M/S The India Thermit Corporation Ltd vs Cce, Kanpur

[Arising out of the Order-in-Appeal No. 70/CE/APPL/KNP/2006 dated 27/01/2006 passed by The Commissioner of Central Excise, Kanpur.]

For Approval and signature :

Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri 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 would 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 :

Department Authorities?

M/s The India Thermit Corporation Ltd. Appellant

Versus

CCE, Kanpur Respondent

Appearance

Shri Rahul Tangri, C.A.  for the Appellants.

Shri Ranjan Khanna, Authorized Representative (DR)  for the Respondent.

CORAM : Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

Final Order No. 51028/2015 Dated : 26/03/2015

Per. Rakesh Kumar :-

The facts leading to filing of this appeal are, in brief, as under.

1.1 The appellant are manufacturer of Thermit portion which was being supplied by them to railways. The appellant were classifying this product, which is used for jointing and cutting of the rails, under sub-heading 730290 of the Tariff and were paying on its clearances @ 15% adv. In this regard the appellant had filed a classification declaration to the Department on 15/3/97. On 23/7/97 the Deputy Commissioner, Central Excise by passing an order-in-original rejected the appellants claim for classification of the product under heading 730290 and classified the same under heading 3810 where the rate of duty applicable is 18% adv. Accordingly from 23/7/97, the appellant started paying duty on the supply of Thermit portion to the railways @ 18% adv. The appellant, however, immediately filed an appeal to Commissioner (Appeals). The appeal filed to the Commissioner (Appeals) was disposed of vide order-in-appeal dated 20/5/98 by which the Commissioner (Appeals) reversed the Deputy Commissioners order and held that the Thermit portion is classifiable under heading 730290. This order of the Commissioner (Appeals) was received by the appellant on 28/5/98 and in respect of the supplies made after this date they paid duty on the clearances of Thermit portion @ 15% adv. by classifying the same under heading 7302.90. The Revenue filed an appeal to the Tribunal against the Commissioner (Appeals)s order. The Revenues appeal was decided by the Tribunal dated 3/2/2000 by which the Tribunal held that the Thermit portion is classifiable under heading 3810 of the Tariff. The Tribunal, however, held that the differential duty would be recoverable only for normal period of limitation from the relevant date and accordingly the no duty was recoverable from the period from June 1998 to February 1999. In fact, for this period, no show cause notice had been issued.

1.2 The Department, thereafter, issued a show cause notice dated 23rd August 2002 to the appellant in respect of the period from June 1998 to February 1999 by invoking Section 11D of Central Excise Act, 1944 alleging that the appellant during this period have recovered duty in respect of supply of Thermit portion to their customers @ 18% adv. while they have paid the duty to the Department @ 15% adv. and accordingly they would be liable to pay excess duty recovered from the customers to the Government. This allegation by the Department was based mainly on a tender dated 27/5/98 submitted by the appellant to the Deputy General Manager, IRCON Ltd., Bilaspur wherein they had mentioned that the excise duty applicable on the Thermit portion would be 18% adv. The amount demanded under Section 11D for the period from June 1998 to February 1999 is Rs. 21,83,849/-.

1.3 The show cause notice was adjudicated by the Deputy Commissioner vide order-in-original dated 27/2/04. The Deputy Commissioner in course of adjudication proceedings wrote to the Divisional Railway Manager, North Western Railways, Ajmer for informing about the rate at which the Central Excise duty was recovered by the appellant in respect of supply of Thermit portion and the DRM, Ajmer under his letter dated 09/2/04 enclosed a list of the invoices in respect of it was reported that the excise duty charged is @ 18% adv. Relying on this report of DRM, Ajmer, the Deputy Commissioner confirmed the demand under Section 11D. On appeal being filed to Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-appeal dated 27/1/06 dismissed the appeal. Against the above order of the Commissioner (Appeals), this appeal has been filed.

2. Heard both the sides.

3. Shri Rahul Tangri, C.A., the learned Counsel for the appellant, pleaded that the dispute is only in respect of period from June 1998 to February 1999, that during this period the appellant in pursuance of the order-in-appeal dated 28th May, 1998 classifying the Thermit portion under sub-heading 7302.90 were paying duty in respect of clearances of Thermit portion to railways @ 15% adv., that in all the invoices issued to Railways they have charged duty @ 15% adv. only, that the Departments allegation that during this period they had recovered duty @ 18% is based only on a tender submitted by the appellant to M/s M/s IRCON under their letter dated 27th May 1998 wherein the rate of duty applicable in respect of supplies of Thermit portion is mentioned as @ 18%, that this rate has been mentioned in the tender as the tender had been sent on 27th May 1998 i.e. before the receipt of the order-in-appeal passed by the Commissioner (Appeals), that the tender acceptance letter of M/s IRCON does not mention the rate of duty, and it only accepts the supply portion  mentioning the quantity to be supplied and the rate, that in the invoices issued to the railways, though in some of the invoices issued to railways, the rate of duty is mentioned as 18% as the same was pre-printed, the duty charged from the railways in those invoices is only @ 15% adv., not 18% adv., that the letter dated 09/2/04 of DRM, Ajmer relied upon by Deputy Commissioner had never been supplied to the appellant and, therefore, there is denial of natural justice, that in the DRMs letter, the rate of duty mentioned in respect of supplies to railways has been wrongly mentioned as 18%, as in the respective invoices, the rate of duty mentioned is 15% not 18%, that on every invoice issued during this period to railways, the duty had been charged only @ 15% and not 18% and that in view of this, the impugned order is not correct.

4. Shri Ranjan Khanna, learned DR, defended the impugned order by reiterating the findings of the Commissioner in it and pleaded that the letter dated 09/2/04 of the DRM, Ajmer clearly proves that in respect of supplies of Thermit portion to railways during the period from June 1998 to February 1999, the appellant have recovered excise duty @ 18% adv. and not 15% adv.

5. We have considered the submissions from both the sides and perused the records.

6. The Departments allegation that during the period from June 1998 to February 1999, the appellant while paying duty to the Department @ 15% in respect of clearances of Thermit portion had recovered from customer  railways @ 18% is based only on one tender document dated 27/5/98 to M/s IRCON wherein the rate of duty applicable in respect of supplies of Thermit portion is mentioned as 18%. However, it is seen that the M/s IRCONs letter accepting the tender does not mention the rate of duty and from some of the invoices issued to Railways during this period, which have been placed on record, it is seen that while the rate of duty is mentioned 18%, the duty actually shown in the invoices has been calculated @ 15%. In a number of other invoices though the pre-printed rate of duty is mentioned as 18%, but the same has been cancelled and modified as 15% and accordingly the duty had been charged @ 15% only. In our view, merely on the basis of the DRM, Ajmers letter, the copy of which was not supplied to the appellant, it is not correct for the Department to conclude that during the period of dispute the appellant had recovered duty from railways @ 18%.

7. In view of this, the impugned order is set aside and the matter is remanded to the original Adjudicating Authority for denovo adjudication. The Adjudicating Authority should examine the invoices issued by the appellant to railways in respect of supplies of Thermit portion and verify as to at what rate the excise duty had been recovered. The demand under Section 11D would be sustainable only if the duty recovered from the railways as mentioned in the invoice had been charged @ 18% adv. The Adjudicating Authority should also supply a copy of the letter dated 09/2/04 of DRM, Ajmer and take into consideration the appellants submissions in respect of the same. Since this is a very old matter, the same may be decided within a period of six months.

(Dictated and pronounced in open court.)

(Rakesh Kumar)

Member (Technical)

(S.K. Mohanty)

Member (Judicial)

PK

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