Calcutta High Court
Commissioner Of Cenral Excise vs M/S. Tata Steel Limited (Bearing ... on 18 April, 2022
CEXA NO. 25 OF 2021
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SPECIAL JURISDICTION (CENTRAL EXCISE)
ORIGINAL SIDE
RESERVED ON: 04.04.2022
DELIVERED ON: 18.04.2022
CORAM:
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
IA NO. GA/02/2021
IN
CEXA NO. 25 OF 2021
COMMISSIONER OF CENRAL EXCISE, HALDIA COMMISSIONERATE
VERSUS
M/S. TATA STEEL LIMITED (BEARING DIVISION)
Appearance:-
Mr. Uday Shankar Bhattacharya, Adv.
Mr. S. Seal, Adv.
Mr. B. Bhattacharya, Adv.
.....For the Appellant.
Dr. Samir Chakraborty, Sr. Adv.
Mr. Avra Mazumdar, Adv.
Sudheshna Mazumdar, Adv.
Binayak Gupta, Adv.
.....For the Respondent.
Page 1 of 20
CEXA NO. 25 OF 2021
JUDGMENT
(Judgment of the Court was delivered by T.S.SIVAGNANAM, J.)
1. This appeal by the revenue filed under Section 35 G of the Central
Excise Act, 1944 (the Act) is directed against the order dated 13.01.2020
passed by the Customs, Excise and Services Tax Appellate Tribunal, Eastern
Zonal Bench, Kolkata in Excise Appeal No. 444 of 2012. By the said order,
the appeal filed by the respondent assessee was allowed by the Learned
Tribunal. The appellant revenue has raised the following substantial
questions of law for our consideration:-
(i) Whether in absence of any evidence the entire findings of the
Learned Tribunal is perverse in holding conclusively that the
inputs which have not been received back by the respondent-
assessee from the job workers, is 'waster and scrap' only?
(ii) Whether the value of the said non-returned inputs as adopted
by the respondent-assessee and confirmed by the Learned
Tribunal is correct when the footings of the entire findings is
based on some assumptions, without having any conclusive
evidence?
(iii) Whether the Respondent is liable to pay an amount
equivalent to the Cenvat Credit attributable to the inputs or
capital goods by debiting the Cenvat Credit or otherwise if the
inputs are not received back within 180 days from the
premises of job workers in terms of Rule 4(5) (a) of the Cenvat
Credit Rules 2002/2004?
(iv) Whether the Respondent violated and contravened the
mandatory provision of Rule 4(6) of the Cenvat Credit Rules,
2002 by not obtaining permission from the jurisdictional
Central Excise Authority when the goods are not received
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back into the factory and are removed from Job Workers'
premises?
(v) Whether the impugned Order of the Learned Tribunal dehors
the settled principles of law pertaining to the issue of Res
judicata which is not applicable in tax matter?
2. The facts leading to the present appeal can be summarised as follows:-
2.1 The respondent assessee is a manufacturer of Ball and Roller bearing
classifiable under Sub-heading No. 8482 of the Central Excise Tariff Act,
1985 (Tariff Act).The respondent assessee upon availing Cenvat Credit on
the duty paid, a part of such raw materials procured by them is sent out for
processing work to job workers. After processing is completed, the races are
brought back factory which are used in the manufacture of bearings. The
waste and scrap generated are not brought back but duty and cess was
being paid by the respondent assessee on monthly basis on such waste on
quantity as per the standard input-output ratio and value of similar waste
and scrap generated in the factory and sold from the assessee's factory. The
then Commissioner, Central Excise, Haldia issued show cause notice dated
31.03.2004, referring to Rule 4(5)(a) of the Cenvat Credit Rules, 2002 and
stated that the respondent assessee instead of paying such amount equal
and through Cenvat attributable to the quantity of inputs not received back,
have paid Central Excise duty on the said inputs not received back within
the factory treating them as waste and scarp and the Central Excise duty so
paid on such value was much less than Cenvat Credit attributable to such
quantity of inputs not received back within the factory. Therefore, it was
alleged there was short payment of duty and this was on account of wilful
CEXA NO. 25 OF 2021
suppression of facts with an intent to evade the Central Excise laws. The
assessee was called upon to show cause as to why the excise duty amount
should not be recovered under Rule 12 of the Credit Rules read with Section
11 A of the Act, why penalty equal to the Central Excise duty should not be
imposed and recovered under Rule 13 of the Credit Rules read with Section
11 AC of the Act and why interest as applicable should not be charged
under Section 11 AB of the Act.
