M/S. S.V. Mestry Engg. Works vs Commissioner Of Central Excise, Mumbai

[Arising out of Order-in- Appeal No. SB(134) 134/MV/2010 dtd. 23/11/2010 passed by the Commissioner of Central Excise (Appeals) Mumbai Zone-I]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

=======================================================

1. Whether Press Reporters may be allowed to see : No 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 : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

M/s. S.V. Mestry Engg. Works : Appellants

VS

Commissioner of Central Excise, Mumbai : Respondent

Appearance

Ms. Padmavati Patil, Advocate for the Appellant Shri. V. K. Shastri, Asst. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 7/5/2015 Date of decision: 7/5/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. SB(134) 134/MV/2010 dtd. 23/11/2010 passed by the Commissioner of Central Excise (Appeals) Mumbai Zone-I, wherein Ld. Commissioner(Appeals) set aside the order-in-original No. 83/56/AC/BVL/2010 dated 22/3/2010 in the appeal filed by the Revenue. The fact of the case is that M/s. S.V. Mestry Engg. Works is a proprietary firm owned by Shri. S. V. Mestry, who are engaged in the manufacture of excisable goods Biscuit Wrapping Machines and parts thereof falling under Chapter Sub Heading No. 84224000 & 84229090 respectively of the First Schedule to the Central Excise Tariff Act, 1985. Show cause notice was issued alleging that the appellant is fraudulently availing SSI exemption of Notification No. 8/2003 dated 1/3/2003 as they have floated dummy unit namely M/s. Shree Swami Samarth Engineering in the name of his wife Smt. Sarika S. Mestry. In the adjudication, the adjudicating authority has though held that the both the units should be clubbed but extended the benefit of export through Marchant exporter and the value thereof was reduced for the purpose of taking aggregate value of one crore as provided under Notification and after deduction of export value the demand of Rs. 29,560/- was confirmed and equal amount of penalty and interest were also imposed. Aggrieved by the said order Revenue filed appeal before the Commissioner(Appeals) on the ground that original adjudicating authority should not have reduced the value of goods claimed to have been exported through merchant exporter. Ld. Commissioner(Appeals) accepting contention of the Revenue set aside the order of the original authority and confirmed the demand of Rs. 4,83,864/-, equal amount of penalty was also imposed. Aggrieved by the impugned order the appellant is before me.

2. Ms. Padmavati Patil, Ld. Counsel for the appellant submits that adjudicating authority has correctly considered and reduced value of goods cleared for export through merchant exporter. The adjudicating authority has followed Board Circular No. 212/46/96-CX dated 26/5/1996 and subsequent Board Circular No. 648/39/2002-CX dated 25/7/2002 wherein Board has clarified that in case of exempted unit the buyers form H can be accepted as proof of export. It is not under dispute that form H has been produced before lower authorities and considering the same reduced total aggregate value to the extent of the good exported through merchant exporter. She further submits that the Commissioner(Appeals) has denied deduction of export value on the ground that Board circular dated 26/5/1996 not applicable, however Circular dated 25/7/2002 is applicable as present case is covered by the board circular dated 25/7/2002. It is her submission that Board circular dated 26/5/1996 as well as Board Circular dated 25/7/2002 prescribed that form H can be accepted as proof of export and both circular are in force and has not been withdrawn therefore Ld. Commissioner(Appeals) findings is not correct.

3. On the other hand, Shri. V. K. Shastri, Ld. Asst. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that Board Circular dated 25/7/2002 is applicable only in a case where goods are exported by manufacturer exporter. Therefore Ld. Commissioner appeal has rightly confirmed demand and set aside the order of the original authority.

4. I have carefully considered the submissions made by both sides and perused record.

5. The appellant has not disputed the issue of clubbing of both units before adjudicating authority. They only made submission that value of goods exported through merchant exporter should be reduced from total aggregate value of both units and thereafter if any demand arises on over and above threshold limit of aggregate value of one crore, only on that demand can be confirmed. Appellant have produced all the records such as form H and other sales documents before adjudicating authority and considering those documents, original authority has extended the benefit of deduction of value of goods exported through merchant exporter strictly in terms of Circular dated 26/5/1996 and 25/7/2002. In both the Circulars, Board has categorically clarified that in case of goods cleared form exempted unit for the purpose of export through merchant exporter form H provided by the buyer can be considered as proof of export. In view of the clear Board circular adjudicating authority has correctly allowed deduction of value of goods exported through merchant exporter. Findings of the original authority is reproduced below:

