2004 (97) ECC 311 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(B)

Shri S.S. Kang, Member (J) and Shri V.K. Agrawal, Member (T)

Aarti Steel Rolling Mills Ltd.

Versus

CCE, Noida

Appeal No. E/538/2003-NB(B)

[Arising out of Order-in-Original No. 53/Commr./Noida/2002 dated 27.11.2002 passed by the Commissioner of Central Excise, Noida (U.P.)]

Final Order No. 501/2004-B, dt. 17.6.2004, Certified on 6.7.2004

Exemption (C. Excise)

Notfn. No. 202/88-CE -- Specified final products -- Raw-material was used in the manufacture of finished products i.e. M.S. billes, which were cleared without payment of duty and sold in the market through their dealers -- Onus is on the department. The Department has not discharged. Therefore, the demand of duty is not sustainable.

Appeal allowed

PRESENT :

Shri R. Santhanam, Adv. for the appellant.

Shri O.P. Arora, SDR for the respondent.

Cases Cited :

1. CCE, Gzbd. v. H.R.R. Alloys & Steel Ltd., 2003 (58) RLT 405 (T)...................... [Para 2]

2. Mahavir Steel Mills v. CCE, Meerut, Final Order No. A/935/99-NB(DB dated 8.10.99) [Para 2]

3. Modern Steel Industries v. CCE, Meerut (Final Order No. A/511/99-NB(DB dated 26.5.99)........... [Para 2]

4. R.S. Industries v. CCE, New Delhi-1, 2003 (86) ECC 200 (Tri)............................ [Para 2]

5. Shalimar Rubber Indus. v. CCE, Cochin, 2002 (84) ECC 718 (SC)..................... [Para 2]

Per : V.K. Agrawal

M/s. Aarti Steel Rolling Mills Ltd. have filed this appeal against the Order-in-Original No. 53/02 dated 27.11.2002, by which the Commissioner of Central Excise, has confirmed the demand of Central Excise Duty Rs. 7,33,656 and imposed penalty of equivalent amount besides confiscating land building, plant, machinery with an option to redeem the same on payment of a fine of Rs. one lakh.

2. Shri R. Santhanam, learned Advocate, submitted that the appellants manufacture M.S. Bars and Rods falling under Chapter 72 of the Schedule to the Central Excise Tariff Act; that the entire duty demand is fictitious, imaginary and unsubstantiated both on facts and in law; that the duty has been demanded from them by denying the benefit of Notification No. 202/88-CE dated 20.5.1988 on the ground that the appellants had procured M.S. Billets through the dealers of M/s. Nova Udyog Ltd., who are alleged to have manipulated their raw-material account by showing fictitious sales and that M/s. Nova Udyog Ltd. had manufactured M.S. Billets clandestinely and removed the same without payment of duty; that M/s. Nova Udyog Ltd. had cleared the suppressed production to the market main stream through dealers/traders, which were floated to provide documentary cover to the goods; that the Commissioner has also held that the appellants have failed to record receipt of 304.890 MT of M.S. Billets supplied to them by the dealers of Nova Udyog Ltd.

The learned Advocate submitted that the M.S. Billets alleged to have been removed without payment of duty by M/s. Nova Udyog Ltd. have been subjected to duty by confirming the demand and imposing penalty against them; that, therefore, the question of demand of duty from the appellants by denying them exemption under Notification No. 202/88 does not arise; that the Revenue has not proved by discharging its onus that the goods received as inputs by the appellants had not been subjected to duty in the hands of the sellers thereof; that it has been held by the Appellate Tribunal in the case of CCE, Ghaziabad v. H.R.R. Alloys & Steel Ltd., 2003 (58) RLT 405 (CEGAT-Del.) that the allegation based on the fact that the name of the respondents, therein, was mentioned in G.Rs. to the effect that they had received the goods, is not sufficient to establish the allegation of receiving non-duty paid M.S. Billets; that the Tribunal has relied upon the decision in the case of Mahavir Steel Mills v. CCE, Meerut (Final Order No. A/935/99-NB(DB dated 8.10.99). He also relied upon the decision in the case of Modern Steel Industries v. CCE, Meerut (Final Order No. A/511/99-NB(DB dated 26.5.99) wherein the appeal, filed by M/s. Modern Steel Industries, was allowed in respect of the allegation of receipt of billets without payment of duty from M/s. Nova Udyog Ltd.; that the Tribunal has held that no evidence has been placed on record to show clandestine conversion of billets into flats, bars, etc. nor any evidence has been placed to prove clandestine removal of the said quantity of bars, alloys, etc. The learned Advocate also contended that onus is cast upon the Department to prove the receipt of the goods by them without payment of duty. He relied upon the decision in the case of R.S. Industries v. CCE, New Delhi-1, 2003 (86) ECC 200 (Tri) : 2003 (153) ELT 114 (Tri) and Shalimar Rubber Industries v. CCE, Cochin, 2002 (84) ECC 718 (SC) : 2002 (146) ELT 248 (SC). He, finally, mentioned on similar facts wherein M/s. Rathi Udyog Ltd., Ghaziabad were alleged to have received the inuts (sic) from M/s. Nova Udyog Ltd, which were not duty-paid, that the Commissioner of Central Excise, Meerut has dropped the demand against them vide Order-in-Original No. 30/Collector/95 dated 31.3.95.

