Ashok K. Arya ORDER
Ashok K. Arya, Member (T)
1. MAs (ROA) allowed for these appeals, which were earlier dismissed for non-prosecution, and are now being taken up for disposal.
1.1 M/s. Pioma Industries has filed these appeals against the respective Orders, whereunder subjects of classification and admissibility of benefit of Notification No. 3/2005-CE : MANU/EXCT/0010/2005, dt. 24.02.2005 for the subject goods viz. Soft Drink Concentrates are under dispute. The total period involved is from April 2005 to February 2006.
2. Brief facts of the case are that:-
i) The appellant M/s. Pioma Industries were manufacturing unbranded Soft Drink Concentrates. They were classifying the said goods prior to April 2005 under six digit classification of Central Excise Tariff under Heading 2108.90 and were having the benefit of Nil rate of duty as the tariff rate was Nil.
ii) After the introduction of eight digit classification for Central Excise, the appellant-assessee classified the subject goods under Tariff Sub Heading 21.06.9099 whereas the Department decided to classify the goods under Central Excise Tariff Sub Heading No. 2106.9019.
iii) The assessee-appellant after classifying the subject goods under Tariff Heading 2106.9099, is claiming the benefit of Notification No. 3/2005-CE : MANU/EXCT/0010/2005 for the said goods. However, the Departments stand is that the benefit of Notification No. 3/2005-CE : MANU/EXCT/0010/2005 (supra) is not available to the subject goods as the goods deserve classification under Tariff Sub Heading 2106.9019.
iv) Vide the impugned orders, the Department inter alia, classified the subject goods under Chapter sub-heading 2106.9019 of Central Excise Tariff without the benefit of Notification No. 3/2005-CE : MANU/EXCT/0010/2005 (supra) and confirmed the demand against the assessee-appellant.
v) Hence, these appeals before the Tribunal.
3. With the background of above facts, we heard both the sides represented by the learned counsels, Shri Uday Joshi for the appellant and Shri L. Patra for the Revenue. The subject matter being common in these appeals, these are being decided by this common order.
4. After perusal of the facts of the case and the submissions of both the sides, it appears that the goods deserve classification under Central Excise Tariff sub-heading No. 2106.9019 as Others, which specifically covers Soft Drink Concentrates other than Sharbat, which is one of the sub entries of the description Soft Drink Concentrates. For Soft Drink Concentrates, there are only two sub headings one for Sharbat which is covered by Heading 2106.9011 and second one is Other category which is covered by Heading 2106.9019.
4.1 Thus, there are only two choices for classifying the Soft Drink Concentrates which could be either Sharbat or could be Others. In the light of the descriptions and the wordings of the Central Excise Tariff, it is clear that there cannot be two opinions regarding the classification of the item Soft Drink Concentrates (unbranded) and, therefore, its correct classification is 2106.9019 only. On the other hand, the assessee is pleading the classification of their goods under Central Excise Tariff Sub Heading 2106.9099 for which there is no basis as per the material given by them especially when there is specific entry for Soft Drink Concentrates in the Tariff as mentioned above. Therefore, the appellants pleading for the said classification is rejected as without any merit.
5. Another plea of the assessee-appellant is for admissibility of the benefit of Notification No. 3/2005-CE : MANU/EXCT/0010/2005, dt. 24.02.2005 (Entry No. 11) for the subject goods. However, the entry No. 11 of the said Notification inter alia, mentions Chapter sub-heading 2106.9099. When the Sub Heading 2106.9099 is not the classification for the subject goods, the benefit of this notification is not admissible for the goods in question.
6. During the hearing the appellant pleads that if the classification pleaded by them is not accepted, they be given the benefit of MODVAT/CENVAT Credit for the inputs/raw materials used for manufacturing their product along with the benefit of cum-duty, when the demand is computed against them.
6.1 In the light of Indirect Tax Scheme/Structures of Union of India, where duty of Central Excise is levied on manufacturing and set off for the taxes paid on the inputs (raw materials/services) used for manufacturing a product is generally allowed (unless there is contrary provisions to such effect), the appellant would be entitled to claim the benefit of MODVAT/CENVAT Credit for the inputs utilized for manufacturing the subject goods.
6.2 In the present case, the goods have already been sold to the customers and there is no likelihood of further recovery from the past consumers of any duty of Central Excise, if levied and confirmed against the appellant now. Hon'ble Supreme Court in the case of CCE Delhi Vs. Maruti Udyog Ltd. MANU/SC/0148/2002 : 2002 (141) ELT 3 (SC) has held that the sale price realized by an assessee should be regarded as the price inclusive of excise duty as the purchaser has no obligation to pay any amount in excess of what has already been paid as the price for the goods purchased. In this regard, the Hon'ble Supreme Court in the said decision observes as under:-
6. It will be? useful here to refer to the observations of this Court in Hindustan Sugar Mills v. State of Rajasthan & Others, MANU/SC/0335/1978 : 1978 (4) SCC 271, at page 280, as follows:
Take for example, excise duty payable by a dealer who is a manufacturer. When he sells goods manufactured by him, he always passes on the excise duty to the purchaser. Ordinarily it is not shown as a separate item in the bill, but it is included in the price charged by him. The sale price in such a case could be the entire price inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of the goods. True, the excise duty component of the price would not be an addition to the coffers of the dealer, as it would go to reimburse him in respect of the excise duty already paid by him on the manufacture of the goods. But even so, it would be part of the sale price because it forms a component of the consideration payable by the purchaser to the dealer. It is only as part of the consideration for the sale of the goods that the amount representing excise duty would be payable by the purchaser. There is no other manner of liability, statutory or otherwise, under which the purchaser would be liable to pay the amount of excise duty to the dealer. And, on this reasoning, it would make no difference whether the amount of excise duty is included in the price charged by the dealer or is shown as a separate item in the bill. In either case, it would be part of the sale price.
7. The example given in the aforesaid decision is clearly applicable in the present case. The sale price realised by the respondent has to be regarded as the entire price inclusive of excise duty because it is the respondent who has, by necessary implication, taken on the liability to pay all taxes on the goods sold and has not sought to realise any sum in addition to the price obtained by it from the purchaser. The purchaser was under no obligation to pay any amount in excess of what had already been paid as the price of the scrap.
In the light of above discussion and the observations of Hon'ble Apex Court, the Appellant is entitled to cum duty benefit for the sales made during the period under dispute and the liability of duty of Central Excise against them is to be computed accordingly, for which the matter is being remanded to the Adjudicating authority viz. jurisdictional Commissioner of Central Excise. It is again made clear that as discussed earlier, the appellant is entitled to the benefit of MODVAT/CENVAT Credit when they make payment of their liability of Central Excise duty to the Department.
7. In the result, in the light of aforesaid findings, the impugned order is modified to above effect and the matter is accordingly remanded to the Adjudicating authority viz. Commissioner Incharge for re-quantification of the liability of duty of Central Excise against the appellant, and he shall adjudicate the same after giving opportunity of personal hearing and submission of documents to the appellant. The appeal stands disposed off accordingly.
(Pronounced in the open court on 15.05.2017.)
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