M/s Purbanchal Alloys Limited V. The Commissioner Central Excise Shillong

CentralExciseAp/1/2017

AI Insights

The case involves M/s Purbanchal Alloys Ltd., which appealed against the dismissal of their refund claim by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata. The appellant had sought a 'Special Rate' for excise duty refund under Notification No.32/1999-CE, claiming that their actual value addition exceeded the rates specified in the notification. The primary legal issue was whether the late submission of supporting documents, after the deadline for the application, invalidated the timely filing of the application itself. The court emphasized the principle of 'substantial compliance', noting that the substantive condition of filing the application by the deadline was met, and the late submission of supporting documents should not be considered fatal to the application.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 690737 (HC-MEGHALAYA)
• Appeal Type: Others
• Pronouncement Date: 14-08-2018
• Assessment Year: misc
• Other Referred Cases: Nalari Ferro Alloys Pvt. Ltd. v. Commr. of Central Excise, Shillong, Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, Commissioner of C.EX., New Delhi v. Hari Chand Shri Gopal, M/s Mawthlliang Wood Products Pvt. Ltd. v. The Commissioner of Central Excise, Shillong
• Laws Referred To: Central Excise Act, 1944, Central Excise Tariff Act, 1985, North East Industrial and Investment Promotion Policy 1997/2007, Notification No.32/1999-CE, Notification No.17/2008-Central Excise, Notification No.31/2008-Central Excise
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SA CHALLAM
• Assessee Lawyers: N DAS GUPTA
• Keywords: Central Excise; Refund claim; Special rate; Substantial compliance; Value addition
• Section: 35G

