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2014 (2) TMI 297 - CESTAT MUMBAICENVAT Credit - Input service distributor (ISD) - distribution of service tax credit to the Job worker - Contravention of Rules 2(m) and 7 of CENVAT Credit Rules, 2004 (CCR, 2004) - Invocation of extended period of limitation - Held that:- the question of distribution of credit by M/s. Merck Specialties ltd. to the job-workers does not satisfy the condition that the credit is distributed to its manufacturing units. It is a settled position of law that job-workers who actually undertake the manufacturing process is the ‘manufacturer' of goods and not the supplier of raw materials. It is the appellants who are the manufacturers and not M/s. Merck Specialties Ltd. who has merely supplied the raw materials to be the appellants for the manufacture of the goods. It is also not in dispute that it is the appellants who are discharging the excise duty liability though on the price declared by M/s. Merck Specialties Ltd. The value on which excise duty liability is discharged is not determinative of the liability to pay excise duty or who the manufacturer - The fact that the appellants are independent job-workers and the transactions were on a principal-to-principal basis was not disclosed to the department. Thus, there is a deliberate mis-declaration on the part of M/s. Merck Specialties Ltd. in stating that the units to which they have distributed the credit are their own manufacturing units whereas the facts were otherwise. Similarly, in the declaration made to Dy. Commissioner, Belapur I Division, the appellants did not intimate that they were availing credit in terms of Rule 7 of CCR, 2004. In views of the deliberate mis-statement of facts on the part of the appellants, the invocation of extended period of time is clearly justified. Therefore, the demands are sustainable. Once the invocation of extended period of time is held to be correct in law, mandatory penalty under Section11AC is an automatic consequence. Therefore, the appellants are liable to penalties under Section 11AC of the Central Excise Act, 1944 - once there is a mis-statement of facts or suppression of facts, mandatory penalty is imposable - Following decision of Union of India vs. Dharmendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT ] - Decided against the assessee.
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