2.2 The assessee submitted their explanation stating that in the
manufacture of bearings, two types of raw materials are used namely steel
tubes and steel bars and the bearings consists of an outer ring and an inner
ring and these rings are carved out from the solid steel tubes and bars. The
steel tubes and bars purchased by the assessee are sent to job workers for
extracting the inner and outer rings and the bearing finally assembled in the
assessee's factory at Kharagpur. The assessee also explained as to how they
have adopted various standards so as to have better control over the
manufacturing process at the job workers end as each type of tube and bar,
based on its dimensions are used to produce pre-determined number of
rings and in that process certain pre-determined quantity of waste and
scrap is also generated. According to the assessee, these quantities are as
per industry standards. Thus, the assessee contended that they are aware of
the total quantity of waste and scrap that would be generated from a certain
dispatch of tubes and bars to the job workers. Further it was stated that
challan-wise statement is prepared mentioning the equivalent weight of the
rings as per the standards and the balance amount is treated as scrap. The
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scraps so generated is normally manufacturing loss and the same is not
brought back to the assessee's factory premises as it would be uneconomical
to do so and therefore at the end of each month, Central Excise duty is paid
on the scrap that was generated based on challan-wise statement.
Therefore, it was submitted that there is no case of non-payment of duty on
the goods sent for job workers.
2.3 The then Commissioner adjudicated the show cause notice and by a
speaking order dated 25.05.2004 dropped the proceedings. Since the
findings recorded by the Commissioner would have a bearing on the final
decision to be taken in this appeal, we quote the relevant paragraphs of the
findings recorded by the Commissioner in the order of adjudication:-
At the outset, I find that the notice have sent tubes and
pipes to the job workers for turning the same into rings
of certain sixe as per the terms of contract entered in to
by the noticee and their job workers by maintaining
conversion standards as prescribed by the noticee firm.
While processing the tubes and pipes into rings, scrap
is generated automatically at the job workers premises
in the form of cuttings, parings, and end-pieces of
tubes as generation of waste is an inevitable and
inescapable fact in the process of manufacture of
goods and if the same is excisable for their specific
entry in the CETA then duty is required to be paid on
such waste and scrap generated in the course of
processing of inputs. In the instant case I find that the
quantity of non-returnable inputs/processed inputs are
nothing but waste and scrap generated and duly
declared as manufactured goods by the notice for
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which appropriate CE duty liability has duly been
discharged. Hence CE duty is leviable and payable as
if the original manufacturer removes them as waste
and scrap from the job workers premises on payment
of CE duty. On the other hand if such waste and scrap
were to be returned to the factory, the same were then
required to be removed from the factory on payment of
appropriate CE duty. Hence, I observe that there is no
loss of duty or evasion of duty on waste and scrap
removed from the job workers' end. As per rule 4(6) of
CCR, '02. Even waste and scrap can be removed from
the premises of the job workers. Hence it is not a case
of evasion of duty as alleged in the SCN.
