M/S. Jct Ltd vs C.C.E. Jalandhar

[Arising out of Order-in-Appeal No. 164/CE/APL/JAL/2006 dated 28.04.2006 by the Commissioner of Central Excise (Appeals), Jalandhar].

For approval and signature:

Honble Mr Ashok Jindal, 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. JCT Ltd. .Appellants

Vs.

C.C.E. Jalandhar .Respondent

Appearance:

Shri Rajesh Chibber, Advocate for the Appellants

Ms. Ranjana Jha, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 05.01.2015

FINAL ORDER NO.50020/2015-EX(SM)

Per Ashok Jindal:

Appellant is in appeal against the impugned order denying the refund claim on account of that as on 15.01.2004 the assessment was finalized holding that assessee has paid the duty as per the new cart data submitted upto spindle stage but the same cannot be refunded as the burden of unjust enrichment was not passed by the appellant. As appellant has not challenged the said order and failed to prove that they have not passed the incidence of duty to the buyer, therefore they are not entitled to refund claim as made by the appellant. Aggrieved from the said order, appellant is before me.

2. The ld. counsel appearing on behalf of the appellant submits that assessment for the Financial year 2002-2003 was finalized on 15.01.2004. Thereafter the show cause notice was issued to the appellant on 29.10.2004 for the same period. In these circumstances, the order dated 15.01.2004 becomes non est and non operative. Therefore, they are entitled for the refund claim filed by the appellant as the impugned orders have been passed on the grounds that they have not challenged the order dated 15.01.2014 which is non est. In support of his contention he submits that in the case of Polydyne Coprporation Vs. C.C.E. Mumbai-1999 (108) E.L.T. 94 (Tri), this Tribunal has taken up the view that when assessment is reopened then the assess is entitled to raise all the objections and the assessment already passed becomes non est. He further submits that in the appellants own case for the earlier period, Ld. Commissioner has observed that as the show cause notice has been issued, therefore, the assessment is reopened and all the issues raised by the appellant are required to be considered. In these circumstances, he submits that impugned order be set aside and matter remanded back to the adjudicating authority for reconsideration of the refund claim on the merits.

3. On the other hand Ld. AR opposes the contention of the Ld. Counsel and submits that the order dated 15.01.2004 has finalized the assessment upto spindle stage and show cause notice dated 29.12.2004 has been issued for the process taken up by the appellant post spindle stage. Therefore, there are different proceedings against the appellant. In these circumstances, the order dated 15.01.2004 is operative and the same has not been challenged by the appellant. Therefore, they are not entitled for the refund claim. He further submits that, as the assessment has not been challenged, therefore, they cannot claim the refund as held by the Honble Apex Court in the case of Priya Blue Industries Ltd. Vs. C.C. (Preventive)-2004 (172) E.L.T. 145 (SC) and in the case of C.C.E. Kanpur Vs. Flock (India) Pvt. Ltd.-2000 (120) E.L.T. 285 (SC). Therefore, the refund claim is rightly rejected by both the lower authorities.

4. Heard the parties and considered the submissions.

5. In this case it is no doubt that assessment has been finalized upto spindle stage on 15.01.2004. Thereafter, the show cause notice was issued to the appellant for the same period although on some other ground. It is the contention of the appellant that when assessment has been reopened for the said period, the appellant is entitled to raise all the issue before the Adjudicating Authority although they have been dealt earlier. To support this contention the reliance is made on the decision of Polydyne Coprporation (Supra) wherein this tribunal has held as under:

We note that the adjudicating authority has declined to go into the issue of correct classification of this product for the reason that the assessees had not challenged the approval of its classification under TI 68 (up to 28-2-1986) or CET sub-heading 39.10 (from 1-3-1986 onwards). However, we agree with the assessees contention that once the matter has been reopened by the Department and duty demand has been raised it is open to the assessees to challenge the rate of duty. This is the view that has been taken by the Tribunal in the case of Lili Foam Industries (P) Ltd. v. Collector of Central Excise reported in 1990 (46) E.L.T. 462. Para 24 which is relevant to this aspect is reproduced below:

We have already held that the value of the top skin, bottom skin, side skin and the shreddings are to be increased. The learned Departmental Representative, during the course of the arguments, submitted that the proceedings in the instant case, do not call for a finding on the rate of duty applicable on the side skin, bottom skin, top skin and the shreddings. He argued that the appellants had paid duty according to the approved classification list and the present proceedings cannot be used by them to question the correctness of the rate of duty applied. However, we find that the appellants had raised the issue of classification before the Collector and the Collector dealt with the same. Also, even though an assessee may not contest the correct rate of duty on a commodity cleared by him earlier, whenever the Department seeks to reopen the assessment and demands differential duty for whatever reasons, it is open to the assessees to contest the demand of the higher differential duty with an argument that the rate of duty originally applied was wrong. Even if the allegations against them in the proceedings are found to be correct the quantum of differential duty to be paid by them can be questioned. The Tribunal simply cannot shut out such an argument of the appellant on the ground that he has not raised the dispute regarding the rate of duty until the proceedings are initiated against him. After all the Department seeks to rely on Section 11A of the Central Excises and Salt Act for demanding differential duty. The demand of differential duty can arise only when the Department correctly determines the duty payable by an assessee and the duty actually paid by him earlier. The correct quantum of duty payable by an assessee, in cases where the goods are subjected to ad valorem rate of duty, depends on the value of the goods and also the rate of duty. Therefore, determination of the correct rate of duty for the goods on which differential duty is demanded is the first step before quantifying the demand. We accordingly over-rule the objection raised by the learned Departmental representative that the appellant should not be permitted to raise the dispute regarding the determination of rate of duty."

The decision in the? Lili Foam case has been followed in Decora Ceramics v. Collector reported in 1998 (100) E.L.T. 297. In the light of the above case law, we hold that the appellants are not stopped from challenging the classification of the product. However, since there is no independent finding on the correct classification of Silmar 007, we remand the matter to the jurisdictional Commissioner for deciding the classification of this product and for considering the alternate plea of time bar as regards the demand of duty on this product.

6. I further find that in appellants own case for the earlier period the Ld commissioner in the similar proceedings has observed that the assessment which was finalized on 25.05.2003 was reopened in the show cause notice dated 25.05.2004 issued under section 11A. Once the assessment is reopened then all issues can be raised by the appellants and as such the Adjudicating Authority was bound to consider the refund claim on merits.

7. In these circumstances, when the Ld Commissioner (A) in appellants own case for the earlier period has taken up view that when Show Cause Notice has been issued to the appellant for the same period where assessment has been finalized in that case appellant can raise all the issues on merits and relying on the decisions of this Tribunal in the case of Polydyne Corporation, I hold that in this case also when the show cause notice was issued on 29.12.2004 for the said period the appellant was at the liberty to raise all the issues in defence of the show cause notice issued to them. In these circumstances, I hold that order dated 15.01.2004 is non est and non cooperative.

8. In these circumstances, I set aside the impugned order and remand matter back to the adjudicating authority to reconsider the refund claim filed by the appellant on its own merits. Appeal is disposed off on above terms. Cross objections are also disposed off in the above terms.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

6

E/2517/2006-EX(SM)