M/S. Khodiar Fibrefill vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIO-SUR-EXCUS-002-COM-050-055-13-14 dated 30.12.2013, Passed by Commissioner (Appeals) Central Excise, Service Tax & Customs, Surat)

M/s. Khodiar Fibrefill : Appellant (s) Shri Jignesh Madhubhai Patel Shri Chaganbhai F Sangani Shri Ashwin Ghanshyam Patel M/s. Alliance Fibres Limited M/s. Parisudh Fibres Pvt Limited VERSUS

Commissioner of Central Excise & S.T., Surat : Respondent (s)

Represented by :

For Appellant (s) : Shri Prabhat Kumar, Advocate and Shri Mukund Chauhan, Consultant.

For Respondent (s) : Shri K. Shivkumar, Authorised Representative

For approval and signature :

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

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) Mr. H.K. Thakur, Hon'ble Member (Technical)

Date of Hearing/ Decision: 20.05.2015

ORDER No. A/10613-10622/2015 dated 20.05.2015

Per : Mr. H.K. Thakur;

These appeals have been filed by the appellants against OIO No. OIO-SUR-EXCUS-002-COM-050-055-13-14 dated 30.12.2013 passed by Commissioner of Central Excise, Surat. As the issue involved in all these appeals is the same therefore, these are taken up together for disposal.

2. Shri Prabhat Kumar (Advocate) and Shri Mukund Chauhan (Consultant) appeared on behalf of the appellants. Shri Prabhat Kumar argued that the main appellant M/s. Khodiyar Fibrefill is engaged in the manufacture of Polyester Stable Fibre (PSF), Polyester Oriented Yarn (POY) and waste and scrap of PSF and POY generated in the process of manufacture of PSF and POY. That demands are pertaining to the period April 2008 to March 2013 with respect to PSF and POY and also the waste of both these products manufactured by the appellant. That M/s. Khodiyar Fibrefill is a division of M/s. Alliance Fibre Limited and was earlier functioning in the name and style of M/s. Alliance Fibre Limited. That the present demands were issued as a result of CBEC Circular No. 929/29/2010-CX dated 29.06.2010 holding a view contrary to the decision of the CESTAT in the case of CCE, Kanpur vs. GPL Polyfils Limited - [2005 (183) ELT 27 (Tri. Del.)]. That the said Circular was contested by the appellant before the Delhi High Court in CWP 5454 of 2010 and the Hon'ble High Court vide final order dated 30.09.2011, struck down Para 10 of the Circular dated 29.6.2010. That in view of the amendment carried out in Section 110 of the Finance Act, 2014, the PSF and POY manufactured by the main appellant, from waste pet bottles, were exempted for the period 29.6.2010 to 16.10.2012 retrospectively. It was the case of the learned Advocate that as a result of exemption Notification the goods PSF and POY manufactured by the appellant were exempted with effect from 08.5.2012. It was strongly argued by the learned Advocate that for the period prior to 29.6.2010, the impugned goods manufactured by the appellant were not leviable to duty as per decision of CESTAT in the case of CCE, Kanpur vs. GPL Polyfils Limited (supra) and for the period from 29.6.2010 to March 2014, no duty was leviable as a result of retrospective amendment under Section 110 of Finance Act, 2014 and the exemption notification issued..

2.1 With respect of duty liability on waste and scrap it was argued by the learned Advocate that since PSF and POY manufactured by the main appellant stand fully exempted, therefore, waste and scrap also gets exempted by virtue of Notification No. 89/95-CE dated 18.5.1995.

3. Shri K. Sivakumar (AR) appearing on behalf of the Revenue argued that Section 110 of the Finance Act, 2014 exempts only PFY and PSF manufactured from plastic scrap or plastic waste including the waste polyethylene terephthalate (PET) bottles during the period 29.6.2010 to 16.10.2012. It was his case that appellant is manufacturing POY which is not covered within the meaning of PFY. As a counter to the argument made by the learned AR, Shri Prabhat Kumar (Advocate) for the appellants argued that as per HSN explanatory notes under Chapter heading 54.02, Synthetic Polyester Yarn includes Partial Oriented Yarn, Fully Oriented Yarn and Polyester Texturised Yarn. He also made the Bench go through the explanatory notes given under HSN Explanatory notes for sub-heading 5402.42 and other scientific publications.

4. Heard both sides and perused the case records. The issue involved in these appeals is whether PSF and POY manufactured by the appellant from plastic waste pet bottles, is liable to duty during the period April 2008 to March 2013. Another issue raised in the proceedings is whether waste and scrap of PSF and POY generated during the course of manufacturing is exempted under Notification No. 89/95-CE dated 18.5.1995. Learned Advocate relied upon the decision of the CESTAT Delhi in the case of Shiva Texfabs Limited vs. CCE, Chandigarh (supra). It was his case that all the issues in the present proceedings have been covered by CESTAT Delhi. Paras 4 to 6 of the order No. 53987-53990/2014 dated 23.09.2014, passed by CESTAT Delhi in the above case, are relevant and are reproduced below:-