I also observe that pipes and tubes of different sizes
and shapes are the basic raw material required for the
manufacture of ball and roller bearings. In the process
of such manufacture the tubes and pipes are required
to be cut into pieces and machined suitably to be
converted into rings of different sizes and
specifications. Such rings are further processed and
fabricated to manufacture bearings. It is no practically
possible to cut tubes and pipes into smaller pieces and
machined suitably to manufacture "rings" without
generating any waste and scrap. It is an impossible
proposition to get back the entire tubes and pipes (raw
materials) from the job workers' premises after
completion of cutting and machining. It has been
provided in law that cenvat credit need not be reversed
or varied because of generation of scrap and waste
emerging out of such inputs while manufacturing the
final products. Even if a part of the input gets lost
during the process of manufacture cenvat credit need
CEXA NO. 25 OF 2021
not be reduced proportionately whether such loss of
input is visible or an invisible loss. The generation of
ferrous waste and scrap here is in the nature of normal
processing to that quantum of input attributable to
such processing loss.
I further find that the notice has paid CE duty on scrap
generated and cleared from the job workers premises
by keeping a separate record for the same and the
end-pieces of tubes and bars are nothing but waste
and scrap which cannot be processed any further by
the manufacture for the purpose of manufacture of
finished goods. Even though rule 57 F has been
dispenses with w.e.f. 01.04.2000.
circulars/instructions issued earlier in connection and
consistent with these rules are deemed to be
considered as valid and effective under the
corresponding provisions of the rules, so far the spirit
of rule 14 of CCR, 02 and rule 33 of CE Rules, 02 are
concerned.
In view of above discussions I come to the conclusions
that the allegations made in the SCN are not
sustainable and there is no requirement under law to
reverse the credit or pay an amount equivalent to the
cenvat credit attributable to that quantity of input not
received back within 180 days from the job-workers
premises where the inputs were sent for processing.
In view of the above findings, I drop the proceedings in
favour of the M/s. TISCO Ltd. (Bearing Division),
Nimpura, Kharagpur and withdraw the show cause
notice.
CEXA NO. 25 OF 2021
2.4 The above order of adjudication had attained finality and the respondent
assessee were carrying on their activities in tune with the practise followed
by them in the earlier years and the correctness of which was tested for the
period from 2002-03 to 2003-04 (up to July 2003) and the Commissioner
held that the assessee's submissions were correct and the show cause notice
proposing to recover Central Excise duty, penalty and interest was dropped.
2.5 After about 3, years after the earlier show cause notice was issued the
new incumbent Commissioner of Central Excise, Haldia Commissionerate,
issued show cause notice dated 30.04.2007.The allegations were identical to
that of the show cause notice dated 31.03.2004 and the period also overlaps.
The period covered in the show cause notice dated 30.04.2007 is from 2002-
03 to 2005-06 (up to July 2005). Thus, the period between 2002 to July
2003 would overlap as it was the period for which the show cause notice
dated 31.03.2004 was issued which show cause notice was dropped after
adjudication. The assessee submitted their reply and the Commissioner by
order dated 27.03.2012 confirmed the proposal in the show cause notice and
determined the excise duty, levied penalty and interest. Aggrieved by the
same, the assessee filed appeal before the Learned Tribunal. The Learned
Tribunal after considering the facts of the case as also the earlier decisions
of the Tribunal and more particularly the order of the Commissioner dated
25.05.2004 (quoted above) allowed the appeal. The revenue is before us
challenging the correctness of the order passed by the Learned Tribunal.
CEXA NO. 25 OF 2021
3. We have elaborately heard the Learned Counsels Mr. Uday Sankar
Bhattacharya assisted by Mr. S. Seal and Ms. B. Bhattacharya for the
appellant and Dr. Samir Chakraborty, Senior Advocate assisted by Mr. Avra
Mazumdar, Sudeshna Mazumdar and Binayak Gupta for the respondent
and carefully perused the materials placed on record.
4. The first aspect which has drawn our attention is the manner in
which the Commissioner of Central Excise had proceeded with the matter.