Judgement Text

"1 Serial No.03 Regular List HIGH COURT OF MEGHALAYA AT SHILLONG Central Excise Ap.No.1 of 2017 Date of Order: 14.08.2018 M/s Purbanchal Alloys Ltd. Vs. Commissioner Central Excise, Byrnihat Shillong Coram: Hon‟ble Mr. Justice Mohammad Yaqoob Mir, Chief Justice Hon‟ble Mr. Justice S.R. Sen, Judge Appearance: For the Petitioner/Appellant(s) : Mr. N Dasgupta, Adv For the Respondent(s) : Ms. SA Challam, Adv vice Mr. N Mozika, Adv i) Whether approved for reporting in Yes Law journals etc.: ii) Whether approved for publication in press: No Per Mohammad Yaqoob Mir, „CJ‟: ORAL 1. By medium of this appeal, the order dated 22.03.2017 passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Kolkatta, in Excise Appeal No.661/2010, is assailed. 2. CESTAT while dismissing the appeal of the appellant arising out of the order-in-original No.002/SR/2010 dated 06.05.2010 passed by the Commissioner of Central Excise, Shillong, has opined that in terms of the Notification No.32/1999-CE dated 08.07.1999, refund claim was to be submitted by 30th September 2009. 30 days delay in submission on sufficient cause is condonable but delay of 104 days in filing the application is not condonable. Similar issue was dealt with by the Tribunal in the case of “Nalari Ferro Alloys Pvt. Ltd. v. Commr. of Central Excise, Shillong”- 2016 (337) ELT 113 (Tri-Kolkatta) wherein, it was observed that delay beyond the statutory limit prescribed in the said Notification is not condonable. Following the same order the appeal has been dismissed vide order 2 dated 22.03.2017, which is now impugned in this appeal filed under Section 35G of the Central Excise Act, 1944 read with Rule 29 of the CESTAT Procedure Rules, 1992. Background of the case: 3. The appellant is a registered company under the Indian Companies Act, 1956, „having its registered office at 13th Mile, Tamulkuchi, Byrnihat, Ri-Bhoi District, Meghalaya‟, is engaged in manufacture of Ferro Silicon, falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985. 4. The company is also registered with the department of Central Excise under Registration Number-AADCP2939HXM001, has been availing the benefit of exemption of central excise duty, in terms of the North East Area Based Exemption Notification No.32/99-Central Excise dated 08.07.1999 as amended by the Notification No.17/2008-Central Excise dated 27.03.2008 and Notification No.31/2008-Central Excise dated 10.06.2008 issued by the Government of India, Ministry of Finance (Department of Revenue), by refund of central excise duty paid. 5. The Central Excise Exemption Scheme, is available to the manufacturers, under the North East Industrial and Investment Promotion Policy 1997/2007. For stimulating the development of industries in North Eastern Region numbers of incentives/concessions are available for setting up of new industries in the Region so as to attract investors to invest money in the said Region. The industrial policy was introduced vide Notification dated 24.12.1997, in terms whereof, all the industrial activities in the Region were exempted from payment of income tax and excise duty for a period of ten years. 6. Notification No.32/99-CE dated 08.07.1999, provides the exemption of payment of central excise in respect of the goods specified in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 (for short the Act of 1985). The said 3 Notification was subsequently amended on 27.03.2008 then again amended vide Notification dated 10.06.2008. 7. The Notification No.31/2008 in effect gave liberty to an industrial unit to apply to the Commissioner for determination of the actual value addition, if the manufacturer of such an industrial unit do not agree to the rate of excise duty exemption, which has been made available to the manufacturer, then Commissioner of Central Excise has the jurisdiction and power to determine the actual value addition in the production or manufacture of goods and then to refund the excise duty to the extent of value addition, as per the procedure laid down in para 2.1 of the Notification dated 27.03.2008 and Notification dated 10.06.2008. The determination of actual value by the Commissioner of Excise is termed as “Special Rate”. 8. The appellant acting upon the promises made vide the 1997 Industrial Policy Resolution and also noticing the benefit of Notification No.32/1999-CE has set up manufacturing unit for manufacture of Ferro Silicon. He was granted the certificate of eligibility entitling him to receive exemption from payment of excise duty, so started receiving refund of central excise duty in terms of Notification No.32/1999-CE dated 08.07.1999. 9. Product of ferro manganese etc. manufactured by the appellant-company is covered under Chapter 72 of the goods specified in the First Schedule of the Act of 1985. 10. The appellant has submitted an application for “Special Rate” for the financial year 2009-2010 on 23.09.2009 received by the Commissioner on 30.09.2009. The supporting documents i.e. balance sheet, value addition certificate by the statutory auditor (Charted Accountant) was submitted on 13.01.2010. The Commissioner of Central Excise, Shillong rejected the application on the ground of having been preferred after the outer limit i.e. 4 30.09.2009. The rejection order has been maintained by the First Appellate Authority (CESTAT). 11. The appellant had sent letter (application) dated 23.09.2009 to the Commissioner of Central Excise, Old Peak Complex, MG Road, Shillong mentioning therein that the appellant is the manufacturer of goods of the description falling within 72 Chapter of the First Schedule. The rates of value addition for goods falling under the said Chapter of the Act of 1985 have been prescribed in the Notifications i.e. excise duty refund scheme under the Notification No.32/1999-CE dated 08.07.1999, Notification No.17/2008-CE dated 27.03.2008 and Notification No.31/2008-CE dated 10.06.2008. Furthermore, praying therein that the actual value addition in respect of the goods manufactured and cleared is more than the rates specified in the said table therefore, the application is for fixation of “Special Rate”. 12. In terms of Notification No.31/2008-CE dated 10.06.2008, an application in writing is required to be submitted not later than 30th day of September in a financial year for determination of Special Rate. However, the Commissioner of Central Excise if satisfied that the manufacturer was prevented by sufficient cause from making the application up to 30th September would allow further period of thirty days. 13. The application admittedly has been received by the Commissioner of Central Excise on 30.09.2009 and it is also admitted that the supporting documents were received on 13.01.2010, now the question is as to whether the application could be treated to have been filed beyond 30th day of September? The respondent-Commissioner of Central Excise has observed that though the application (letter) was received on 30.09.2009 but the supporting documents were received on 13.01.2010 therefore, complete application can be treated to have been filed on 5 13.01.2010. It is on such basis the application has been rejected same has been upheld by the First Appellate Tribunal (CESTAT). 14. Filling of the application up to 30th September in absence of supporting documents has to be treated as substantial compliance. 