of POY, out of duty free material by direct import and from the local market under CT3 certificate. Unit II was engaged in the manufacture of Polyester Twisted Yarn, out of Polyester Yarn, which was obtained duty free by direct import as well as from the local market under CT3 certificate.

3. A Show Cause Notice dtd 2.11.2000 was issued by the Deputy Commissioner, Central Excise and Customs, Division V, Surat I, to the Unit No I proposing demand of central excise duty of Rs 15,74,613/- alongwith interest and penalty on the ground that the Unit No I a 100% EOU had cleared PTY as DTA sale to M/s Home Textiles, Moradabad without payment of Central Excise duty to the persons holding a duty free import licence against the advance release order issued by the licensing authority.

4. Thereafter, on the basis of investigation by the DRI officers, another show cause notice dtd 29.5.2004 was issued by the Additional Director, DRI, Zonal Unit, Ahmedabad, to Unit No. 1 proposing demand of customs duty of Rs 11,53,075/- under Section 28 of the Customs Act 1962 and Section 72 of the said Act alongwith interest and penalty on the ground that the Unit No 1 cleared the duty free raw materials against fake advance licences/advance release orders to Moradabad firms namely M/s Home Textiles. The Adjudicating Authority by adjudication Order dtd 28.11.2005 confirmed the demand of customs duty of Rs 11,53,075/- forgone on 39951 kgs imported polyester yarn under Customs Act 1962. It has also imposed redemption fine and penalty and also demanded interest thereon. By the impugned order, the Commissioner (Appeal) upheld the adjudication order, against which the appellant filed present appeal No C/33-34/2012.

5. In respect of Unit No II, a show cause notice dtd 2.11.2000 was issued by the Deputy Commissioner Central Excise & Customs, Division V, Surat I proposing demand of Central Excise Duty of Rs 15,54,163/- under the Central Excise Act 1944 alongwith interest and to impose penalty on the ground that the unit No II a 100% EOU had cleared Polyester Texturised Yarn as DTA sale to M/s Amar Brothers, Kanpur without payment of Central Excise duty. After the investigation by the DRI officers, another show cause notice dtd 31.5.2004 was issued by the Additional Director, DRI, Zonal Unit, Ahmedabad, proposing a demand of Central Excise duty, which is equivalent to aggregate of customs duty leviable on raw-materials ie. Polestar Texturised Yarn amounting to Rs 14,34,715/- alongwith interest and penalty, confiscation of goods. By adjudication order dtd 2.8.2006 the adjudicating authority confirmed the demand of duty of Rs 14,35,715/- forgone on 36584 kgs of raw-material Polyester Texturised Yarn in terms of proviso to Section 3(1) of Central Excise Act 1944 read with proviso to Section 11(A) read with Notification No 1/95 CE dtd 4.1.1995. It has also imposed redemption fine and penalty alongwith interest on the company and further penalty on Director of the company among others. By the impugned order, the Commissioner (Appeals) upheld adjudication order. The appellant filed this appeal No E/197-198/2012.

6. Heard both the sides and perused the records.

7. The main contention of the Learned Advocate on behalf of the appellants is that both the authorities below had not considered their submission in reply to the show cause notices that the demands in respect of the raw material as well as finished products are not sustainable. He relied upon the decision of the Tribunal in the case of Vandevi Texturisers Pvt Ltd vs. CCE., Surat  [ 2007(220)ELT.289 (Tri. Ahmd). The Learned Advocate submits that the show cause notices issued in the year 2000 against both the units are still pending. He submits that the matter may be remanded to adjudicate all the show cause notices in respect of Customs duty and Central Excise duty on the same transaction.

8. On the other hand the Learned Authorised Representative for Revenue submits that there is no reason to remand this matter on the ground that the demand was confirmed on the basis of detailed investigation of the DRI officers, which are discussed by the Commissioner of (Appeals) in detail.

9. On perusal of records, I find that in 2000, the show cause notices were issued against both the units proposing central excise duty on the finished goods. The present appeals filed by the appellants against the demand of duty on the raw materials. The Tribunal in the case of Vandevi Texturisers Pvt Ltd vs. CCE., Surat - [ 2007(220)ELT.289 (Tri. Ahmd)] held that demand of duty on raw material as well as finished products cannot be sustained. After considering the submissions of both the sides, in my considered view, the matter should be remanded to the Adjudicating Authority to decide afresh after considering allegations in all the show cause notices against both the units.

10. Accordingly, the impugned orders are set aside and the matters are remanded to the Adjudicating Authority to decide all the show cause notice, after considering the submission of the appellants. All the appeals are allowed by way of remand. Miscellaneous applications for extension of stay order filed by the applicants are dismissed as infructuous.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial)

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