Initially we were under the impression that the show cause notice dated
30.04.2007 has been issued based upon certain facts which had been culled
out by the authorities much after the Central Excise duty was paid by the
assessee in respect of the waste and scrap not returned to the assessee's
factory from the job workers. However, after close scrutiny, we found that
the show cause notice dated 30.04.2007 is an exact replica of the show
cause notice dated 31.03.2004 except for the period and the amount which
was proposed to be demanded as Excise duty. In our considered view, the
then Commissioner could not have proceeded to issue such a show cause
notice except under certain circumstances, namely upon discovery of fresh
material which was not subject matter of any earlier adjudication process
and such material came to light upon discovery by the department or upon
intelligence and were not culled out from the books of the assessee. This is
so because the Commissioner sought to invoke the extended period of
limitation by invoking Section 11 A of the Act. On a reading of show cause
notice dated 30.04.2007, it is clear that the show cause notice is based
upon the facts which are already on record. What is more important and
CEXA NO. 25 OF 2021
disturbing is the fact that the Commissioner who issued the show cause
notice dated 30.04.2007 was aware of the order-in-original dated
25.05.2004 by which his predecessor who had issued the first show cause
notice dated 31.03.2004, after adjudication had dropped the proceedings.
Thus, unless the new incumbent Commissioner had fresh materials on
hand, he could not have proceeded to issue the show cause notice that too
were part of the period overlaps with the period covered in the earlier show
cause notice and without dealing with or mentioning the order-in-original
dated 25.05.2004. Thus, it is a clear case of abdication of the statutory
responsibility cast upon officer. That apart, the revenue has preferred this
appeal without even raising any specific ground in the Memorandum of
Appeal, as to how the order of adjudication dated 30.04.2007 is sustainable
despite the order of the Commissioner dated 25.05.2004. In fact, such a
ground can never be taken because the department has accepted the order-
in-original dated 25.05.2004 and allowed it to attain finality. Therefore,
applying the principles of consistency, the order binds the department as
the transaction is identical and there is no fresh materials available with the
Commissioner justifying the issuance of the show cause notice dated
30.04.2007. Merely by stating that the earlier order of adjudication came to
be passed without calling for any conclusive evidence cannot be a ground to
ignore the earlier order of adjudication. Precisely for such reason, we had
extracted the relevant paragraphs of the order of adjudication dated
25.05.2004. A perusal of the said order shows that it is a speaking order
and the Commissioner has assigned reasons as to why the proposal in the
CEXA NO. 25 OF 2021
show cause notice should be dropped. Therefore, the department was wholly
unjustified in not only issuing the show cause notice dated 30.04.2007 but
also by preferring this appeal. In fact, we are of the opinion that this is a fit
case where exemplary cost has to be imposed on the concerned official of the
department for attempting to resurrect a settled issue. However, taking note
of the persuasive submissions of Mr. Uday Sankar Bhattacharya we refrain
from imposing costs.
5. The legal issue as to whether the show cause notice can be issued on
the same grounds for the part of the relevant period when the earlier show
cause notice was dropped by the Commissioner after adjudication, is no
longer res integra and in this regard we refer to the decision of the Hon'ble
Supreme Court relied on by the Dr. Samir Chakraborty, Learned Senior
Counsel in the case of Jayaswal Neco Limited Versus Commissioner of
Central Excise, Nagpur 1. Reliance was placed on the decision in the case
of Birla Corporation Ltd. Versus Commissioner of Central Excise 2,
wherein it was held that the department having accepted the principles laid
down in the earlier case cannot be permitted to take a contra stand in the
subsequent cases. It was noted that the legal issue has already been decided
in the case of Hindustan Gas and Industries Ltd. Versus Commissioner
of Central Excise, Vadodara 3, and the department having accepted the
principle laid down cannot be permitted to take a stand different than the
principles laid down in the earlier case. In this regard, it will be beneficial to
refer to the decisions of the Hon'ble Supreme Court in CCE Versus Bigen
(2006) 195 E.L.T. 142 (S.C.)
2005 (186) E.L.T. 266 (S.C.)
1996 (88) E.L.T. 403
CEXA NO. 25 OF 2021
Industries Limited 4, Boving Foress Ltd. Versus CCE 5, Marsons Fan
Indusries Versus CCE 6, Indian Oil Corporation Versus CCE 7. In
Commissioner of Central Excise, Chennai Versus Sivanesan &
Company 8.
