The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) held that Form H can be valid evidence as it is a statutory document evincing the export of corrugated boxes. The bench viewed that the evidentiary value of such statutory documents, even though not related to central excise law, appears to have been misconstrued by the first appellate authority
The appellant, M/s Shree Hari Packing Industries Ltd is a manufacturer of ‘corrugated boxes, cards rolls and sheets,’ and had been supplying the same to ‘merchant exporters’ in the business of shipping of ‘fruits/vegetables’ as packing. The appellant was operating under notification no. 8/2003-CE dated 1st March 2003 entitling ‘small scale industrial (SSI)’ units to exemption on clearances up to the limit which was to be computed after exclusion of non-excisable goods, exempted goods and exported goods.
The clearances effected by the appellant between April 2008 and March 2010 came under scrutiny in view of the value of clearances of ‘corrugated boxes’ amounting to ₹ 1,65,63,070.55 and ₹ 1,44,40,860.40 in 2008-09 and 2009-10 out of a total value of ₹ 2,20,33,939.55 and ₹ 2,53,68,305.45 respectively for the two years.
The appellant claimed that they were not required to register themselves under the Central Excise Act,1944 as their clearances, net of excludable value, were below the prescribed threshold in the notification and that they had submitted ‘form H’ – used for obtaining exemptions from ‘commercial tax’ authorities – for the said value of clearances.
The original authority, accepting the claims of the appellant herein, dropped proceedings but showed cause notice proposing recovery of duty of ₹ 9,16,627/- under section 11A of Central Excise Act, 1944, along with applicable interest under section 11AB of Central Excise Act, 1944, and imposing penalty of like amount under section 11AC of Central Excise Act, 1944 came to be upheld and hence this appeal.
the appellant is an unregistered unit and, therefore, had not been following the procedure prescribed under Central Excise Rules,1944 and corresponding notifications to the procedure for export of goods, including packing material through third parties.
It was viewed that when the buyer of the respondents uses the cardboard boxes for packing fruits and vegetables, the identity of the cardboard boxes is lost and what the buyer exporting is fruits and vegetables and not corrugated boxes.
It was observed that when representations were received by the small-scale manufacturers the Board vide Circular No. 648/39/2002-CX dated 25.07.02 clearly stated the simplified export procedure is available only if the manufacturer or the merchant exporter exports the goods from the unit itself. Hence, the value of clearance of corrugated boxes by the exporter cannot be excluded from the value of Rs. 150 Lakhs.
A two-member bench comprising Mr C J Mathew, Member (Technical) and Mr Ajay Sharma, Member (Judicial) observed that the appellant had submitted ‘form H’ which was held to suffice for the finding of the Tribunal in re Vadapalani Press. The rejection of the applicability of that decision was grounded in the absence of registration by the appellant and the consequent absence of records.
“Even if such evidence is not available, the first appellate authority should have taken into account the finding or the adequacy of the finding by the original authority requiring ‘form H’ which is a statutory document evincing export of those corrugated boxes. The evidentiary value of such statutory documents, even though not related to central excise law, appears to have been misconstrued by the first appellate authority.”, the bench viewed.
The CESTAT set aside the impugned order and remanded the matter back to the first appellant authority to ascertain the applicability of the evidence of form H and to explicitly detail the reasons.
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