CE - Appellants maintaining separate records for storage and use of imported and indigenous Orthoxylene - In absence of anything on record to establish that aforesaid records maintained by appellants are manipulated, exemption under notfn. 8/1997-CE, 13/1998-CE & 23/2003-CE has to be allowed: CESTAT
By TIOL News Service
MUM, JAN 30, 2016 : THIS is a Revenue appeal.
The issue involved is regarding eligibility of the products waste steam and low boiling component to concessional rate of duty under Notification No. 8/1997-CE, 13/1998-CE and 23/2003-CE respectively. The only condition in all these notifications was that the products should have been manufactured wholly out of raw material produced or manufactured in India.
The adjudicating authority held that the respondent had availed ineligible benefit of exemption under the said Notifications as the appellants were using imported raw materials.
The Commissioner (A) while extending the benefit of the notification(s) observed -
"The appellants have contended that they are maintaining separate records for storage and use of imported and indigenous Orthoxylene. The lower authority has noted this contention in the impugned order and has not controverted this. The appellants have further contended that they had paid normal duty on the products manufactured out of imported Orthoxylene and claimed concessional rate only in respect of products manufactured out of Orthoxylene manufactured / produced in India. In support they also submitted a statement giving details of the products manufactured out of imported/indigenous Orthoxylene; the quantities cleared and duties paid. In the absence of anything on record to establish that the aforesaid records maintained by the appellants are manipulated, the exemption granted to goods manufactured out of raw material/manufactured /produced in India has to be allowed . A similar demand confirmed by the jurisdictional Commissioner inter-alia on the ground that "even if they are keeping any records to this effect it can never be true records but falsified ones…" was set aside by the CESTAT vide Order dt.1.12.2005 - 2006-TIOL-186-CESTAT-MUM. The order of CESTAT has to be followed by the lower appellate authorities. Accordingly, the impugned demand cannot be upheld and has to be set aside. In the absence of demand, the penalty also has to be set aside."
Incidentally, the CESTAT in its order dated 01.12.2005 had inter alia held thus -
7. DGTD vide letter dated 27.9.1996 have listed Vanadium Pentoxide as a catalytic agent. The Commissioner's reliance on EXIM Policy definition thereof is not called for and be a cause to upset the position of Vanadium Pentoxide to be a catalyst. Catalysts are covered as capital goods of Exim Policy and, therefore, when use of such capital goods will not impugn eligibility to the benefit of notification as applicable to DTA clearances in this case.
As mentioned, the CCE, Belapur is in appeal.
The respondent submitted that an identical issue was agitated by the Revenue before the apex Court in Civil Appeal No. 2588/2006 in respondent's own case &this appeal was dismissed by an order dated 01/09/2015 - 2015-TIOL-246-SC-CX.
This is what the Apex Court had held -
"2. The Order-in-Original was passed holding that the respondents were not eligible to avail the benefit of the said Notifications. However, the Tribunal, in appeal, reversed the order with its finding that it is not the raw material. Since the term 'raw material has not been defined anywhere except in the EXIM Policy, as far as the Commissioner is concerned, he had adopted the definition therefrom. However, as per the Tribunal, the said definition contained in the EXIM Policy would be of no relevance. To this extent the Tribunal is right in its approach because under EXIM Policy catalyst is covered as capital goods inasmuch as this Court in various judgments on the subject has taken the view that the raw material is not a defined term. On that basis, it is held that the meaning to the expression 'raw material' has to be given in the ordinary well accepted connotation in common parlance of those who deal with the matter.
8. On the facts of this case, therefore, we hold that the catalyst could not be treated as raw material. We, thus, do not find any violation with the approach of the Tribunal in granting the benefit of the aforesaid Notifications to the assessee herein. "
After considering the above, the CESTAT held -
"4. As, an identical issue in respect of the very same assessee-respondent has been decided by the apex Court in their favour, we find that nothing survives in the appeal filed by the Revenue. Accordingly, in view of the foregoing, we uphold the impugned order as correct and does not suffer from any infirmity."
The Revenue appeal was rejected.
(See 2016-TIOL-293-CESTAT-MUM)