6. The learned Tribunal held that the earlier decision between the same
parties on same facts having attained finality for want of challenge by the
department, revenue is precluded from taking different stand in a
subsequent appeal. In support of such conclusion the learned Tribunal
referred to the decision in Commissioner Versus Bigen Industries Ltd.9
and Commissioner Versus Amar Bitumen & Allied Products Pvt. Ltd. &
Others 10. The decision of the learned Tribunal in Sivanesan & Co. was
approved by the Hon'ble Supreme Court as the special leave petition was
dismissed as reported in Commissioner Versus Sivanesan & Co.11 .
7. In Radhasaomi Satsang Versus CIT 12, while considering the
proceedings under the Income Tax Act, it was held that strictly speaking, res
judicata does not apply to income tax proceedings as each assessment year
being a unit what is decided in one year may not apply in the following year
but, where a fundamental aspect permeating through the different
assessment years and were found as a fact one way or the other and the
parties have allowed that position to be sustained by not challenging the
2006 (197) E.L.T. 305 (S.C.)
2006 (202) E.L.T. 389 (S.C.)
2008 (225) E.L.T. 334 (S.C.)
2006 (202) E.L.T. 37 (S.C.)
2007 (209) E.L.T. 65 (Tri.- Chennai)
2006 (197) E.L.T. 305 (S.C.)
2006 (202) E.L.T. 213 (S.C.)
2007 (211) E.L.T. A77 (S.C.)
(1992) 193 ITR 321 (S.C.)
CEXA NO. 25 OF 2021
order, it would not be at all appropriate to allow the position to be changed
in a subsequent year. The Decision in Radhasaomi Satsang was applied in
the case of Commr. of Central Excise and Customs Versus Mundra Port
& Special Economic Zone Ltd.13
8. The above decisions would squarely apply to the facts of the case and
in fact, the facts before us are much better and stronger than the facts in
the decided cases referred supra. We say so because the Commissioner who
issued the show cause notice dated 31.02.2004, after receiving the reply
from the respondent assessee and after hearing the authorized
representative in person by a speaking order dated 25.05.2004 dropped the
proceedings. The department did not challenge the said order before the
learned Tribunal. That apart, part of the period for which the show cause
notice dated 30.04.2007 was issued overlaps the period covered in the
earlier show cause notice dated 31.03.2004. Therefore, we can safely
conclude that the proceedings initiated in the year 2007, presumably after
change of the Commissioner, were without any legal basis and can also be
termed as misuse of statutory power conferred on the authority.
9. The next aspect to be seen is as to whether the show cause notice
dated 30.04.2007 was issued within the time permissible or was it time
barred. Admittedly, the show cause notice was not issued within the time
prescribed under Section 11A (1) of the Act. But the Commissioner had
invoked the extended period. If such be the case, what are the fundamental
tenets which are required to be fulfilled for invoking the extended period of
2011 (21) S.T.R. 361 (Guj.)
CEXA NO. 25 OF 2021
limitation is required to be seen. For the same subject-matter the earlier
show cause notice dated 31.03.2004 was issued. After adjudication the
proceedings were dropped, the order attained finality. On the same subject-
matter in the year 2007 another notice was issued of which part of the
period overlapped. If such is the case, the department can never bring the
case of the assessee to be a wilful suppression or mis-statement and if that
be the legal position, the extended period under Section 11A cannot be
invoked. In this regard, we place reliance on the decision of the Hon'ble
Supreme Court in Nizam Sugar Factory Versus Collector of Central
Excise, A.P.14 The operative portion of judgment is as follows:-
Without going into the question regarding
classification and marketability and leaving the
same open, we intend to dispose of the appeals on
the point of limitation only. This Court in the case of
P & B Pharmaceuticals (P) Ltd. V. Collector of
Central Excise reported in (2003) 3 SCC 599 =
2003 (153) E.L.T. 14 (S.C.) has taken the view that
in a case in which a show cause notice has been
issued for the earlier period on certain set of facts,
then, on the same set of facts another SCN based
on the same/similar set of facts invoking the
extended period of limitation on the plea of
suppression of facts by the assessee cannot be
issued as the facts were already in the knowledge
of the department. It was observed in para 14 as
follows:
2006 (197) E.L.T. 465 (S.C.)
