Gujarat High Court
Cebon Apparels P. Ltd vs The Commissioner Central Excise on 18 January, 2021
Bench: Ilesh J. Vora
C/TAXAP/55/2020 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 55 of 2020
With
CIVIL APPLICATION (FOR INTERIM RELIEF) NO. 1 of 2020
In R/TAX APPEAL NO. 55 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/
and
HONOURABLE MR. JUSTICE ILESH J. VORA Sd/
================================================================
1 Whether Reporters of Local Papers may be allowed NO
to see the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
================================================================
CEBON APPARELS P. LTD.
Versus
THE COMMISSIONER CENTRAL EXCISE
================================================================
Appearance:
MR PRAKASH SHAH, SR.ADVOCATE with MR DHAVAL SHAH for the
Appellant(s) No. 1
MR JAIMIN A GANDHI for the Opponent(s) No. 1
================================================================
CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 18/01/2021
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
C/TAXAP/55/2020 JUDGMENT
1. This Tax Appeal under Section 35G of the Central Excise
Act, 1944 (for short, 'the Act 1944') is at the instance of an
assessee and is directed against the order passed by the
Customs, Excise and Service Tax Appellate Tribunal, West Zonal
Bench at Ahmedabad, dated 3rd December 2019 passed in the
Excise Appeal No.11457 of 2017, by which the Tribunal quashed
and set-aside the Order in Original passed by the Commissioner
and allowed the appeal by way of remand to the adjudicating
authority for the purpose of passing a fresh order.
2. The appellant has proposed the following two questions of
law for the consideration of this Court :
"(a) Whether in the facts and in the circumstances of the
case and in law, the Appellate Tribunal was right in
remanding the proceedings to the adjudicating authority for
passing fresh order when neither the Appellant nor the
Respondent requested for remand of the proceedings ?
(b) Whether in the facts of the case and in law the
Appellate Tribunal was right in not setting aside the order of
the Respondent after having held that demand for duty
cannot be sustained for non-compliance of procedure under
notification no.42/2001-CE ?"
3. The Appeal is ordered to be admitted on the above referred
two substantial questions of law and is taken up for final hearing
forthwith with the consent of the learned counsel appearing for
the parties.
C/TAXAP/55/2020 JUDGMENT
4. The appellant came to be served with a show-cause notice
dated 20th January 2016 issued by the Commissioner of Central
Excise and Service Tax, Valsad Commissionerate, calling upon
the appellant to show-cause as to why :-
(i) Excisable goods valued at Rs.19,67,64,933/- during
the period from March 2011 to February 2013 should not be
confiscated as per the provisions of Rule 25 of the Central
Excise Rules, 2002.
(ii) Central Excise duty involved amounting to
Rs.2,11,79,188/- (Basic Excise Duty of Rs.2,05,62,316/- +
Edu. Cess of Rs.4,11,248/- S&H.E.S. Cess of
Rs.2,05,624/-) as detailed in Annexure "A" to this SCN
should not be demanded and recovered from them under the
proviso to Section 11A(1) (for the period upto 07.04.2011)
and under Section 11A(4) (for the period 08.04.2011
onwards) of the Central Excise Act, 1944 on the quantity of
goods removed for export during the period from March 2011
to February 2013.
(iii) Penalty should not be imposed on them under Section
11AC(1)(c) of the Central Excise Act, 1944 read with Rule 25
of the Central Excise Rules, 2002 for such contravention.
(iv) Interest at appropriate rate should not be paid by
them under Section IIAB (for the period upto 07.04.2011)
and under Section 11AA (for the period 08.04.2011
onwards) of the Central Excise, Act, 1944.
C/TAXAP/55/2020 JUDGMENT
5. It appears from the materials on record that the appellant
is engaged in the manufacturing of "Readymade Garments"
which are classified under Chapters 61 and 62 respectively of
the Central Excise Tariff Act, 1985.
