CIMMCO LTD. Vs. CCE

JUDGEMENT

(1.) Heard at length the learned Advocate for the appellants and learned DR for the respondent. The appellants challenge order dt. 30.11.03 passed by the Commissioner, Indore whereby the Commissioner while disposing of the matter arising out of the show cause notice dated 27/28 the September, 1994 issued to the appellants has confirmed the duty liability of the appellants as well as has imposed the penalty while denying the benefit under Notification No. 223/88 dt. 23.6.88 in relation to certain products manufactured by the appellants on the ground that those products were subjected to machining and therefore, not entitled to avail the benefit at concessional rate of duty under the said notification.

(2.) Brief facts relevant for the decision are that the appellants were engaged in manufacture of Steel Castings falling under sub heading No. 8607 of the Central Excise Tariff Act, 1985 at their factory situated at Birlanagar, Gwalior. Pursuant to the intelligence report that the appellants were evading the payment of excise duty on cast articles by wrongly paying concessional rate of duty under Notification No. 223/88, the premises of the appellant were inspected and the investigation was carried out pursuant thereto three show cause notices came to be issued dt. 20.9.94 for the period from Nov'89 to Dec'93, another dated 25.11.94 for the period from Jan'94 to Aug'94 and third show cause notice dated 10.3.95 for the period from Sept.94 to Nov'94. The allegation in the show cause notices against the appellants was that the investigation had revealed that the appellants were subjecting the cast articles to boring, welding, pencil grinding and gauging and therefore, they were not entitled to claim concessional rate of duty in respect of such products by taking resort to Notification No. 223/88. The proceedings were contested by the appellants.

(3.) Learned Advocate appearing for the appellants while assailing the impugned order submitted that considering the nature of the allegations in the show cause notices, it was absolutely necessary for the Department to place on record the cogent materials which could have established that the appellants were, in fact, subjecting the cast articles for machining in the nature alleged in the show cause notices for the relevant period. Apart from placing reliance in the statement of Shri B.S. Bhadoria, Superintendent, Machine Shop of the appellants, the Department did not produce any evidence or materials in support of the allegations in the show cause notice. The adjudicating authority according to the learned Advocate has totally failed to take into consideration this aspect of the matter and merely on the basis of some inferences sought to be drawn from the statement of Shri Bhadoria that the appellants had been wrongly availing the benefit under the said notification, the duty has been demanded. Taking through the impugned order as well as the statement of Shri Bhadoria, learned Advocate submitted that the statement of the deponent nowhere supports the allegations made on behalf of the Department. As far as casting is concerned, the Commissioner himself has held that the same does not amount to machining. Drawing our attention to the fact that the appellants were manufacturing cast articles as well as fully machined articles and accordingly had been disclosing the said fact to the Department, he submitted that merely on the basis of the statement of the deponent, the Commissioner could not have arrived at the finding that the casting articles produced by the appellant were subjected to machining as alleged. He further submitted that even the statement of Shri Bhadoria is purely of general nature and does not relate to the product in question which was subject matter of dispute for the relevant period and therefore, statement properly read would rather support the case of the appellants rather than that of the Department. Being so, the finding arrived at by the Commissioner regarding machining of the cast articles in relation to the product in question is totally perverse. He further submitted that in any case it is a matter of record that at the time the show cause notices were issued, the assessment was yet to be finalized in relation to the product in question and being so, no show cause notice could have been issued on the ground on which the notices in question were issued. According to the learned Advocate cause for initiating such action in terms of Section 11A could arise only after finalization of the assessment and not prior thereto. Mere provisional assessment would not entitle the department to invoke such powers. He also submitted that the appellants had been regularly submitting the returns and all the necessary information to the department regarding the manufacturing activity in the appellant's factory and therefore, the nature of the product manufactured by the appellants was within the knowledge of the department and therefore, the Department was not entitled to invoke the extended period of limitation. He also submitted that records also disclosed that the product manufactured by the appellants was subjected to inspection by the Department officers in accordance with the provisions of law and they had not found any fault with the information furnished in respect of such product to the department by the appellants and being so, no adverse inference could have been drawn on the basis of the remark by the Asstt. Collector in the classification list dt. 6.3.92. He has placed reliance in the decision in the matter of Commissioner of Central Excise, Mumbai v. I.T.C. Ltd. reported in : 2006 (203) ELT. 532 (SC), Seraikella Glass Works Pvt. v. CCE, Patna reported in : 1997 (91) ELT. 497 (SC) and CCE, Madras v. India Tyre & Rubber Co. Ltd. reported in : 1997 (94) ELT. 495 (Mad.)