Case Law Details
Global Wool Alliance Private Ltd Vs Commissioner of Central Excise (CESTAT Mumbai)
CESTAT Mumbai held that eligibility of benefit of notification no. 30/2004-CE dated 9th July 2004 owing to reversal of CENVAT Credit needs to be examined by lower authorities. Accordingly, matter restored back to original authority for fresh determination.
Facts- The appellant, as manufacturer of several articles of ‘wool’ and ‘polyester’, had been availing CENVAT credit of duty paid on several inputs deployed in production and had, at the same time been clearing export goods on payment of duty under the rebate procedure while availing the benefit of exemption provided for in notification no. 30/2004-CE dated 9th July 2004 for local clearances.
The first of the disputes, arising from two notices proposing recovery of Rs. 42,81,112 for April-July 2005 and of Rs. 32,32,131 for August-October 2005, concerns taking of credit of duty paid on inputs precluding entitlement to the benefit of notification no. 30/2004-CE dated 9th July 2004. Another dispute, arising from notice proposing recovery of Rs. 22,07,315 for the period from September 2008 to February 2009, pertains to entitlement to notification no. 30/2004-CE dated 9th July 2009 which was sought to be interpreted as intended only for assessees who lacked specified facility which to the appellant could not claim. The third issue is a consequence of refusal to entertain application of refund of Rs. 1,19,37,987 remitted as ‘deposit’for July 2004 to February 2009 during pendency of dispute.
Conclusion- Held that the factual aspects of eligibility –both by reversal of CENVAT credit as well as existence of facility for manufacture of ‘staple fibre’in the light of decisions of the Tribunal –have not been examined by the lower authorities. With the claim for refund restored to the original authority and with these two aspects having to be examined afresh, the issues would have to be go back for re- adjudication. Accordingly, the impugned order is set aside and all the disputes restored to the original authority for a fresh determination.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Though three different issues concern these four appeals of M/s Global Wool Alliance Pvt Ltd, we dispose off all by this common order as the impugned order1 of Commissioner of Central Excise (Appeals), Mumbai Zone-I has dealt with challenges to the four adjudication orders together. The first of the disputes, arising from two notices proposing recovery of Rs. 42,81,112 for April-July 2005 and of Rs. 32,32,131 for August-October 2005, concerns taking of credit of duty paid on inputs precluding entitlement to the benefit of notification no. 30/2004-CE dated 9th July 2004. Another dispute, arising from notice proposing recovery of Rs. 22,07,315 for the period from September 2008 to February 2009, pertains to entitlement to notification no. 30/2004-CE dated 9th July 2004 which was sought to be interpreted as intended only for assessees who lacked specified facility which to the appellant could not claim. The third issue is a consequence of refusal to entertain application of refund of Rs. 1,19,37,987 remitted as ‘deposit’for July 2004 to February 2009 during pendency of dispute.
2. The appellant, as manufacturer of several articles of ‘wool’and of ‘polyester’, had been availing CENVAT credit of duty paid on several inputs deployed in production and had, at the same time, been clearing export goods on payment of duty under rebate procedure while availing the benefit of exemption provided for in notification no. 30/2004-CE dated 9th July 2004 (at serial no. 10) for local clearances. It is, thus, that eligibility for benefit of notification on the two counts supra came to be questioned.
3 .Insofar as the claim for refund is concerned, the impugned order, as well as the submissions of Revenue, are studiedly silent which is not surprising as the finding in relation to the second issue in dispute did preclude entitlement to refund and, thereby, obviating any need to decide on the preferment of the claim at that stage which is the ground for rejection by the competent authority. The appellant had filed the claim for refund even as the issue was pending for appellate remedies. It has been held by the Tribunal in Persistent Systems Ltd v. Commissioner of Central Excise & Service Tax, Pune – III [2016 (43) S.T.R. 117 (Tri. – Mumbai)] that
6. Justification afforded for the act of returning the claim appears to flow from it being ‘premature.’ Implicit in such a description is the existence of a time period prior to which no claim can be preferred. Again, the statute does not prescribe a near deadline for filing claims. ‘Premature’ is, therefore, inexplicable and incomprehensible in the context. Such a description would be apt only if an application has been made before taxes or duties were paid which is plainly an absurdity. It would appear that the two lower authorities chose to attach a status to the refund claim that is not contemplated in the statute.