6. The controversy involved in the present litigation is with
respect to the fact, whether actual export had taken place of the
goods or not.
7. It is the case of the Revenue that when the goods liable to
excise duty came to be exported by the appellant, the appellant
was required to follow the procedure for export without payment
of duty as prescribed under the Notification No.42/2001-CE
(N.T.) dated 26th June 2001, as amended, issued under Rule 19
of the Central Excise Rules, 2002.
8. The adjudicating authority passed the Order in Original
dated 30th March 2017 confirming the demand of the Central
Excise duty and also imposing penalty. The operative part of the
Order in Original reads thus :
"ORDER
(i) I confirm demand of Central Excise duty of
Rs.2,11,79,188/- (BED Rs.2,05,62,316/- = Education Cess
Rs.4,11,248/- + H&S Education Cess Rs.2,05,624/-)
(Rupees Two Crore Eleven Lakh Seventy Nine Thousand
One Hundred Eighty Eight only) Section 11A(1) & 11A(4)
(applicable during relevant time) of Central Excise Act, 1944.
C/TAXAP/55/2020 JUDGMENT
(ii) I order to pay interest, at applicable rate(s) on Central
Excise duty determined at (i) above under Section 11AB (for
the period upto 07.04.2011) and 11AA (for the perod from
08.04.2011 onwards) of the Central Excise Act, 1944.
(iii) I impose penalty of Rs.2,11,79,188/- on M/s.Cebon
Apparels Pvt. Ltd., C-4/5/18/19/20/22, Udyog Nagar,
Navsari under Section 11AC(1)(c) of the Central Excise Act,
1944 read with Rule 25 of Central Excise Rules, 2002.
However, I give them option to pay reduced penalty of
Rs.52,94,797/- (@ 25% of Rs.2,11,79,188/-) in terms of
Section 11AC(1)(e) ibid read with Explanation 1(iii) to Section
IIAC ibid subject to the condition that duty of
Rs.2,11,79,188/- and interest thereon as well as reduced
penalty of Rs.52,94,797/-, all are paid by them within 30
days of the receipt of this Order."
9. The appellant, being dissatisfied with the order passed by
the Commissioner referred to above, preferred an appeal before
the appellate tribunal. The appellate tribunal passed the
impugned order dated 3rd December 2019, holding as under :
"5. We have carefully considered the submission made by
both the sides and perused the records. We find that in
respect of export of readymade garments made by the
appellant, the Excise Duty demand was confirmed by the
Adjudicating authority only on the ground that the procedure
prescribed under Notification No.42/2001-CE(NT) was not
followed.
C/TAXAP/55/2020 JUDGMENT
6. We find that the government has prescribed a simplified
procedure particularly for those units who are not clearing
their goods in home consumption but entire production is
exported. In this regard various circulars were issued from
time to time. It is observed that as regard the readymade
garment, there is a specific circular No. 705/21/2003-CX
dated 8.04.2003 was issued. According to which the
appellant was suppose to follow the simplified procedure as
prescribed in the said circular that means the appellant was
not required to follow the procedure as prescribed under
Notification 42/2001-CE (NT). Therefore, we are of the Prima
Facie view that the demand only on the basis that the
appellant have not followed the procedure prescribed under
Notification 42/2001-CE(NT) will not sustain. However, in
any case the exports of goods have to be established. In the
present case there is no much dispute raised as regard
export of goods.
7. We find that the appellant by Miscellaneous Application
submitted some vital documents which were obtained under
RTI, after the Adjudication Order was passed. We find that
those documents were not considered while passing the
Adjudication Order. Since the veracity of these documents
needs to be verified on factual background, which can be
done by the Adjudicating Authority. Therefore, in our
considered view the matter needs to be remanded to the
Adjudicating Authority, having expressed our view to
remand the matter, We make it clear that even though the
appellant have not followed the procedure prescribed under
Notification No.42/2001-CE (NT) but on the basis of all the
C/TAXAP/55/2020 JUDGMENT
evidences and documents if it is established that the goods
have been exported, demand of Excise Duty on export
clearances will not sustain. The issue of limitation is also
kept open.
