 COMPANY CASES (CC) HIGHLIGHTSF Where dispute prima facie bona fide, common law remedies for recovery of debts to be availed of : Smt. Pabba Vishalaxmi v. Shree Ramana Process P. Ltd. (T & AP) p. 261
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Assessee eligible for remission of duty in respect of goods cleared for export under bond but destroyed at port before export
Assessee is eligible for remission of duty in respect of goods cleared for export under bond but which were destroyed at port before same could be exported
Honest Bio-Vet Pvt. Ltd. Vs Commissioner of Central Excise, Ahmedabad-I [2014-TIOL-2286-CESTAT-AHM-LB]
Honest Bio-Vet Pvt. Ltd. (the Appellant) cleared certain goods for export under ARE-1 under bond without payment of duty. The Appellant had taken the goods directly to the port of export i.e. JNCH, presented the Shipping Bill and 'Let Export' Order was allowed. However, the goods could not be loaded on the ship for export due to Fire Accident at the port. The goods were badly damaged and were brought back to the factory with the permission of the Customs Officers at JNCH. The Appellant informed the same to the Jurisdictional Central Excise Officers who thereafter along with Inspector visited the factory of the Appellant and verified the condition of the damaged goods.Insurance claim in respect of the same was also settled by the Insurance Company, excluding the Central Excise duty element.
Thereafter, the Appellant filed a claim for remission of duty under Rule 21 of the Central Excise Rules, 2002 ("the Excise Rules") on August 15, 2008 which was rejected by the Department on the ground that destroyed finished goods had been removed from factory premises for export, thereby primary condition of eligibility for remission of duty on destroyed goods is not fulfilled as required under Rule 21 of the Excise Rules.
On appeal being filed to the Hon'ble CESTAT, Ahmedabad, theHon'ble Single Member Bench heard the appeal and after observing that there were two streams of view in the stated matter, referred the matter to the Hon'ble President for consideration by the Larger Bench.
The Larger Bench of the Hon'ble Tribunal decided the matter in favour of the Appellant and held as under:
- The provisions of Rule 21 of the Excise Rules provides that remission can be allowed when goods in question have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal. Hence, in absence of any clear definition of the term 'Removal', the phrase 'Place of Removal' is an important expression/factor, which has to be decided first for charging duty or considering application for remission of duty;
- As goods in question were cleared under ARE-1 for export under bond, the sale would be completed at load port only as per definition of'Place of Removal'given under Section 4(3)(c)(iii) of the Central Excise Act, 1944. Under these circumstances, ownership of the goods and duty liability is also extended upto the load port and if, the goods are not exported, concerned manufacturer will be required to discharge the duty liability. Therefore, 'Removal' also gets extended upto the port of shipment from where the sale would be completed;
- In case of clearances for exports, conditions and procedures have been prescribed vide Notification No.42/2001-CE(NT) dated June 26, 2001, which lays down that goods cleared without duty under Bond for export, if not exported within 6 months, the manufacturer will be liable to pay duty. These conditions also show that it will be the liability of the said manufacturer exporter to pay duty if the goods are not exported after clearance from factory;
- It is settled position of law that in case of exports the'Place of Removal' is the port of shipment. Even Section 5 of Central Sales Tax Act also provides that sale of goods can be deemed to take place in the course of export of goods out of the territory of India only if the sale for such export is effected by a "transfer of documents of title to the goods, have crossed the custom frontier of India";
- Accordingly, thegoods cleared for export under Bond, which were destroyed before the same could be exported, can be treated as having been destroyed before removal only.
This would be the fair interpretation of Rule 21 of the Excise Rules. Thus, primary condition of eligibility of remission of duty on the destroyed goods stands fulfilled.
Hence, the Appellant was held to be eligible for remission of duty on the goods destroyed at port of export in terms of Rule 21 of the Excise Rules.
Ignoring judicial discipline & concluding diametrically contrary to Tribunal judgment is either gross incompetence or clear irresponsible conduct
Ignoring judicial discipline and recording conclusions diametrically contrary to judgment of the Tribunal is either illustrative of gross incompetence or clear irresponsible conduct – Revenue to pay litigative costs
RGL Converters Vs. Commissioner of Central Excise, DELHI-I [2014-TIOL-2305-CESTAT-DEL]
RGL Converters (the Appellant) is amanufacturer of Printed Cork Tipping Paper (PCT). The relevant process involves procurement of Cork Tipping Base Paper (CKT) including Other Uncoated Paper and Paper Board in rolls or sheets, including jumbo rolls of specified width and length. The jumbo rolls are first trimmed on their edges to remove torn portions and then printed in rotary printing machines with specific designs with the aid of non-toxic, non-poisonous and specially formulated food grade liquid printing ink (purchased from manufacturers of those products). Thereafter, the rolls are slit to the specified, required width.
The Department contended that a new product emerges from the said process, which bears a different name, characteristic and classification i.e. PCT, classifiable under Tariff Heading No.48239014.
Accordingly, Show Cause Notice was issued to the Appellant confirming the duty liability of Rs.24,70,163 /- apart from interest and penalty.
The Appellant submitted to the Adjudicating Authority that in their own case the Hon'ble CESTAT held that the said process does not amount to manufacture so as to be charged to Central Excise duty.However, the Adjudicating Authority rejected the arguments of the Appellant on the basis that the judgment of the Hon'ble CESTAT were challenged before the Hon'ble Delhi High Court and the Hon'ble Delhi High Court had dismissed the Department's appeal only on the ground of limitation and not on merits. Hence the order of the Hon'ble CESTAT had not attained finality and thus unworthy of efficacy as a binding precedent. The Commissioner (Appeals) also took a similar view and rejected the appeal filed by the Appellant.
Being aggrieved, the Appellant preferred an appeal to the Hon'ble CESTAT, Delhi.
The Hon'ble CESTAT, Delhi held that:
- It is a trite principle that a final order of this Tribunal is an operative judgment per-se, not contingent on ratification by any higher forum, for its vitality or precedential authority. The fact that Department's appeal against the judgment of this Tribunal was rejected only on the ground of bar of limitation and not in affirmation of the conclusions recorded on merits, does not derogate from the principle that a judgment of the Tribunal is per se of binding precedential vitality qua Adjudicating Authorities lower in the hierarchy, such as a primary Adjudicating Authority or Commissioner (Appeals);
- It is axiomatic that judgments of this Tribunal have precedential authority and are binding on all quasi-judicial authorities. If an Adjudicating Authority is unaware of this basic principle, the Authority must be inferred to be inadequately equipped to deliver the quasi-judicial functions entrusted to his case.If the Authority is aware of the hierarchical judicial discipline (of precedents) but chooses to transgress the discipline, the conduct amounts to judicial misconduct, liable in appropriate cases for disciplinary action;
- The Authorities in this case, have chosen to ignore judicial discipline and have recorded conclusions diametrically contrary to the judgment of this tribunal. This is either illustrative of gross incompetence or clear irresponsible conduct and a serious transgression of quasi-judicial norms by the Authorities.
Accordingly, the Hon'ble Tribunal quashed the order of the Adjudicating Authority and the Commissioner (Appeals) and directed the Department to pay the Appellant an amount of Rs. 10,000 within a month.
Further, the Registrar was also directed to communicate a Copy of the Order to the Central Board of Excise and Customs and to the Secretary (Revenue), Ministry of Finance, Government of India, for information.
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