15. Keeping in view the benefit extended to the North Eastern Region, hyper technical approach shall not be in keeping with its object. The substantive condition is that the appellant must have filed application up to 30th September, which the appellant has. The Notification No.31/2008-CE dated 10.06.2008 only provide for filing of an application not later than 30th day of September. There is no condition that the supporting documents are to be filed up to 30th day of September of the year. It is quite relevant to quote para 2.1 (1) of the Notification No.31/2008-CE dated 10.06.2008 as under:- “(1) Notwithstanding anything contained in paragraph 2A, the manufacturer shall have the option not to avail the rates specified in the said Table and apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, having jurisdiction over the manufacturing unit of the manufacturer for fixation of a special rate representing the actual value addition in respect of any goods manufactured and cleared under this notification, if the manufacturer finds that the actual value addition in the production or manufacture of the said goods is at least 115 per cent of the rate specified in the said Table and for the said purpose, the manufacturer may make an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, not later than the 30th day of September in a financial year for determination of such special rate, stating all relevant facts including the proportion in which the material or components are used in the production or manufacture of goods: Provided that the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, may, if he is satisfied that the manufacturer was prevented by sufficient cause from making the application within the aforesaid time, allow such manufacturer to make the application within a further period of thirty days: Provided further that the manufacturer supports his claim for a special rate with a certificate from his statutory Auditor 6 containing a calculation of value addition in the case of goods for which a claim is made, based on the audited balance sheet of the unit for the preceding financial year: Provided also that a manufacturer that commences commercial production on or after the 1st day of April, 2008 may file an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, for the fixation of a special rate not later than the 30th day of September of the financial year subsequent to the year in which it commences production.” 16. Plain reading suggests that the substantive condition is to file the application up to 30th September of the financial year. The filing of supporting documents subsequent thereto will not negate the competence of the application having been filed within the date i.e. 30th September. In this behalf, it shall be advantageous to quote the following portion of para 11 of the judgment rendered by the Hon‟ble Apex Court in “Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner: 1991 (55) E.L.T. 437 (S.C.) as under:- “11. We have given our careful consideration to these submissions. We are afraid the stand of the Revenue suffers from certain basic fallacies, besides being wholly technical. In Kedarnath‟s case, the question for consideration was whether the requirement of the declaration under the proviso to Sec. 5(2)(a)(ii) of the Bengal Finance (Sales-tax) Act, 1941, could be established by evidence aliunde. The court said that the intention of the Legislature was to grant exemption only upon the satisfaction of the substantive condition of the provision and the condition in the proviso was held to be of substance embodying considerations of policy. Shri Narasimhamurthy would say the position in the present case was no different. He says that the notification of 11th August, 1975 was statutory in character and the condition as to „prior- permission‟ for adjustment stipulated therein must also be held to be statutory. Such a condition must, says counsel, be equated with the requirement of production of the declaration form in Kedarnath‟s case and thus understood the same consequences should ensue for the non-compliance. Shri Narasimhamurthy says that there was no way out of this situation and no adjustment was permissible, whatever be the other remedies of the appellant. There is a fallacy in the emphasis of this argument. The consequence which Shri Narasimhamurthy suggests should flow from the non- compliance would, indeed, be the result if the condition was a 7 substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non- observance of all conditions irrespective of the purposes they were intended to serve. .............” (emphasis added) 17. Para 24 of the judgment rendered in the case of “Commissioner of C.EX., New Delhi v. Hari Chand Shri Gopal” reported in 2010 (260) E.L.T. 3 (S.C.) is also advantageous to be quoted as under:- “24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the “essence” or the “substance” of the requirements. Like the concept of “reasonableness”, the acceptance or otherwise of a plea of “substantial compliance” depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means “actual compliance in respect to the substance essential to every reasonable objective of the statute” and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non- compliance of directory 8 requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non- compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the “substance” or “essence” of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the “essence” of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential.” (emphasis added) 18. The appellant has made it clear that he has submitted his application on 23.09.2009 which was received by the respondent- Commissioner of Central Excise on 30.09.2009. However, supporting documents could not be submitted in view of non- availability of the auditor due to his sickness. In absence of supporting documents, the application of the appellant was filed within time. Filing of supporting documents is simply a procedure therefore late filing of documents, will not destroy the right of the appellant. The contention appears to be plausible, firstly the substantive requirement is to submit the application up to 30th September which the appellant has done. Non-filing of the supporting documents with the application by no stretch of imagination in any circumstances could be termed to be fatal. Therefore, on such count, the application of the appellant could not be rejected. Similar view has been taken by the Division Bench of this Court in WP (C) No.196 of 2016 titled “M/s Mawthlliang 9 Wood Products Pvt. Ltd. v. The Commissioner of Central Excise, Shillong” wherein, it has been held that “so far supporting documents are concerned, mere non-filing of the same with the application could not have been taken as fatal to the cause nor the application could have been declined on that ground alone”. 19. The learned Tribunal has relied on its earlier order passed in the case of “Nalari Ferro Alloys Pvt. Ltd. v. Commr. of Central Excise, Shillong”- 2016 (337) ELT 113 (Tri-Kolkatta), but in the said case neither the application nor the supporting documents were filed within time. The copy of the judgment of the said case as placed on record clearly reveal that the required application for claiming the benefit was not filed by due date of 30.09.2009 or within condonable period of thirty days. In the case in hand, the application which was substantive condition was filed within due date of 30.09.2009. 20. For what has been stated hereinabove, the order passed by the Commissioner of Central Excise, Shillong dated 06.05.2010 and the order passed by the First Appellate Tribunal dated 22.03.2017 are not sustainable, are set aside. 21. The matter is remitted back to the Commissioner of Central Excise, Shillong for deciding the original application of the appellant regarding the claim on its merits. 22. The appeal succeeds as above. 23. Copy of this order be sent to the CESTAT, Kolkatta and Commissioner of Central Excise, Shillong for information. (S.R. Sen) (Mohammad Yaqoob Mir) Judge Chief Justice Meghalaya 14.08.2018 “Lam AR-PS” "