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"14. We have indicated above the facts which
make it clear that the question whether M/s.
Pharmachem Distributors was a related person has
been the subject-matter of consideration of the
Excise authorities at different stages, when the
classification was filed, when the first show cause
notice was issued in 1985 and also at the stage
when the second and the third show cause notices
were issued in 1988. At all these stages, the
necessary material was before the authorities.
They had then taken the view that M/s.
Pharmachem Distributors was not a related person.
If the authorities came to the conclusion
subsequently that it was a related person, the
same fact could not be treated as a suppression of
fact on the part of the assessee so as to saddle
with the liability of duty for the larger period by
invoking proviso to Section 11A of the Act. So far
as the assessee is concerned, it has all along been
contending that they were not related person, so, it
cannot be said to be guilty of not filling up the
declaration in the prescribed proforma indicating
related persons. The necessary facts had been
brought to the notice of the authorities at different
intervals from 1985 to 1988 and further, they had
dropped the proceedings accepting that M/s.
Pharmachem Distributors was not a related person.
It is, therefore, futile to contend that there has been
suppression of fact in regard M/s. Pharmachem
Distributors being a related person. On that score,
we are unable to uphold the invoking of the proviso
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to Section 11A of the Act for making the demand for
the extended period."
This judgment was followed by this court in the
case of ECE Industries Limited v. Commissioner of
Central Excise, New Delhi reported in (2004) 13
SCC 719 = 2004 (164) E.L.T. 236 (S.C.). In para 4,
it was observed:
"4. In the case of M/s. P&B Pharmaceuticals (P)
Ltd. V. Collector of Central Excise reported in [2003
(2) SCALE 390], the question was whether the
extended period of limitation could be invoked
where the Department has earlier issued show
cause notices in respect of the same subject-
matter. It has been held that in such
circumstances, it could not be said that there was
any wilful suppression or mis-statement and that
therefore, the extended period under Section 11A
could not be invoked."
Similarly, this judgment was again followed in the
case of Hyderabad Polymers (P) Ltd. V.
Commissioner of Central Excise, Hyderabad
reported in [2004 (166) E.L.T. 151 (S.C.)]. It was
observed in para 6 :
"................On the ratio laid down in this judgment
it must be held that once the earlier Show Cause
Notice on similar issue has been dropped, it can no
longer be said that there is any suppression. The
extended period of limitation would thus not be
available. We are unable to accept the submission
that earlier Show Cause Notice was for a
subsequent period and/or it cannot be taken into
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consideration as it is not known when that show
Cause Notice was dropped. If the Department
wanted to take up such contentions it is for them to
show that that Show Cause Notice was not
relevant and was not applicable. The Department
has not brought any of those facts on record.
Therefore, the Department cannot now urge that
findings of the Collector that that Show Cause
Notice was on a similar issue and for an identical
amount is not correct."
Allegation of suppression of facts against the
appellant cannot be sustained. When the first SCN
was issued all the relevant facts were in the
knowledge of the authorities. Later on, while
issuing the second the third show cause notices the
same/similar facts could not be taken as
suppression of facts on the part of the assessee as
these facts were already in the knowledge of the
authorities. We agree with t he view taken in the
aforesaid judgments and respectfully following the
same, hold that there was no suppression of facts
on the part of the assessee/appellant.
