M/S. Veena Processing Mills Ltd vs Cce, Salem

(Arising out of Order-in-Appeal No. 1852005 (SLM) dated 07.11.2005, passed by the Commissioner of Central Excise (Appeals), Salem).

For approval and signature

Honble Shri R. PERIASAMI, Technical Member

M/s. Veena Processing Mills Ltd. : Appellant

Vs.

CCE, Salem : Respondent

Appearance

Shri J. Shankararaman, Adv., for the applicant Shri B. Balamurugan, AC (AR) for the respondent

CORAM

Honble Shri R. PERIASAMI, Technical Member

Date of Hearing/Decision: 01.05.2015

FINAL ORDER No. 40529 / 2015

Application filed by the appellant for change of cause title from M/s. Veena Processing Mills Ltd. to M/s. Superfine Bleaching Co. Ltd. is allowed.

2. The short issue involved in this appeal relates to duty demand of Rs.7,85,943/- under compound levy scheme for the period 1996-97 on the Hot air Stenter installed by the appellant under Independent Textile Processors with Annual Capacity of Production Determination Rules, 1998. The lower authority confirmed the demand of Rs. 4,64,515 and Rs. 3,21,428/- under Rule 96ZQ(5)(i) along with interest and imposed a penalty of Rs.7,85,942/- under Rule 96ZQ(5)(ii) of CER, 1944. The Ld. Commissioner (Appeals) rejected their appeal and reduced the penalty to Rs.2,00,000/-.

2. Ld. Advocate on behalf of the appellant submits that duty has been demanded under the rules for the period where Hot air Stenter was closed and sealed by the department for the period 24 days in January, 2001 and 15 days in February,2001. Since it was not in operation, duty payment does not arise as the closure and seal has been duly verified by the Superintendent of Central Excise and confirmed that Hot air Stenter was not in operation. He produced a copy of the ledger under Annexure-B page-20 of appeal papers. He also submits that the Honble High Court of Madras has set aside the rules as ultra vires. He relies upon the judgment of the Honble High Court of Madras in the case of Beauty Dyers Vs. UOI - 2004-166-ELT 127 (Mad.) and decision of the Tribunal in Ahmedabad Bench in the case of Sanoo Fashion Pvt. Ltd. Vs. CCE, Surat  2013 (298) ELT 719 (Tri.-Ahmd.).

3. On the other hand, the Ld. AR reiterated the findings of the impugned order and the adjudication order. He submits that as per 96ZQ (7) if the period of closure is less than one month they are required to pay duty and claim abatement afterwards.

4. After hearing both sides I find that the issue has been decided by this very bench in the case of Sanoo Fashion Pvt. Ltd.(supra), where the Tribunal by relying the Honble High Court of Madras and allowed the appeal. I find that the lower appellate authority has not considered the Honble High court of Madrass order and relied the Honble High Court of Gujarats decision in the case of Ambuja Cements Vs. UOI. Both the lower appellate authority and the Tribunal joined by the decision of Honble High Court of Madras order in the case of Beauty Dyers (supra) and the Honble High Court has held that the impugned order was set aside as ultra vires. The Tribunal in the above cases followed the Honble High Court order. The relevant portion of the Tribunals order is reproduced as under.

7.?We have considered the submissions. We take note of the fact that it is not the case of Revenue that erection was not going on or the assessee had actually used other 3 chambers during the relevant period. No evidence has been shown for this purpose. It is the assessees claim that permission to install additional chambers has been given and they had intimated both commencement of work as well as completion. It is to be taken note of that whenever such intimation is given, the officers are required to visit and verify. Since there are no observations that the officers have not visited or they have not verified, it has to be held that the assessees claim has to be accepted. The demand stands confirmed on the ground that duty was required to be paid in the beginning of the month and abatement, if any, was to be claimed separately and therefore appellants are at fault in not paying the duty during the relevant time. In view of the fact that the relevant rules have been struck down as ultra vires, we consider that the demand cannot be sustained against the appellant. Demand cannot be sustained not only because of rules have been struck down, but also because it is basically only a procedural violation. On merit, it has not been shown that the appellants are not eligible [for] abatement.

By respectfully following the Honble High Court Order as above and Tribunals order, I hold that in the present case the demand of duty is not sustainable. Accordingly the impugned order is set aside and appeal allowed.

(Order pronounced and dictated in the open Court)

(R. PERIASAMI) TECHNICAL MEMBER

BB

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