M/S. J.J. Packagerr Pvt. Ltd vs C.C.E. Allahabad

[Arising out of Order-In-Appeal No. 639/CE/ALLD/2004 dated: 20.10.2004 passed by U.P. Commissionerate, Allahabad]

For approval and signature:

Hon'ble Mr. Rakesh Kumar, Member (Technical)

Hon'ble 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?

M/s. J.J. Packagerr Pvt. Ltd. ...Appellant

Vs.

C.C.E. Allahabad Respondent

Appearance:

Mr. Bipin Garg, Advocate for the Appellants

Mr. M.S. Negi, DR for the Respondent

CORAM:

Hon'ble Mr. Rakesh Kumar, Member (Technical)

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing/decision.28.01.2015

FINAL ORDER NO. 50297 /2015-Ex(Br)

Per Rakesh Kumar (for the Bench):

The appellant are manufacturers of Plastic Containers and also plastic handles and caps. The raw material for manufacture of these items is Plastic Granules. The period of dispute in this case is from 1999-2000, 2001-2002. The appellants unit was visited by the Jurisdictional Central Excise Officer on 09.09.2002 and at that time when the stock of the finished products and the raw materials was checked, there the Officers found 7408 pieces of HDPE Containers and 7670 pieces of HDPE Caps in excess of the balance of these items in the RG-1 register. Beside this, there was also 2905 KG of HDPE Waste which had not been accounted for in any record. The officers also found 4050 KG of coloured HDPE Granules and 250 KG of HDPE Granules which were not accounted for in their records. These goods were placed under seizure. In course of officers visit, the officers enquired about the manufacture of HDPE caps and handles and they were informed that the appellant manufacture these items mainly on job work basis and that in respect of the goods manufactured on job work basis no account is kept. Subsequently, inquiry was made with Shri Hari Prasad Asthana an employee of the Appellant Company on 11.09.2002 who also stated that the caps are also being manufactured on job work basis. He subsequently on 01.10.2002 gave details of the clearances of the caps to various factories during 1999-2000, 2000-2001 and 2001-2002. According to the information given by Shri Asthana during these three financial years, the total value of clearances of caps was Rs. 1,34,99,773/-. The officers were of the view that these caps have been cleared without payment of duty. And as such, the duty leviable of these caps was Rs. 12,58,816/-.

1.1 After issue of Show Cause Notice, the matter was Adjudicated by the Additional Commissioner vide order in original dated 29.03.2004 by which the Addl. Commissioner ordered confiscation of the seized goods as mentioned above, with an option to be redeemed on payment of redemption fine of Rs. 1,05,000/- and imposed penalty of Rs .20,000/- on the appellant on this count. Beside this he also confirmed central excise duty demand of Rs. 12,58,816/- on alleged clearances of 30,23,345/- No.s of HDPE Caps without payment of duty, during 1999-2000 to 2001-2002 along with interest thereon under section 11AB and also imposed penalty of equal amount on the appellant under section 11AC. In course of hearing before the Joint Commissioner, it was pleaded by the appellant that the HDPE caps, in question, have been manufactured on job work basis and had been cleared against job work challans and in this regard, the job work challans were also produces but this plea was not accepted.

1.2 On appeal being filed to Commissioner (Appeals) against this order, the same was dismissed against which this appeal has been filed.

2. Heard both the sides.

3. Shri Bipin Garg, Advocate, the Ld. Counsel for the appellant pleaded that so far as the duty demand of Rs. 12,58,816/- on alleged clearance of 30,23,345 HDPE Caps during period from 1999-2000 to 2001-2002 is concerned, these clearances were of the HDPE caps manufactured on job work basis which had been sent to the principal manufacturers under job work challans, that in this regard the appellant immediately after submitting information about the clearances of the caps had submitted the job work challans, that since these clearances of caps were under job work challans, no duty is payable in respect of the same, that as regards, the confiscation of 7408 pieces of HDPE Containers, 7670 pieces of HDPE Caps on account of their non-accountal in the RG-1 register, since these goods were still in the factory and were not in fully finished condition, the same were not liable for confiscation, that as regards 2905 KG of HDPE waste, the same was meant for captive consumption and was exempt from duty under notification No. 67/95-CE and for this reason only the same had not been accounted for RG 1 register and that as regards the unaccounted stock of HDPE Granules, the same cannot be confiscated under Rule 25(1) for non-accountal and that this quantity of HDPE Granules had actually been received for job work. He, therefore, pleaded that the confiscation of the stock of the seized finished gods and raw material is not sustainable.

4. Shri MS Negi, the Ld. DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) with regard to duty demand of Rs. 12,58,816/- on 30,23,245 HDPE Caps alleged to have been cleared without payment of duty during the 1990-2000 to 2001-2002, pleaded that at the time of inquiry with Shri Chote Lal Yadav on 09.09.2002 and with Shri H.P. Asthana on 11.09.2002, both of them simply stated that no account of the plastic HDPE Caps being manufactured by them on job work, were being manufactured, though they are manufacturing HDPE caps, for M/s JJ Packgerr unit-II, M/s Shivam Udyog and M/s. Annapuma Industries. He, therefore, pleaded that there is no infirmity in the impugned order.

5. We have considered the submissions from both the sides and perused the records. As regards, the duty demand of Rs. 12,58,816/- on 30,23,345 HDPE Caps alleged to have been cleared without payment of duty during period from 1999-2000, 2001-2002, the details about these clearances had been supplied by the appellant company himself. However, their plea is that these HDPE Caps had been manufactured on job work basis out of the Granules supplied by the principal manufacturers and had been returned back to them under job work challans and in this regard they have also enclosed the copies of the job work challans. In our view, once the appellant have submitted the job work challans and job work records, the lower authorities should have been examined this claim and the same should not have summarily dismissed. In view of this, this duty demand is not sustainable and the matter has to be remanded to the original adjudicating authority for de novo adjudication on this point.

6. As regards confiscation of 2905 KG HDPE waste, we accept the Appellants plea that the same being meant for recycling and also exempt from duty under notification no. 67/95-CE had not been accounted for in the RG-1 register and hence, the confiscation of 2905 KG of HDEP waste is set aside. Similarly the 4050 KG of coloured HDEP Granules and 250 KG of HDEP Granules are the raw material, which according to the Department were unaccounted. In our view, the unaccounted raw material cannot be confiscated under Rule 25 and as such the confiscation of the HDPE Granules is also not sustainable and accordingly set aside. However, as regards 7408 pieces and 7670 pieces HDPE caps, we are of the view that the same were in fully finished condition and the same had not been accounted for in the RG-1 Register, the same had been correctly confiscated.

7. In view of the above discussion, while the order of confiscation of HDPE scrap and plastic Granules is set aside, the confiscation of 7408 pieces of HP Containers and 7670 pieces of HDEP caps is upheld. However, the redemption fine is reduced to Rs. 20,000/- and penalty is reduced to Rs. 5,000/-. As regards, the duty demand of Rs. 12,58,816/- along with interest and imposition of equivalent penalty, the same is set aside and the matter is remanded to the Original Adjudicating Authority for de novo adjudication, after examining the appellants plea that the HDPE caps had been manufactured on job work basis, out of the raw material supplied by the principal manufacturer and had been returned to them under job work challans. The appeal stands disposed of as above.

(Dictated and pronounced in open court)

(S.K. Mohanty) (Rakesh Kumar) Member(Judicial) Member(Technical)

Neha

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