4. In view of the aforesaid amendment it is evident that the impugned demand pertaining to the period 29th June 2010 to 16th March 2012 does not survive as the rate of duty on polyester staple fibre obtained from plastic scrap/waste including waste of PET bottles has been made Nil. The impugned goods were exempted with effect from 17.3.2012 vide Notification No. 12/2012-CE dated 17.3.2012. As regards the period from April 2009 to 28th June 2010, we find that in the case of CCE, Kanpur Vs. G.P.L. Polyfils Limited - [2005 (183) ELT 27 (Tri. )], CESTAT held as under:

4. Chapter 54 of the Tariff, relates to man-made Filaments and its Chapter note I defines man-made fibres, as under :-

Throughout the First Schedule, the term man-made fibres means staple fibres and filaments of organic polymers produced by manufacturing processes, either :

(a) By polymerization of organic monomers, such as polyamides, polyesters, polyurethanes or polyvinyl derivatives; or

(b) By chemical transformation of natural organic polymers (for example, cellulose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates.

It remains undisputed that none of these processes, had been undertaken by the assessee in respect of their fibre so as to bring the same within the ambit of this Chapter 54 or even Chapter 55 which are part of the First Schedule. The learned Commissioner (Appeals) has, in our view, rightly dropped the duty demand against the assessees on this ground.

5. Thus the impugned goods were not classifiable under the Central Excise tariff during the period up to 28th June 2010 and they were brought under the scope of the said chapter in view of the insertion of Chapter Note 1A in Chapter 54 with effect from 29.6.2010. Consequently, for the period up to 28th June 2010 the goods were not liable to Central Excise duty as has been held by the CESTAT in the case of G.P.L. Polyfils (supra). In this regard it is pertinent to note that the CBEC vide Circular dated 29.6.010 stated that the case of G.P.L. Polyfils Limited would be relevant for the particular facts as in the said case and hence cannot be a binding precedent in other matters. This observation of CBEC was struck down by the Delhi High Court vide its decision dated 30.9.2011 in the CWO No. 5454/2010. There is no doubt that the Tribunals decision have precedential value. It is also seen that the adjudicating authority while not following the said judgement has not quite distinguished the same and such an act (of not following the said order) is not in conformity with the requirement of judicial discipline inasmuch as the distiguishment has to be rational, logical and substantive enough to take away the precedential value of the judgement and the adjudicating authoritys attempt at distinguishing the CESTAT order falls abysmally short of that requirement.

6. in this regard, it is not out of context to quote Para 4 of the DO letter F.No. 334/15/2014-TRU dated 10.7.2014 :

4. Excise duty on Polyester Staple Fibre (PSF) and Polyester Filament Yarn (PFY) manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles (which is already exempt w.e.f. 8.5.2012) is being exempted retrospectively w.e.f. 29.6.2010 to 7.5.2012. Clause 102 of the Finance (No. 2) Bill, 2014 refers. Intermediate product Tow arising during the course of manufacture of such PSF/PFY is being exempted retrospectively w.e.f. 29.6.2010 to 10.7.2014 so as to provide relief to the manufacturers of such PSF/PFY. Clauses 102 and 103 of the Finance (No.2) Bill, 2014 refer.

5. In view of the above settled position of law, demands for the period after 29.06.2010 do not stand. PSF or PFY manufactured from plastic scrap and plastic waste were exempted as per the amendment carried under Notification No. 12/2012-CE dated 17.3.2012, an entry No. 172A was inserted by Notification No. 24/2012-CE dated 08.05.2012. So far as the period prior to 29.6.2010 is concerned, the same is covered by the decision of CESTAT in the case of CCE, Kanpur Vs. G.P.L. Polyfils Limited (supra). The argument of learned AR that POY is not a category of Polyester Filament Yarn is not correct in view of the HSN explanatory notes given under Central Excise Heading 54.02 heading 54.02. As per these HSN explanatory notes, Synthetic Filament Yarn includes Partially Oriented Yarn, Fully Oriented Yarn and Texturised Yarn of polyester which will be covered by the description PFY mentioned in Section 110 of the Finance Act, 2014, which retrospectively exempted the said goods. Therefore, the entire period is covered in the demand show cause notices, either because the duty was not leviable on PSF and POY manufactured by the appellants or the same were exempted under retrospective exemption or by introducing entry No. 172A in Notification No. 12/2012-CE dated 17.03.2012. Due to the corrective action taken by Revenue, it is held that there was no intention to charge duty on impugned PSF and POY for the period involved in these appeals.

6. So far as the chargeability of duty on waste and scrap in the manufacture of PSF and POY is concerned, the appellant has relied upon exemption Notification No. 89/95-CE dated 18.5.1995. On a specific query from the Bench, learned Advocate appearing for the appellant fairly agreed that admissibility of Notification No. 89/95-CE dated 18.05.1995 was not raised by the appellants before the adjudicating authority. It is observed that exemption to waste and scrap under Notification No. 89/95-CE is subject to certain conditions mentioned in proviso contained in this notification. The aspect of availability of exemption is, therefore, required to be remanded back to the adjudicating authority, who will decide the same in the remand proceedings, after giving opportunity of personal hearing to the appellant.

7. So far as imposition of penalties upon other appellants are considered, in our considered view, no penalties are attracted because on merits the appeals filed by the appellants are allowed.

8. Appeals filed by the appellants are allowed to the extent indicated hereiabove.

(Operative part of the order pronounced in the open Court)

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

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