Uniflex Cables Ltd. .
Commissioner, Central Excise, Surat-II
J U D G M E N T
ANIL R. DAVE, J.
is an appeal under Section 35-L (b) of the Central Excise Act, 1944
(hereinafter referred to as `the Act'), against the Judgment and Order no A/1326/WZB/2005/C-iii
dated 7.7.05 in Appeal No. E/1893/01, passed by the Customs, Excise and Service
Tax Appellate Tribunal, West Zonal Branch, Mumbai.
material facts are that the appellant is engaged in the manufacture of insulated
wires and cables falling under Central Excise Tariff Sub- 2 Heading No.8544.00.
The appellant claimed benefit under Notification no. 205/88 - C.E. dated
25.05.88 as amended by Notification no. 57/95. The said notification grants exemption
from payment of central excise duty in respect of manufacture of wind mills,
parts of wind mills and any specially designed devices which run on wind mills.
As the appellant had received orders from various wind mill manufacturers for specially
designed electrical cables, which were to be used in the manufacture of wind
mills, the appellant filed a declaration under Rule 173-B of the Central Excise
Rules, 1944 (hereinafter referred to as `the Rules') claiming nil rate of duty so
as to avail benefit under the aforestated notification for the insulated cables
manufactured by it and supplied to the manufacturers of wind mills for using the
same as part of wind mills for the period commencing from May,1995 to February,
2006. The appellant reversed the modvat credit taken on inputs for Rs. 16,14,088.32
for availing the exemption benefit under notification no. 205/88.
the appellant had not paid excise duty on the electrical cables supplied to the
manufacturers of wind mills as stated hereinabove, three show cause notices had
been issued to the appellant by the Revenue -Authorities for recovery of total
excise duty amounting to Rs.66,92,604/-. According to the Authorities, the electric
cables were neither parts nor specially designed devices, which were necessary for
manufacturing or running wind mills. For the aforestated reasons, according to
the authorities, benefit under the aforestated notification could not have been
availed by the appellant. Ultimately, the Commissioner, Central Excise, Surat -
II by an order dated 20.2.1998, confirmed the demand of excise duty amounting
to Rs. 66,92,604 and imposed penalty under Rule 173Q(1) of the Rules. The said
order was challenged before the Tribunal and the Tribunal allowed the appeal by
remanding the matter to the Commissioner. After hearing the appellant, the Commissioner
again took the same view by his order dated 22.3.2001.
aggrieved by the aforestated order dated 22.3.01, the appellant preferred an
appeal before the Tribunal which was dismissed. The Tribunal relied on its earlier
order passed in NICCO CORPORATION LIMITED v. COMMISSIONER OF CENTRAL EXCISE, CALCUTTA,
whereby an analogous issue was adjudicated and decided against the concerned
assessee. Aggrieved by the said order dated 7.7.2005, the appellant has
preferred the appeal before this Court.
order passed by the Tribunal in NICCO CORPORATION LIMITED (supra) was appealed
against in C.A. No 1118/2001 before this Court. This Court, vide its order
dated 22.3.06 dismissed the appeal and held that insulated electrical cables
designed for use in wind mills would not be eligible for exemption under
notification no 205/88 as amended. The said judgment is now reported as Nicco Corporation
Ltd. v. Commissioner of Central Excise, Calcutta 2006 (203) ELT 362(S.C.). During
the pendency of the proceedings, the Authorities had issued a notice of demand
directing the appellant to pay central excise duty and penalty amounting to Rs 1,
33, 85,208. The appellant, in compliance of the said notice, deposited a sum of
Rs 66, 92,604 towards the excise duty payable by it. However, the amount of penalty
has not been paid as stay has been granted against the said demand.
have heard the learned counsel appearing for the concerned parties. It has been
mainly submitted on behalf of the appellant that the electrical cables supplied
to the manufacturers of wind mills were specifically designed for use in wind mills.
They were special type of cables, without which the wind mills could not have been
operated and, therefore, the revenue authorities ought to have granted
exemption as stated in the notification referred to hereinabove. The learned
counsel appearing for the appellant gave details as to how the electric cables were
specially used for running the wind mills. He further stated that without use
of the electric cables supplied by the appellant, functioning of the wind mills
5 would not have been possible. He, therefore, submitted that the appellant ought
to have been given the benefit of the notification referred to hereinabove.
the other hand, Shri H.P. Raval, learned Additional Solicitor General appearing
for the respondent-authorities relied upon the judgment delivered in Nicco Corporation
Ltd. v. Commissioner of Central Excise, Calcutta (supra) and submitted that the
electric cables manufactured and supplied by the appellant were not so
indispensable that without which the wind mills could not have been operated. He
further submitted that for the reasons recorded in the order passed by the Tribunal,
the appellant is not entitled to exemption. He further submitted that the order
imposing penalty is also just and proper as the appellant deliberately did not
pay excise duty payable by it. Thus, he submitted that the impugned order is
just and proper and, therefore, the appeal deserves to be dismissed.
issues arise for adjudication in the present case: I. Whether the insulated
electrical cables manufactured by the appellant would be eligible for exemption
under the above mentioned exemption notification. II. Whether imposition of penalty
is justified in view of the facts and circumstances of the case.
far as the first issue is concerned, it is no more res integra in view of the judgment
delivered by this Court in the case of Nicco Corporation Ltd. v. Commissioner of
Central Excise, Calcutta (supra). The facts in the said case as well as in the
present case are similar and, therefore, we need not consider the said issue again.
In the circumstances, the first issue is decided in favour of the Revenue. It
is also pertinent to note that the appellant has already paid a sum of
Rs.66,92,604/- towards excise duty. As regards the second issue about the
imposition of penalty, we are of the opinion that the said order cannot be
justified in the facts of the case.
far as the second issue with regard to the imposition of penalty in the present
case is concerned, the Commissioner, himself in his order-in- original has
stated that the issue involved in the case is of interpretational nature.
Keeping in mind the said factor, the Commissioner thought it fit not to impose harsh
penalty and a penalty of an amount of Rs. 5 lakhs was imposed on the appellant
while confirming the demand of the duty.
is also evident from the said order that the Commissioner also found that except
for the statement of the Excise Executive Director and Excise Clerk of the
assessee company there was no other evidence pointing out any accusing finger
at them in dealing with offending goods knowingly. A clear finding has been
recorded by the Commissioner that it was difficult to hold that the appellant
knowingly dealt with excisable goods which were cleared without payment of duty.
Nor the department itself took it as a formal case of offence.
we take into consideration the aforesaid facts and also the fact that the
Commissioner himself found that it is only a case of interpretational nature, in
our considered opinion, no penalty could be and is liable to be imposed on the
in the facts and circumstances of the present case we are of the view that penalty
should not have been imposed upon the appellant. Consequently, we quash the
order of the Commissioner imposing penalty as also the order of the Tribunal so
far as it confirms imposition of penalty upon the appellant. The appeal is
allowed to the aforesaid extent leaving the parties to bear their own costs.
(Dr. MUKUNDAKAM SHARMA)
(ANIL R. DAVE)