8. We thus set aside the impugned Order and allow the
appeal by way of remand to the Adjudicating Authority for
passing a fresh order."
10. The plain reading of the aforesaid order passed by the
appellate tribunal would indicate that the appellate tribunal
disagreed with the finding recorded by the adjudicating authority
that the appellant had not followed the procedure prescribed
under the Notification No.42/2001-CE(N.T.) referred to above.
11. The appellate tribunal took the view that the appellant was
obliged to follow the simplified procedure as prescribed in the
circular referred to in the order passed by the Tribunal and the
said procedure had in fact been followed. The Tribunal has also
recorded a finding that as such no dispute had been raised as
regards the actual export of the goods. However, the Tribunal
thought fit to remand the matter directing the adjudicating
authority to take into consideration the documents evidencing
actual export of goods.
12. Being dissatisfied with the order passed by the Tribunal
remanding the matter to the adjudicating authority, the
appellant is here before this Court with the present appeal.
C/TAXAP/55/2020 JUDGMENT
13. We have heard Mr.Prakash Shah, the learned senior
counsel assisted by Mr.Dhaval Shah, the learned counsel
appearing for the appellant, and Mr.Jaimin Gandhi, the learned
standing counsel appearing for the respondents.
14. The controversy involved in the present litigation is in a
very narrow compass. We are of the view that there was no good
reason for the appellate tribunal to remand the matter to the
adjudicating authority. We take notice of the fact that during the
pendency of the adjudication proceedings certain information
was called for by the Deputy Commissioner from the
Superintendent, Central Excise Range-I, Navsari. We may refer
to the letter dated 15th December 2016 (Annexure-1, Page-276).
The order reads thus :
"To,
The Deputy Commissioner,
Central Excise, Customs & S.Tax,
Divn. - Valsad.
Sir,
Sub.- SCN F.No.V(Ch.20&21)15-56/Dem/14-15 dated
20.1.2016 issued to M/s.Cebon Apparels Pvt. Ltd.,
C-4/5/18/19/20/22, Udyog Nagar, Navsari - m/reg.:
This is to inform that during Personal Hearing, in defence
submission, the assessee submitted that :
(i) the readymade garments on which duty has been
demanded in present SCN were actually exported. They
have submitted copies of Shipping Bill, Invoices, Bank
Realization Certificate and Mate Receipt.
C/TAXAP/55/2020 JUDGMENT
(ii) They have followed and fulfilled the condition of
Board's Circular No.705/21/2003-CX dated 8.4.2003 and
Circular F.No.609/162/2002-DBK dated 14.11.2003 and
their case is covered by the said circulars. They have been
satisfying condition of clearance of goods including waste
for home consumption less than 5% of their export turnover
and hence they were not required to follow ARE-1
procedure.
(iii) the unit was audited in December-2011 and fact of
exporting readymade garments by them was never in
dispute.
(iv) the goods have actually been exported and All
Industry Rate of Duty Drawback has also been claimed from
Nahva Sheva Customs.
In this context, it is requested to verify :
(i) whether they were eligible to avail the benefit
extended vide Circular No.705/21/2003-CX dated 8.4.2003
and Circular F.No.609/162/2002-DBK dated 14.11.2003.
(ii) whether they have followed and fulfilled the
conditions of Circular No.705/21/2003-CX dated 8.4.2003
and Circular F.No.609/162/2002-DBK dated 14.11.2003.
(iii) whether the goods in question have been exported or
otherwise.
C/TAXAP/55/2020 JUDGMENT
(iv) Provide a copy of said Audit Report.
It is therefore, requested to verify the genuineness of the
claim and submit your reply within a week."