7. Besides statutory impropriety and fallacious description, a consummation disconnect is also perceptible. The claim having been filed and taken on record, its return can be said to be complete only when its custody is transferred back to the claimant. It is moot whether an order can render it to be so without the willing participation of the claimant in a custodial transaction. That the claimant has been pursuing appellate remedies is a clear indication of lack of such The orders of the lower authorities would appear to be no whit more than printing on a piece of paper. Can the physical existence of a refund application with the Commissionerate be erased or wished away by an adjudication order? Is there a process contra to revenue recovery that entails the might of the State being resorted to for reposing the custody in the applicant? It would appear not. The ‘bell, book and candle’ routine does not trespass into the temporal! Tax administrators exercising statutory authority should be cautious in staking the credibility of the institution that they represent.
8. That the appellant is not put to any disadvantage or detriment is not relevant to the circumstances. The claim itself is symptomatic of a lack of faith in the fairness of the institution in dealing with refund claims. Every conceivable reason is assigned to justify the unwillingness to open the purse strings and not the least used are ‘limitation’ and ‘pre- requisite of challenging the assessment.’ It would appear that the claim has been filed to forestall recourse to these justifications. That the claim has been filed and that it has been preceded by payment of tax is undeniable. That the content of the order passed in relation to the refund claims is unimplementable is uncontestable. Nevertheless, there is an order and the fallacies therein need to be remedied because we have taken a solemn oath to uphold the laws of the country. The legislative organ of the State has imposed a burden of interest for delays in sanctioning of refund and prescribed a time-frame of three months for processing claims. The impugned order appears to have been conceived as a tool to escape this burden without taking a decision on the refund claim. Such perversion of legislative intent cannot pass unchallenged.
9. The eligibility for refund should have been decided taking into consideration the taxability of the service and the procedures laid down in law relating to tax collection and refund. The form and substance of a disposal in adjudication is vested exclusively in the authority before whom the claim has been preferred and that is a responsibility which should have been responsibly discharged. The order of the original authority has merged with that of the first appellate authority and the merged order lacks legal sanctity for reason cited supra. Accordingly, the return of the refund claim is set aside and the original authority is directed to decide on the refund claim afresh in accordance with the law.’
Thus, it is not open to the authority empowered under section 11B of Central Excise Act, 1944 to dispose off a claim for refund on grounds of such being premature in any circumstance whatsoever. As the competent authority has not considered the eligibility for refund except at the threshold, it would only be appropriate to restore the claim before the original authority for fresh disposal.
4. On the issue of dis-entitlement of the appellant to benefit of notification no. 30/2004-CE dated 9th July 2004 for non-compliance with the substantive condition of eligibility owing to which demand of Rs. 22,07,315 was confirmed in relation to availment of exemption for the period from September 2008 to February 2009, Learned Counsel for appellant contended that the dispute had come before the Tribunal concerning an earlier period and, by order2 , had been remanded for ascertainment of
‘10. The contention of the appellants is that the issue that a manufacturer who is procuring tow from outside and converting into tops is covered by the decision of the Hon’ble Bombay High Court in the case of Raymond Ltd (supra). The appellants also filed a miscellaneous application in support of their claim that the appellants have no facility in the factory (including plant and equipment) for producing goods of Chapter Heading 5503 of the Central Excise Tariff. The appellants relied upon the returns filed to the Revenue whereby details of machine and machineries were disclosed and the contention of the appellants is that there are no machine and machineries in the factory for producing the goods of Chapter Heading 5503 of the Tariff. This factual aspect requires verification by the adjudicating authority. In view of this, the matter requires to be reconsidered by the adjudicating authority afresh. The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication. The adjudicating authority will decide after affording an opportunity of hearing to the appellant. The appeals are disposed of in above terms. The miscellaneous application is allowed.’
in Global Wool Alliance Pvt Ltd and others v. Commissioner of Central Excise, Thane-I3 challenging order4 of Commissioner of Central Excise, Thane-I. According to her, the factual report dated 4th July 2014 about lack of facility as claimed by them rendered the appellant eligible for benefit of notification, as held by the Hon’ble High Court of Bombay in Raymond Limited v. Union of India [2009 (240) ELT 180 (Bom)]. It is contended by her that ‘tops’ come into existence after conversion of extrusion from ‘plastic chips’ into ‘synthetic staple fibre’ and that the tow’ of uniform length procured by them is the very same eligible goods for which reliance was placed on
‘50. It is true that Chapter 55 of the CET classifies Tow under Headings 55.01/55.02 or 55.03/55.04 based on the length of the tow. In view of Chapter Note 1 to Chapter 55, tow of a length exceeding 2 metres are classified under Heading 55.01/55.02 and tow of a length not exceeding 2 metres are classified under Heading 55.03/55.04 as ‘staple fibres’ not carded, combed or otherwise processed for spinning. However, both these products are covered under Chapter 55 titled as ‘man-made staple fibres’. In the General Rules for the interpretation of the First Schedule to the CET, it is stated that the titles to the Chapters are provided for easy reference only. If for easy reference, the ‘chapter 55 man-made staple fibres’ applies to Tow 55.01/55.02) as well as unprocessed staple fibre (55.03/55.04), then, for the same reason the term ‘staple fibre’ in the Notification No. 30/04 would apply to ‘tow and unprocessed staple fibre’ covered under Headings 55.01 to 55.04. In other words, for broad classification purposes if the Legislature has considered the term ‘staple fibre’ to include tow and unprocessed staple fibre, then, in the absence of any intention to the contrary, the same broad meaning has to be given to the term “staple fibre” used in the Notification No. 30/04.
