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2014 (11) TMI 1062 - AT - Central ExciseCenvat credit on wrong duty payment - Held that - It is an admitted position that during the said period the appellant did not manufacture any DFMO at Jammu as their factory was not operating. The receipt of terpene from TYIL Taloja during this period the statements of various officials of the appellant firm confirming the same the absence of test reports for the DFMO for this period all corroborate the fact that no deterpenation was undertaken at JDL Jammu during this period and therefore the goods cleared during this period at Jammu was none other than CMO. Therefore the appellant could not have availed the benefit of Notification No. 56/2002 in respect of such clearances. Consequently the unit at Taloja also could not have availed any Cenvat credit on such wrong duty payment on Crude Mentha Oil. Therefore the duty demand against M/s. Jindal Drugs Ltd. Jammu under the provisions of paragraph 2A(g) of Notification No. 56/2002-C.E. dated 14-11-2002 read with Section 11A of the Central Excise Act 1944 is upheld along with interest liability thereon under Section 11AB of the said Act. Central Excise duty demands in respect of Terpene and in respect of Menthol Crystals are upheld against M/s. Tien Yuan India (P) Ltd. under Section 11A of the Central Excise Act 1944 along with interest thereon under Section 11AB and penalty of equivalent on the said firm under Section 11AC of the Central Excise Act 1944 are upheld. Confiscation of goods valued at 95.08 lakhs (approx.) seized on 23-6-2006 at the premises of M/s. Tien Yuan India (P) Ltd. Taloja under Rule 25 of the Central Excise Rules 2002 along with option to redeem the same on payment of fine of 22 lakhs is upheld. The balance of demands towards duty interest and penalties (other than those mentioned above) are set aside.
Issues Involved:
1. Duty demand and interest liability on M/s. Jindal Drugs Ltd., Jammu. 2. Denial of Cenvat credit to M/s. Tien Yuan India (P) Ltd., Taloja. 3. Imposition of penalties on M/s. Jindal Drugs Ltd., Jammu and M/s. Tien Yuan India (P) Ltd., Taloja. 4. Confiscation of goods seized at the premises of M/s. Tien Yuan India (P) Ltd., Taloja. Detailed Analysis: 1. Duty Demand and Interest Liability on M/s. Jindal Drugs Ltd., Jammu: The adjudicating authority confirmed a duty demand of Rs. 22,13,22,732/- against M/s. Jindal Drugs Ltd., Jammu (JDL, Jammu) under Notification No. 56/2002-C.E. read with Section 11A of the Central Excise Act, 1944, along with interest under Section 11AB. The Tribunal upheld the duty demand of Rs. 3,93,78,240/- for the period from 26-12-2005 to 16-1-2006, as the factory was not operating, and no DFMO was manufactured. The remaining demand was set aside due to lack of evidence that the goods cleared were not DFMO. The test reports indicated that the terpene content was less than 1%, showing that deterpenation had occurred. 2. Denial of Cenvat Credit to M/s. Tien Yuan India (P) Ltd., Taloja: The denial of Cenvat credit amounting to Rs. 3,93,78,240/- to M/s. Tien Yuan India (P) Ltd., Taloja (TYIL) was upheld. However, the Third Member (P.S. Pruthi) held that TYIL was eligible for the Cenvat credit, as the credit had been reversed before the final determination, and the original duty payment on the goods still stood. The Tribunal ultimately decided in favor of TYIL, allowing the Cenvat credit. 3. Imposition of Penalties: - On M/s. Jindal Drugs Ltd., Jammu: The penalty of Rs. 3,93,78,240/- under Section 11AC was upheld by the Member (Technical) but set aside by the Member (Judicial) and the Third Member. It was determined that since the situation was not of erroneous refund and the credit had been reversed, Section 11A was not applicable, and consequently, penalty under Section 11AC was not imposable. - On M/s. Tien Yuan India (P) Ltd., Taloja: The penalty of Rs. 3,93,78,240/- under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC was upheld by the Member (Technical) but set aside by the Member (Judicial) and the Third Member. Since the credit was held to be available to TYIL, the question of penalty did not arise. 4. Confiscation of Goods Seized at the Premises of M/s. Tien Yuan India (P) Ltd., Taloja: The confiscation of goods valued at Rs. 95.08 lakhs seized on 23-6-2006 at the premises of TYIL under Rule 25 of the Central Excise Rules, 2002, with an option to redeem the same on payment of a fine of Rs. 22 lakhs, was upheld by the Tribunal. The Member (Judicial) disagreed, but the Third Member concurred with the Member (Technical), confirming the confiscation and fine. Final Order: 1. The duty demand of Rs. 3,93,78,240/- against JDL, Jammu, under Notification No. 56/2002-C.E. read with Section 11A of the Central Excise Act, 1944, along with interest under Section 11AB, was upheld. 2. Central Excise duty demands of Rs. 1,55,105/- in respect of Terpene and Rs. 98,083/- in respect of Menthol Crystals were upheld against TYIL under Section 11A of the Central Excise Act, 1944, along with interest under Section 11AB and equivalent penalty under Section 11AC. 3. Confiscation of goods valued at Rs. 95.08 lakhs seized on 23-6-2006 at the premises of TYIL under Rule 25 of the Central Excise Rules, 2002, with an option to redeem the same on payment of a fine of Rs. 22 lakhs, was upheld. 4. The balance of demands towards duty, interest, and penalties (other than those mentioned above) were set aside.
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