3. Countering the arguments, Shri O.P. Arora, learned SDR, submitted that on the basis of G. Rs., recovered from different transporters, it is clear that the appellants had received 304.890 MT of M.S. billets through traders which were not accounted for in their books of accounts; that as per their records, the appellants have purchased 475.595 MT from M/s. International Suppliers, M/s. V.K. Enterprises and M/s. Rakesh Industries; that, however, the fact is that they had received 780.485 MT of billets on which no duty had been paid by M/s. Nova Udyog Ltd; that out of this, the appellants did not account for receipt of 304.890 MT in their books and removed their finished goods, manufactured, therefrom, clandestinely without payment of duty; that the Commissioner of Central Excise, in para 20 of the impugned order, has given a specific finding after examining the arguments advanced by the appellants that M/s. Nova Udyog Ltd. had not sold their raw-material and only fake gate passes were issued indicating clearance of the raw-material and that the facts remained that M/s. Nova Udyog Ltd. had used all the stocks of raw-material in the manufacture of the finished goods. Ld. SDR, further, submitted that M/s. Nova Udyog Ltd. have suppressed the production of M.S. Billets and the suppressed production of was diverted to the market through dealers; that the benefit of Notification No. 202/88-CE dated 20.5.88 is available subject to the condition that the inputs are such on which the duty of excise has already been paid; that as the appellants have manufactured their final products out of the raw-material on which excise duty has not been paid, they are not eligible for the benefit of the notification.

4. We have considered the submissions of both the sides. Notification No. 202/88-CE exempts specified final products from payment of duty subject to the condition that the final products are made from the specified inputs on which the duty of excise has already been paid. The Revenue has disallowed the benefit of Notification on the ground that the appellants had manufactured their final products out of M.S. billets manufactured by M/s. Nova Udyog Ltd., who had cleared the same without payment of duty. The Revenue's case is based on the facts that M/s. Nova Udyog Ltd. were showing the sale of raw-material as such which was not correct and the said raw-material was used in the manufacture of finished products i.e. M.S. billets, which were cleared without payment of duty and sold in the market through their dealers. The learned Advocate for the appellants, on the other hand, has contended that the onus is on the Department to prove that the inputs i.e. M.S. flats were actually received by them. According to the learned Advocate, the Department has not discharged this burden at all. He has also relied upon number of decisions in which the Tribunal has set aside the demand made against other assessees on the same ground of receipt of inputs from Nova Udyog Ltd. without payment of duty. In the case of Mahavir Steel Rolling Mills (supra), the allegation against the appellants was that their name was mentioned in G.Rs. of the goods manufactured by M/s. Nova Udyog Ltd. The Tribunal had set aside the demand confirmed against M/s. Mahavir Steel Rolling Mills (supra) on the ground that there is no evidence to show that they had manufactured M.S. flats out of billets received from various dealers. In the present matter also, the case has been made against the appellants on the basis of G.Rs. recovered from different transporters. Thus, the facts of the present case are also the similar as in the case of Mahavir Steel Rolling Mills (supra) which have also been followed by the Appellate Tribunal in the case of H.V.R. Alloys & Steel Ltd. (supra). The Revenue has not proved the receipt of the billets, in question, by the appellants and, therefore, the demand of duty is not sustainable against them. We, therefore, allow the appeal.

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