51. There is nothing in the Notification No. 30/04 to suggest that the term ‘staple fibre’ has been used in a restricted sense so as to apply only to inputs falling under Heading 55.03/55.04. On the contrary, reading the Notification as a whole it is seen that the said Notification is issued to ensure effective implementation of the new tax regime so that the manufacturers are required to pay only the mandatory excise duty and not required to pay excise duty at different stages specified in the CET. Therefore, there is no reason to construe the terms ‘staple fibre’ narrowly so as to restrict it to unprocessed staple fibres used as inputs in the manufacture of Tops.’
in re Raymond Ltd. It was submitted that the Tribunal, relying upon the same judgment, had upheld eligibility in Raymond Ltd v. Commissioner of Central Excise, Mumbai –III [2010 (260) ELT 279 (Tri-Mumbai)] and in Reid and Taylor India Ltd v. Commissioner of Customs, Central Excise and Service Tax, Mysore [2019-TIOL-700- CESTAT-BANG]. It was also submitted that the unquestionable eligibility, upon incorporation in notification no. 30/2004-CE dated 9th July 2004 (as serial no. 10A) by notification dated 12/2009-CE dated 7th July 2009, arising from the decision of the Hon’ble High Court of Bombay supra, is clarificatory and, hence, retrospectively applicable.
5. Learned Authorized Representative disputed the applicability of the decision of the Hon’ble High Court of Bombay in re Raymond Ltd with the submission that the appellant did have the facility for manufacturing of ‘staple fibre’and, therefore, ineligible. The claim that ‘tow’was also ‘staple fibre’was countered with the submission that ‘tow’finds fitment within heading 5501 of the Schedule to Central Excise Tariff Act, 1985 while ‘staple fibre’is described elsewhere and also by reliance on note 1 of chapter 55 in Schedule to Central Excise Tariff Act, 1985. He averred that the record of investigation has clearly adduced existence of facility for manufacture of ‘staple fibre’in their factory.
6. The remand order of the Tribunal supra is specific as is the report of the jurisdictional central excise authorities. However, the order of the original authority that was before the first appellate authority to culminate in the impugned order predates the remand ordered by the Tribunal and the defence thereof was not before the original, or first appellate, authority.
7. On the issue of eligibility to benefit of notification no. 30/2004-CE dated 9th July 2004 owing to reversal of credit, Learned Counsel referred to settled decision of the Tribunal in Global Wool Alliance Pvt Ltd v. Commissioner of Central Excise, Thane-I [2017 (358) ELT 1218 (Tri-Bom)] and Learned Authorized Representative agreed that reversal of credit would suffice to qualify in terms of circular no. 858/16/2007-CX dated 8th November 2007 of Central Board of Excise & Customs (CBEC). He, however, contended that record of reversal had not been ascertained and needs to be.
8. We find that the factual aspects of eligibility –both by reversal of CENVAT credit as well as existence of facility for manufacture of ‘staple fibre’in the light of decisions of the Tribunal –have not been examined by the lower authorities. With the claim for refund restored to the original authority and with these two aspects having to be examined afresh, the issues would have to be go back for re- adjudication. Accordingly, the impugned order is set aside and all the disputes restored to the original authority for a fresh determination.
(Order pronounced in the open court on 11/10/2023)
Notes:
1. [order-in-appeal no. BR/203 to 206/Th-I/2012 dated 26th September 2012]
2. [final order no. A/543-548/EB dated 12th June 2013]
3. [appeal no. E/78 to 81, 93 and 236/10-MUM]
4. [order-in-original no. 37/BR-33/Th-I/2009 dated 20th October 2009]
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