Rks Agro Tech Ltd vs Commissioner Of Customs And Service Tax ...
- CitationAppeal No. 99-2005 dated 19/07/2006 passed by Commissioner of Customs (Appeals), Bangalore]
Ratio decidendi
The rule this decision rests on
Where an EOU's failure to obtain the Development Commissioner's permission for job work is a non-fulfilment of a procedural condition, and the revenue does not dispute that the permission would have been granted in the ordinary course and that the goods were in fact job-work clearances, such non-compliance does not by itself sustain a demand of duty, interest or penalty under Section 11AC of the Central Excise Act. Non-compliance with a procedural condition, as distinct from a substantive condition, does not by itself result in denial of the consequential benefit or in a duty liability, where the procedural requirement could have been satisfied in the ordinary course and the underlying entitlement to the activity is not in dispute. A breach of a procedural requirement, though a contravention, may nonetheless attract a penalty under the applicable rule, and such a penalty may be sustained and reduced to a proportionate amount where the breach is established.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Appeal No. 99-2005 dated 19/07/2006 passed by Commissioner of Customs (Appeals), Bangalore]
For approval and signature:
HON'BLE SMT ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER
1 Whether Press Reporters 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 the 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
RKS AGRO TECH LTD PLOT NO.61&62, PHASE II JIGANI INDUSTRIAL AREA, JIGANI, ANEKAL TALUK, BANGALORE Appellant(s)
Versus
Commissioner of Customs and Service Tax BANGALORE, C.R. BUILDING,QUEENS ROAD, P.B.NO. 5400, BANGALORE, - 560001 KARNATAKA Respondent(s)
Appearance:
Ms. RUKMANI MENON, Adv For the Appellant Mr. N. JAGADISH, A.R. For the Respondent
Date of Hearing: 15/07/2015
Date of Decision: 15/07/2015
CORAM:
HON'BLE SMT ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER
Final Order No. 21585 / 2015
Per : ARCHANA WADHWA
Nobody appeared for the appellant. Accordingly, we have heard learned A.R. and have gone through the impugned order.
2. As per the facts on record, the appellant is a 100% EOU, being manufacturers of essential oils and sandal wood oil and sap wood paste etc. The dispute lies in a very narrow compass. The appellant received sandal wood from M/s Karnataka Soaps and Detergents Ltd. (KSDL) for extraction of sandal wood oil on job work basis. The appellant extracted the same and returned the goods to M/s KSDL.
3. The Revenues sole objection is that due permission for doing the job work was not availed by the appellant from the Development Commissioner. Accordingly, they have concluded that the said job work done by the appellant is without the permission of the concerned authorities and the appellant is required to pay appropriate duty on the same. Accordingly duty to the extent of Rs. 28,220/- stands confirmed against them along with confirmation of interest and imposition of penalty to the extent of duty. Further, penalty of Rs. 5000/- under Rule 26 of Central Excise Rules stands imposed.
4. We find that there is no dispute about the facts. Revenue is not disputing the fact that the appellant was otherwise entitled to do the job work for the DTA unit if the relevant permission was taken. They are also not making any allegation against the assessee that the clearance of the sandal wood oil in question was not on account of job work done by them for M/s KSDL. In such scenario, the only question required to be decided is as to whether the fact of non-taking of permission by the Development Commissioner would be fatal to their case and would result in confirmation of demand of duty against them and imposition of penalty.
5. No doubt the assessee working under the customs and excise arena is required to follow the procedure laid down under the law and to fulfill the conditions for availment of benefit of any procedure of law. However, it is also well settled that some of the conditions required to be followed by an assessee are procedural conditions. Whereas non-fulfillment of substantive conditions would definitely result in denial of consequent benefit, non-fulfillment of procedural conditions may not. It is the Revenues case that if the permission of the Development Commissioner was sought, it would have been granted by him in the ordinary course. The appellant was entitled to do job work for the principal manufacturer located in DTA. In such a scenario, we are of the view that non-taking of the permission, though a contravention, may not result in confirmation of demand of duty. Accordingly, we set aside the confirmation of duty along with interest and imposition of penalty under Section 11AC of the Central Excise Act.
6. However, inasmuch as there is admittedly a violation of the procedures required to be followed by the appellant, we uphold the imposition of penalty under Rule 26 of the Central Excise Rules 2002 but reduce the same to Rs 2000/- (rupees two thousands only). Appeal is disposed of in above manner.
(Order pronounced in open court)
ASHOK KUMAR ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER
Pnr...
2
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free