The Madras Aluminium Co. Ltd vs Commissioner Of Central Excise

Applications Nos. E/MISC/40417/2015, E/MISC/40418/2015 & Appeal No.E/696/2005

[Arising out of Order-in-Appeal No.94/2005-CE [SLM] dt.25.5.2005 passed by the Commissioner of Central Excise (Appeals), Salem]

The Madras Aluminium Co. Ltd. [now sought to be changed as Vedanta Ltd.]

Appellant

Versus

Commissioner of Central Excise, Salem Respondent

Appearance:

Shri M. Kannan, Advocate For the Appellant Shri L. Paneer Selvam, AC (AR) For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :18.6.2015

FINAL ORDER No.40671/2015

The appellant filed 2 MISC petitions for change of cause title. The MISC petition No.40417/2015 is seeking to change the cause title of appellants name from "The Madras Aluminum Company Ltd." to Sesa Sterlite Ltd. The second MISC petition No.40418 is seeking to change the cause title from the name of the appellant from M/s.Sesa Sterlite Ltd. to M/s.Vedanta Ltd. Appellants produced certificate of Registrar of Companies. Both the applications for change of cause title are allowed. The name of appellant in the cause title is changed from "The Madras Aluminum Company Ltd. to Sesa Sterlite Ltd. and from M/s.Sesa Sterlite to Vedanta Ltd. Registry is directed to amend the cause title in so far as the appellant's name shall be read as Vedanta Ltd. Both the MAs are allowed.

2. The main appeal is taken up for hearing. The issue relates to demand of excise duty on the goods cleared under Rule 173H and Rule 57F (4) of Central Excise Rules, 1944. The appellant has received the raw materials from various companies for reprocessing under Rule 173H and Rule 57F (4) and got it repaired. Instead of repairing or reprocessing, appellants have cleared the excisable goods by using the inputs which were available in from their stock. Therefore, they have violated the provisions of Rule 173H and Rule 57F (4). Adjudicating authority confirmed duty of Rs.8,73,015/- and also imposed equivalent penalty of Rs.10,000/- under Rule 173Q. Commissioner (Appeals) also rejected their appeal.

3. Ld. Advocate submits that appellants are manufacturers of aluminum ingots, rods, sheets. They used the raw material, scrap and other materials which are re-melted in the furnace and in turn used in the manufacture of final product. They also received the returned goods which were supplied to M/s.Sesa Sterlite Ltd. under Rule 173H and duly filed D-3 declaration. The nature of the goods received in factory are such that there is no re-processing or repair involved that they have to be re-melted. Once the goods are re-melted, the identity of the goods are lost. There is no one to one correlation once the goods are melted in the furnace. They have supplied the sheets from their fresh stock and also submits that department is demanding duty on the goods cleared under Rule 173H whereas the raw material received under Ruel173H was subsequently cleared on payment of duty. Therefore, duty cannot be demanded twice. He relied on para-41 of the OIO and para 5.4 of OIA wherein admittance of lapse on the part of appellant is recorded. There is no dispute on the fact that re-melted goods received under Rule 173H and Rule 57(4) were subsequently cleared on payment of duty. The only procedural lapse is that replacement of goods was made out of freshly produced metal. He also submits that the limitation period is not applicable as officers visited on 10.2.2000 and notice was issued on 10.2.2004 after a lapse of four years.

4. On the other hand, Ld. AR reiterates the findings at para 5.5. of the OIA. The date of receipt of defective sheets on the appellant premises is 22.5.99 to 27.5.99 with respect to goods supplied whereas processed goods despatched were manufactured even earlier to the receipt of the inputs under rule 57F (4) during the period 13.5.99 to 16.5.99 which clearly shows that the appellants processed the goods for which they supplied from the fresh stock which are manufactured out of their invoice. Therefore duty has been rightly demanded which is also admitted by the appellants. Appellants cleared the goods even before reprocessing was done. Appellants have cleared the original goods in the guise of repair and reprocessed goods. He relied on Tribunal's decision in the case of National Conductors Vs CCE & ST, Daman - 2014-TIOL 553-CESTAT-AHM.

5. After hearing both sides, I find that there is no dispute on the fact that appellant admitted that they have supplied the goods under Rule 173H and Rule 57F (4) of Central Excise Rules which were manufactured from their input stock. It is also not in dispute that defect sheets which were received cannot be repaired or reconditioned but has to be re-melted. Therefore once the returned goods are re-melted, it lost its identity. There is no dispute that appellant followed 173H procedure and also filed D3 intimation to the Department. As clearly seen from annexure to SCN the date of receipt of defective sheets is 22.5.99 to 27.5.99 and the date of despatch of processed goods is from 27.5.99 to 2.6.99 which clearly shows that appellants cleared the goods under rule 173H & 57F(4) only upon receipt of the goods. The lower authorities have also clearly brought that stock which were cleared under rule 173H is manufactured from during the period 13.5.99 to 16.5.99. The appellants have set up integrated aluminium plant where they have the facility of manufacturing of aluminium products from primary ore stage to the finished goods viz. aluminium Ingots, Rods, Sheets. They also carry out re-processing or remelting of the scrap and this is only a miniscule activity and done only when their finished goods are returned by the suppliers. I also find that the finished goods manufactured out of returned goods were subsequently cleared on payment of duty as normal clearance. Therefore duty cannot be demanded twice there is revenue-neutrality.

6. Further, the appellants pleaded strong case on the limitation issue. I find that they have filed D3 declaration intimation was duly filed upon the officers visited the unit on 10.2.2000 as recorded in para-2 of the SCN. It is found that from the production records that appellants have cleared the goods under rule 173H from the fresh stock. SCN should have been issued within 6 months whereas the department issued SCN on 10.2.2004. Hence there is no suppression of facts with intention to evade payment of duty. Therefore, demand raised on the goods cleared under Rule173H is hit by limitation and liable to be set aside and equal penalty imposed on the appellant is also liable to be set aside.

7. However, I find that appellants are liable for under penalty under Rule 173Q as they have violated the procedure. Therefore, appellants are liable for penalty. In view of the foregoing discussion, demand and Section 11AC penalty is set aside. Imposition of penalty of Rs.10,000 under rule 173Q is upheld. Appeal is allowed in the above terms.

(Dictated and pronounced in open court)

(R. PERIASAMI) TECHNICAL MEMBER gs

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