9. I have gone through records of the case and the submission made by the assessee. I have also perused the exhaustive case laws sited as furnished by the assessee in their written submission, also perused case laws viz CCE Bhopal V/s Birla Erricson Optical Ltd. 2007(212) E.L.T. (Tri-Del.) & CCE V/s Shayona Enterprises 2008 (230) E.L.T. (Tri-Ahmd.). I have examined all the documents relating to the merchant export clearance of the assessee i.e. M/s S. V. Mestry Engineering Works & M/s Shri Swami Samarth Engineering cleared goods for merchant export. Therefore, the clearance of merchant export to be excluded for considering SSI exemption of the both companies or clubbing both the companies clearance. However, it is a case of dept. that both companies i.e. M/s S. V. Mestry Engineering Works & M/s Shri Swami Samarth Engineering, to be clubbed for the financial year 2005-06 & 2006-07.

9 a. I have carefully gone through the submission of assessee regarding the export made by M/s S. V. Mestry Engineering Works & M/s Shri Swami Samarth Engineering through their merchant exporters viz M/s KDR Industries & M/s Sulpha International. The value of the said exports have not been excluded from the value of home clearances, the assessee in there said contention have submitted form H in respect of there above merchant export. Therefore, in light of the Boards Circular No. 648/30/2002 CX dtd. 25.07.02 (F. No. 200/41/202-CX-6). I am inclined to accept these form H as proof of export (as detailed in enclose Annexure), after taking into consideration this value of proof of export in respect of merchant export. Their cum duty value exceeds SSI exemption limit by rupees 2,10,681/-. Therefore the assessable value for charging duty comes to Rs. 1,81,122/- on which The C.Ex. Duty (Basic @ 16% + Edu. Cess @ 2%) comes to Rs. 29,560/- (Basic Rs. 28,980 + Edu. Cess Rs. 580/-) for the financial year 2005-06. The value of merchant export clearance for the financial year 2006-07 as per the form H submitted as proof of export the total value come to Rs. 24,09,822/- after deducting the same from their cum duty Value for the financial year 2006-07 it comes to Rs. 83,82,181/- which is below the SSI limit prescribed hence there is no duty liability for the said financial year.

9 b. The assessee has not argued regarding the clubbing issue in the case of M/s. S.V. Mestry Engineering Works & M/s Shri Swami Samarth Engineering. However, they argue for excluding the value of clearance of merchant export. The merchant export clearance of both the companies during financial year 2005-06 was Rs. 24,45,543/- and during financial year 2006-07 are Rs. 24,09,822/-. Hence, excluding the value of clearance through merchant exporters during financial year 2005-06 and by allowing come duty price value the assessable value comes to Rs. 1,81,122/-. Hence, duty to be recoverable of Rs. 29,560/- from the assessee. For the financial year 2006-07 excluding merchant export clearance, the total value of clearance of the both the companies remain below of Rs. 1 crore.

9 c. I find that since assessee have to pay demand of duty during the financial year 2005-06 of Rs. 29,560/- they are liable for penalty under sec. 11AC equal to demand of Rs. 29,560/-.

9d. Regarding interest under sec. 11AB of C.Ex. Act, 1944, the interest calculation of 726 days on Rs. 29,560/- @ 13% comes to Rs. 7,633/-.

9e. Regarding personal penalty on Shri S. V. Mestry under Rule 26, proprietor of M/s S. V. Mestry Engineering Works is liable for penalty under Rule 26 of C.E.R.,2002. For concerning himself in clearance of the said excisable goods which he knew were liable to confiscation under the Central Excise Act, 1944.

9f. Regarding personal penalty on Smt. Sarika S. Mestry proprietor of M/s Shri Swami Samarth Engineering, the clubbing of the both companies have proved. Therefore, personal penalty on Smt. Sarika S. Mestry is impossible under Rule 26 of C.E.R., 2002.

9g. Since assessee have deposited Rs. 5 lacs, the confirmed demand, penalty, interest & personal penalties are liable for appropriation against the said amount.

From the above findings of the original authority, I do not find any infirmity in the order, as original authority has only followed the Board Circular in correct perception and allowed the deduction of value of exported goods from the aggregate value of both units. Ld. Commissioner (Appeals) reason for not considering Board Circular only on the ground that goods should be exported from manufacturers premises is absurd and cannot be accepted for very simple reason that both Board circular are specifically clarified that in a case where goods are cleared by exempted unit through merchant exporter and not through any manufacturer, therefore order of the Ld. Commissioner(Appeals) suffered with serious infirmity which can not be sustained. I therefore set aside the impugned order and upheld the order passed by the original adjudicating authority. Appeal is allowed, accordingly.

(Dictated in court)

Ramesh Nair Member (Judicial)

sk

8