Decided on January 14,2015

Pushkar Steels Pvt. Ltd. And Ors. Appellant
CCE Respondents


Rakesh Kumar, Member (T) - (1.)THE facts leading to filing of these appeals are, in brief, as under.
1.1 The main appellant M/s. Pushkar Steels Pvt. Ltd. are manufacturers of MS Ingots from MS Scrap by induction furnace. The appellant unit, during 1997 -2000 period was operating under compounded levy scheme notified under Section 3A of the Central Excise Act, 1944. Subsequently Notification No. 50/2003 -CE was issued. As an existing unit, the appellant company started availing of this exemption on the ground that they have expanded their installed capacity from 3 M.T. to 4 M.T. and in this regard they claimed that (a) they have modified the crucible by changing the top and bottom of the crucible and increasing its height (b) have changed the hydraulic system, (c) have added fuses, thyristers and capacitors and (d) in the panels, the invertors and rectified were also changed. The appellant in this regard also enclosed the certificate of the Chartered Engineer regarding 25% capacity expansion, certificate dated 26/3/04 of General Manager, District Industries Centre, Kotdwar also the certificate of dated 18/7/03 of Tehsildar in support of their claim that the unit is located in the plot of land whose Khasra number is mentioned in the notification. Beside this, they also enclosed invoices of the machinery purchases and the installation work for capacity expansion. The Commissioner, however, vide order -in -original dated 23/11/06 disallowed the exemption and confirmed the duty demand of Rs. 3,59,39,816/ - for the period from December 2003 to December 2005 alongwith interest thereon under Section 11AB and imposed penalty equal amount on them, beside imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on the employees/ Director of the appellant company namely Shri Vasudev Singh, Shri R.K. Gupta and Shri Subhash Chand. The appellant company as well as Directors/employees filed appeals to the Tribunal against the Commissioner's order dated 23/11/06 and the Tribunal vide order dated 12/6/07 remanded the matter to the Commissioner for denovo adjudication with direction that the Commissioner should consider the material on record.

1.2 In denovo proceedings, the Commissioner vide order -in -original dated 20th August 2008 once again confirmed the duty demand of Rs. 3,59,39,816/ - against the appellant company alongwith interest thereon under Section 11AB and also imposed penalty of equal amount on the appellant company and imposed penalties on various Directors and employees of the appellant company. Against this order of the Commissioner, the appeal No. E/2398 -2401/2008 EX have been filed. In respect of the subsequent period i.e. January 2006 to September 2006, October 2006 to June 2007 and July 2007 to May 2008, the Commissioner by 3 separate orders dated 31/5/07, 08/9/08 and 31/12/08 respectively confirmed the duty demands of Rs. 1,91,75,800/ -, Rs. 1,96,53,083/ - and Rs. 2,84,99,465/ - respectively against the appellant alongwith interest thereon under Section 11AB and imposed penalty of equal amount on the appellant company under Section 11AC beside imposition of penalty on the Directors and employees under Rule 26 of the Central Excise Rules, 2002. Against these three orders of the Commissioner, the appeal No. E/270 -273 of 2008 EX; E/2408, E/2411 and E/978 -981/2008 EX have been filed. In respect of appeal No. E/270 -273/2008 -EX the stay application No. E/S/294 -297 of 2008 had also been filed which has not been disposed of yet.

(2.)HEARD both the sides.
Shri B.L. Narasimhan, Advocate, the learned Counsel for the appellants, pleaded that the Commissioner in para 4.2 of denovo adjudication order dated 20th August 2008 has given a finding that earlier the Department had issued a revised ACP order No. 53/IFU/ACP/2000 dated 31/07/2000 under which the capacity of crucible was ascertained as 3 M.T. and in absence of any evidence as to whether the capacity of production increased before the claimed increase in installed capacity, it can be assumed that the production capacity was 3 M.T. before the specified date i.e. 7/1/03, that in para 4.3 in the same order, the Commissioner has given a finding that the capacity of the appellant after expansion was 4.1 M.T. and in this regard he has referred to the verification report of the Range Superintendent, which was further endorsed by the Assistant Commissioner, that the Commissioner in para 4.4 of the same order has given a finding that the appellant company achieved expansion of capacity from 3 M.T. to 4.1 M.T. i.e. by more than 25%, that having given this finding, the Commissioner has still denied the benefit of exemption Notification No. 50/03 -CE on the grounds that (a) the increase in the installed capacity is not by addition of the new machinery and (b) the purchase of various items of machinery equipment claimed to have been installed, is not entered in the register maintained by the Trade Tax Department at Kotdwar check post and thus there is no evidence that the machinery/equipment which are claimed to have been purchased by the appellant and installed in order to increase the capacity had been received, that in the subsequent orders dated 08/9/08 and 31/12/08, the Commissioner has followed his order dated 20th August 2008 and in the order dated 31/5/07 he has followed his earlier order dated 23/11/2006, that once the Commissioner gives a finding that a capacity before 07/1/03 was 3 M.T. and after undertaking the expansion exercise, the same increased to 4.1 M.T., it is wrong to deny the benefit of exemption, when it is not denied that the height of the crucible had been increased, that in this regard he relies upon the judgment of the Tribunal in the case of Uttaranchal Iron & Ispat Ltd. v. CCE, Meerut reported in 2008 (229) E.L.T. 253 (Tri. Del.) which has been upheld by Hon'ble Uttarakhand High Court in the case of CC & CE v. Uttaranchal Iron & Ispat Ltd. reported in 2011 (266) E.L.T. 331 (Uttarakhand), that in this judgment, Hon'ble High Court has held that the Board's Circular dated 21/1/04 must be read as a whole and that even modernisation which leads to increase in installed capacity by 25% or more, would have to be treated as substantial expansion, that in any case, the Commissioner's finding that the hydraulic system, which is claimed to have been replaced, and fuses, thyristers and capacitors which are claimed to have been added had not been purchased by the appellant, is factually incorrect, as in this regard the Commissioner has relied only on the non -entry of these items in the register maintained by the Commercial Tax Department, at check post at Kotdwar, while the Department of Commercial Taxes, Uttaranchal has issued an order under Rule 41(8)/Section 9(2) of the Uttaranchal General Sales Tax Act wherein it is mentioned that while on verification of the list of purchases made through the medium of import declaration forms, it has been found that the assessee has purchased the components vide import declaration form Nos. UMA/319419, 25, 383, 346686, 85 for Rs. 1,72,842/ -, Rs. 2,68,368/ -, Rs. 4,42,400/ -, Rs. 9,72,946/ - and Rs. 4,37,840/ -, but the original copies are not on record and only the photocopies of the duplicate forms are on record, that the assessee have not furnished duplicate copies and these have not been endorsed at the check post barrier, as has been mentioned by the Incharge of the check post and, therefore, the assessee have contravened Section 28(a), that this purchase of the assessee has been found recorded in their books of accounts, but since the purchase has been done in unauthorised manner, in this connection separate penal action shall be taken, that from the order of the Uttaranchal Commercial Tax Department, it is clear that the furnace components, in question, though not entered in the check post register, had been purchased by the appellant, that in view of this, the Commissioner's finding that the purchase of these components is not backed by the records of check post is not correct, and that in view of the above submissions, the impugned orders are not sustainable.

(3.)SHRI Yashpal Sharma, learned DR, defended the impugned orders by reiterating the findings of the Commissioner.

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.