Rashtriya Ispat Nigam Ltd v. Commissioner Of C. Ex

G.A. Brahma Deva, Member (J)

1. Shri M. Venkataraman, learned Advocate arguing on behalf of the appellants submitted that there are three issues are involved in this case. The first issue with reference to eligibility of benefit in terms of Notification No. 67/95-C.E., dated 16-3-95. The other two issues are concerned with payment of duty in respect of the items manufactured by the appellants. He said that they had already paid duty in respect of the goods manufactured and used for the civil construction and maintenance purposes. He said that he is not contesting on payment of duty element on items as such, but nevertheless, imposition of penalty on that account is not justified since duty amount has already been deposited even before the issue of show cause notice. He submitted that the first issue with reference to eligibility of benefit in terms of Notification No. 67/95-CE has already been considered by the Tribunal in the appellants own case as per Final Order No. 1004/2002, dated 2-8-2002 [Rashtriya Ispat Nigam Ltd. v. Commissioner - 2002 (150) E.L.T. 743 (T)] in appeal No. E/129/98. In this context, he drew our attention to Para 2 (b) & (c) of the said order, which reads as under:-

"2 (b) The Commissioner has rejected the claim of the appellants to the Notification 67/95 on the ground that dolomite bricks are not used in the process of manufacture of the final product and that it is by itself is final product which is exempt from payment of duty and therefore the coal tar pitch is not entitled to the benefit of Notification. In terms of the proviso to the Notification. It is settled position that refractory materials like dolomite bricks, can be considered as being used in or in relation to the manufacture of the final product. There have been a series of decisions on this point, the latest being of the Honble High Court of Karnataka in the case of Escorts Ltd, v. CCE, Bangalore reported in 2000 (120) E.L.T. 75. Following the same, we cannot uphold the Commissioners finding as regards Notification 67/95. Further, Department themselves have extended the benefit of Notification No. 67/95 to the dolomite bricks which could have been availed only if it is used in or in relation to the manufacture of the final product.

(c) In absence of any definition of intermediate product, a product that is consumed within the factory, would continue to be an intermediate product, when it is cleared from the factory it would be considered as final product. We follow the decision of the Tribunal in the case of Shalimar Paints Ltd. v. CCE, Calcutta-II reported in : 1994 (72) ELT 186 in this regard. Once the dolomite bricks is considered as an intermediate product, then the coal tar pitch, that is consumed in the manufacture of an intermediate product, which in turn is consumed in the manufacture of a final product, is to be considered as used in or in relation to the manufacture of the final product. This view is evident from the circular No. 17/93/CX. 8, dated 6-12-93 and Circular No. 33/33/94-CX. 8, dated 4-5-94 in which the Board themselves have clarified that where more than one intermediate product comes into existence, the benefit of Notification 217/86 which is a predecessor Notification to Notification 67/95-C.E., would be available."

the appellants succeed on this issue. On the other issues, in view of the submissions made by the Counsel that the party has already deposited the duty to the Department, prior to issue of show cause notice, there is a lot of force in the arguments advanced on behalf of the party not to impose penalty. In these circumstances, there is no justification on the part of the Department to impose penalty under Section 11AC as well as under Rule 173Q of the Central Excise Rules, 1944. Consequentially, no interest also is payable. Thus this appeal is disposed of in the above terms.