10. Furthermore, on perusal of the show cause notice dated 30.04.2007,
we find that there is no allegation against the respondent assessee of wilful
suppression or mis-statement though the words "wilfully suppressed" has
been used in one place in the show cause notice. Mere use of the words or
expression "wilfully suppressed" with intend to avoid duty cannot hold the
assessee guilty of wilful suppression. The same has to be established by the
department by pointing out as to on what basis they have come to the prima
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facie conclusion that there has been wilful mis-statement or suppression of
facts. Therefore, mere use of the said words and expression cannot validate
the show cause notice. Therefore, the initiation of the proceedings itself is
bad in law. Further we note that it not the case of the appellant revenue that
the respondent assessee had not disclosed about the manufacturing
activities done by them as to how the quantity of scrap generated is
determined using a standardized formula which is adopted as an industrial
practice and how Central Excise Duty has been remitted. In fact, the
Commissioner does not dispute any of these facts but would only state that
the Central Excise duty so paid on such value was much less than the
Cenvat Credit attributable to such quantity not received back the factory.
There is nothing to indicate that the appellant revenue doubted the bona
fides of the respondent assessee. In such circumstances extended period of
limitation could never have been invoked in the assessee's case. Thus, if
Section 11A of the Act could not have been invoked, the question of
imposing penalty or levying interest also does not arise. All these factors are
taken into consideration and the Tribunal has rightly granted relief to the
assessee.
11. The learned Senior Counsel appearing for the respondent assessee
relied upon the decision in the case of Commissioner of Central Excise
Versus Rocket Engineering Corporation Ltd.15 In the said case the
appeal filed by the revenue was dismissed holding that it is not in dispute
that the assessee had paid duty on the scrap generated at the factory of the
2008 (223) E.L.T. 347 (Bom.)
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job worker and there is no substantial question of law arising for
consideration. The learned Senior Counsel placed reliance on the decision of
the learned Tribunal in Mahindra Hinoday Industries Ltd. Versus
Commissioner of Central Excise, Pune-I 16 and National Engineering
Ind. Ltd. Versus Commissioner of Central Excuse, Jaipur-I 17. In our
considered view, we may not be required to examine as to the propositions
as advocated on behalf of the respondent assessee as we are fully satisfied
that the initiation of proceedings commencing from issuance of the show
cause notice itself is vitiated and bad in law. Therefore, the substantial
questions of law Nos. 3 and 4 as suggested the Revenue are left over.
12. The learned Senior counsel appearing for the respondent assessee
submitted that the respondents had taken credit on the raw materials used
and when the raw materials are used finished product emerges and along
with the finished products waste is generated and this waste is removed on
the payment of duty. Therefore, it is submitted that if a product is removed
on payment of duty, the input credit can legally be availed and there is no
requirement of reversing the Cenvat Credit on a product which was cleared
on payment of duty. In support of such contention reliance was placed on
the decision of the learned Tribunal in Tulsyan NEC Ltd. Versus
Commissioner of Central Excise, Bangalore-II 18 and Commissioner of
Central Excise, Hyderabad-III Versus Allwyn Auto Ltd.19 As observed
the earlier, we are satisfied that the initiation of the proceedings by the
2013 (292) E.L.T. 456 (Tri.- Mumbai)
2015 (323) E.L.T. 205 (Tri.- Del.)
2008 (225) E.L.T. 65 (Tri.- Bang.)
2004 (178) E.L.T. 693 (Tri.- Bang.)
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Commissioner commencing to the issuance of the show cause notice was
illegal. We have also considered the binding effect of the order of
adjudication dated 25.05.2004 which has attained finality. Therefore, for
such reason we have left substantial questions of law Nos. 3 and 4 open for
consideration in an appropriate case. Hence, we are not expressing any
opinion on the effect of the decisions in Tulsyan NEC Ltd. and Allwyn
Auto Ltd. and leave the issue open to be agitated in an appropriate
proceeding.
13. For all the above reasons, we find no grounds to interfere with the
order passed by the Tribunal. Accordingly, the appeal is dismissed and the
substantial questions of law Nos. 1, 2 and 6 are answered against the
appellant revenue and substantial questions of law Nos. 3 and 4 are left
open.
(T.S. SIVAGNANAM, J.)
I agree
(HIRANMAY BHATTACHARYYA, J.)
(P.A- PRAMITA/SACHIN)
