CX - Balance sheet figures included quantity of re-rolled products traded - demand on differential quantity dropped by CCE & Revenue appeal dismissed by Tribunal - in grounds taken by Revenue, there hardly exists any element of law - Reference rejected: HC
By TIOL News Service
HYDERABAD, OCT 31, 2014: THE respondent is a manufacturer of re-rolled products of iron and non-alloy steel. During audit of the records it was observed that 26968.312 MTs of re-rolled products have been cleared on payment of excise duty for the year 1993-94 whereas the balance sheet for the corresponding period revealed the transaction in relation to 29049.747 MTs of re-rolled steel.
On that basis, a SCN was issued demanding CE duty on the differential quantity allegedly removed without payment of duty. The assessee submitted that the said quantum of re-rolled products was purchased from outside, and was traded, and in that view of the matter, it cannot be treated as a product manufactured by them. The explanation was found satisfactory and the Commissioner passed an order dropping the proceedings.
This order was reviewed by the Board and an appeal was filed by the Revenue before the Tribunal. This appeal was dismissed by the Tribunal in August 2002.
Against this dismissal, the CCE, Guntur filed a reference under Section 35(H)(1) of the CEA, 1944with a prayer to quash the order of the Tribunal.
In the memorandum of grounds, the following questions are framed:
(i) Whether the Tribunal was correct in merely dismissing the appeal without having taken the Boards Review order into consideration.
(ii) Whether the Tribunal was correct in giving Final Order having taken only the adjudication order passed by the Commissioner of Central Excise, Guntur, into consideration.
The High Court after narrating the powers conferred upon the Board u/s 35E & 35H of the CEA, 1944 observed -
++ In the instant case, the original authority did issue a show cause notice to the respondent, and on consideration of the explanation submitted by the latter, passed an order, dated 23.03.1995, dropping the proceedings. It was almost a case of arithmetics and an ordinary verification. The exercise did not involve in any process of interpretation and application of provision of law.
++ After the appeal was preferred, the respondent placed before the CEGAT the relevant material. The Chartered Accountant certified that while the quantity of 26968.312 MTs. is the one representing the product manufactured in the factory of the respondent, the differential quantity is the one that was just traded. This is not a case where the traded quantity was also included in the register pertaining to the manufacture. On the other hand, it was just reflected in the balance sheet, obviously for the purpose of income tax or other commercial purposes. That does not by itself give rise to an inference that the quantity that was stated by the respondent was also manufactured by it.
The Counsel for the Revenue further argued that the respondent was not supposed to trade in the same product, which it is manufacturing.
The High Court observed that if such an activity is contrary to any provision of law necessary steps as provided for under the relevant law ought to be taken; that it was not even the case of the Department that the differential quantity was physically found in the premises of the factory of the respondent.
Noting that in the grounds taken by Revenue there hardly exist any element of law and the entire case is depending on facts, the High Court rejected the reference made by the CCE, Guntur.
(See 2014-TIOL-1883-HC-AP-CX)