15. The Superintendent replied vide letter dated 31 st January
2017 as under :
"To,
The Deputy Commissioner,
Central Excise, Customs & S.Tax,
Division - Service Tax, Valsad.
Sir,
Sub: SCN F.No.V(Ch.20&21)15-56/Dem/14-15 dated
20.1.2016 for the period from March 11 to Feb. 13 issued to
M/s.Cebon Apparels Pvt. Ltd., C-4/5/18/19/20/22, Udyog
Nagar, Navsari - m/reg.:
Please refer to letter F.No.V (CH.61, 62 &
63)/03-05/Dem/VLD/14-15 dated 15.12.2016, issued by
the Superintendent (Adj. CP), Central Excise,
Commissionerate, Valsad and addressing to your kind office
and this office letter of even dated 04.01.2017 on the above
cited subject matter.
In this connection the revised report is as under :
(i) Yes, they are eligible to avail the benefit extended vide
Circular No.705/21/2003-CX dated 08.04.2003 and
Circular F.No.609/162/2002-DBK dated 14.11.2003. The
assessee are primarily exporting all their production. The
C/TAXAP/55/2020 JUDGMENT
cleared waste and rejects for home consumption on
payment of duty which does not exceed 5% of their export
turnover during the SCN period.
(ii) Yes.
(iii) Yes, checked the Xerox Copy of Shipping Bill and BRC
for the entire period covering the SCN. The goods exported,
under AIR Drawback Scheme and Focus License. The goods
concerned to Shipping Bill No.6527788 and Shipping Bill
No.6527786 are not exported, due to ship sink in the sea (as
stated by assessee)
Dated 05.10.2011 Duty 10%
FOB GBP
FOB-6527788 - 631132-8 7909.98
6527786 - 351779-2 4405.5
(iv) N.A.
As per Circular No.96/2003-Cus dated 14.11.2003, through
Central Excise Circular No.705/21/2003-CX dated
08.04.2003, the Board, after considering the specific
situation of the readymade garment sector has decided to
extend the Simplified Export Procedure to ready made
garments (both - knitted and woven categories) because
these manufacturers primarily export almost all of their
production and their clearances of rejects and waste for
home consumption are minimal. Therefore, according to this
procedure, their exports can be cleared on the invoices
instead of regular ARE-1.
C/TAXAP/55/2020 JUDGMENT
The assessee entitle for AIR Drawback and claim is
genuine."
16. The Superintendent has, in no uncertain terms, stated in
his report that the goods were actually exported and the same is
evidenced by the documents in the form of shipping bills and
BRC for the entire period covering the show-cause notice. The
goods were exported under the drawback scheme and focus
license.
17. We inquired with the learned standing counsel appearing
for the respondent, whether he had any doubt as regards the
report of the Superintendent referred to above. Mr.Gandhi would
submit that as such he has no doubt as regards the genuineness
of the report of the Superintendent but, at the same time, he
insisted that let such report be looked into by the adjudicating
authority as directed by the appellate tribunal.
18. We are of the view that the appellate tribunal, on its own,
could have looked into the report instead of remitting the entire
matter to the adjudicating authority for the purpose of passing a
fresh order, more particularly, being convinced as regards the
export of goods.
19. In such circumstances referred to above, we are of the view
that the remand of the matter would be an empty formality,
more particularly, when there is evidence on record in the form
of the report of the Superintendent that the export of goods had
actually taken place.
C/TAXAP/55/2020 JUDGMENT
20. In the result, this Appeal succeeds and is hereby allowed.
The impugned order passed by the appellate tribunal to the
extent it remitted the matter to the adjudicating authority, is
quashed and set-aside. Rest of the order passed by the appellate
tribunal stands affirmed. The two substantial questions of law
are answered accordingly in favour of the appellant-assessee and
against the Revenue.
21. The Civil Application stands disposed of.
(J. B. PARDIWALA, J.)
(ILESH J. VORA, J.)
/MOINUDDIN
