CX - Revenue Officers have no respect for orders passed by Tribunal and they follow own law which results in unnecessary litigation - adjudicating authority in overenthusiasm readjudicating SCNs although there was no such direction given by Commissioner(A) - Order set aside: CESTAT
By TIOL News Service
MUMBAI, FEB 04, 2013: THE appellant cleared various types of cast articles for job work to various job workers for the purposes of machining/fettling, bending, or carrying out any other operation necessary for the manufacture of final product. The finished goods were removed from the premises of the job workers and directly sent to the customers in terms of the permission granted to them under Rule 4(6) of the CENVAT credit Rules, 2004. The aforesaid permission was granted subject to undertaking given by the appellant that the waste and scrap if generated at the job workers end would either be brought back or removed on payment of Central Excise duty from the premises of the job workers.
During the scrutiny of records of the appellant's factory, it was noticed that they had failed to pay excise duty on waste and scrap generated at the job workers' end for the period May 2007 to February, 2008. Accordingly, SNCs were issued for recovery of CE duty of Rs.5,17,110/- u/s 11A for having contravened the provisions of Rule 4(6) of CCR, 2004 and Trade notice no. 38/02 dated 10.6.2002 issued by the CCE, Pune and also proposing interest and penalty.
The Asst. Commissioner dropped the proceedings by relying upon the decisions in Preetam Enterprises - (2005-TIOL-1256-CESTAT-MUM) and Rocket Engineering Corporation Ltd. - (2005-TIOL-1313-CESTAT-MUM) wherein it is held that the liability to discharge duty on waste and scrap is on the job workers who are the manufacturers and not on the supplier of materials.
The department filed an appeal before the Commissioner(A) and laid stress on the fact that the appellant had given an undertaking that they would discharge the duty liability on waste and scrap generated at the job workers' premises in case they failed to bring back such waste and scrap and since the assessee had gone back on their promise, the demand needs to be confirmed.
The lower appellate authority accepted this Revenue plea and set aside the order of the adjudicating authority vide his order dated 21.08.2009.
This order was challenged by the assessee before the CESTAT and the appellant was granted a Stay in the matter on 20.03.2010.
Interestingly, during the pendency of this appeal, the adjudicating authority (for reasons wholly known to him) re-assessed the show-cause notices and confirmed the demand against the appellant. The said order was challenged by the appellant before the Commissioner (Appeals), and though he was made aware of the CESTAT Stay order dated 20.03.2010, he confirmed the adjudication order by his order-in-appeal dated 11.08.2010.
Against the said order dated 11.08.2010, the appellant filed an appeal before the CESTAT.
Incidentally, their earlier appeal was allowed by the CESTAT vide its order dated 19.09.2011 - (2011-TIOL-1537-CESTAT-MUM) and where it was inter alia held that - ‘ In respect of waste and scrap generated during course of jobwork, liability to pay duty is on job worker as he is manufacturer - a trade notice which is contrary to statutory provision has no existence in law'.
Be that as it may, when the present appeal was heard by the Bench, the appellant narrated the facts involved and expressed surprise at the multiplicity of the proceedings triggered by the Revenue.
The Revenue representative probably did not have any answer.
The Bench observed -
"6. In this case I find that two show-cause notices were issued to the appellant on 18.1.2008 and 2.5.2008 for demand of duty on clearance of waste and scrap generated at the end of the job worker during the impugned period. Proceedings against both show-cause notices were conducted by the adjudicating authority and the adjudicating authority dropped the show notices on 12.12.2008. The said order was challenged by the revenue before the Commissioner (Appeals) who vide order dated 21.08.2009 passed the following order: "I allow the appeal and set aside the order of the original adjudicating authority." In the said order, there was no direction given by the Commissioner (Appeals) for re-adjudication of the show cause notices. Despite that the adjudicating authority in over-enthusiasm re-adjudicated the show-cause notices and passed the order dated 29.1.2010 confirming the demand against the appellant despite the facts that it was brought to the notice of the adjudicating authority that the appeal has been filed before this Tribunal against the order of the Commissioner (Appeals) dated 21.8.2009. The adjudication order was further challenged before the Commissioner (Appeals) and before the Commissioner (Appeals), the appellant submitted that the operation of the order dated 21.8.2009 has been stayed by this Tribunal vide order dated 29.3.2010, despite that the Commissioner (Appeals) disposed of the appeal instead of keeping the appeal pending.
7. The action of both authorities, i.e. adjudicating authority and Commissioner (Appeals) are not appreciable. Moreover, when there is no direction for re-adjudication by the Commissioner (Appeals), and appeal against the order of Commissioner (Appeals) is pending before this Tribunal, the adjudicating authority dared to pass the impugned order. Further, the Commissioner (Appeals) has also not bothered about the stay of operation of the order dated 21.8.2009 by this Tribunal. This shows that the officers of the department have no respect for the orders passed by this Tribunal and they are following their own law which results in unnecessary litigation before this Tribunal. In this case, till disposal of the appeal against the order dated 21.08.2009 by this Tribunal, the litigation could have been avoided but both the lower authorities chose to continue unnecessary litigation. The action of both the lower authorities is not appreciable at all.
8. With these observations, I find that neither re-adjudication nor any order was required to be passed by the Commissioner (Appeals) till the final disposal of the appeal by the Tribunal. Therefore, I set aside the impugned order and allow the appeal with consequential relief."
In passing : The time is apt to bring in a legislation empowering the CESTAT to impose costs on the department for initiating a frivolous litigation. Till that time, let both the lower authorities be posted to the training academy - NACEN. After all, for an assessee, money doesn't grow on trees!
(See 2013-TIOL-212-CESTAT-MUM)
