2013 (4) TMI 562 - AT - Central Excise

Assessee availed benefit of Notification No. 5/98-C.E. - Revenue Authorities were of the view that the benefit of said Notification is available only when he does not avail credit of duty paid on manufactured products. - appellate authority noticed that there were two registered unit situated in the same factory premises and was manufacturing finished products one of which was availing the benefit of Modvat credit, while another unit was claiming exemption. Accordingly demand of duty, interest & penalties arise. First appellate authority set aside the Order-in-Original on merits as well as limitation. Revenue file an appeal. Held that None appeared on behalf of assessee. After interpretation of notification we confirm the demand against the appellant. However, the same is required to be re-quantified after extending the benefit of Modvat credit. The benefit of cum-duty price is also to be extended and demand is required to be re-calculated. Appeal is disposed of accordingly . The department chose to issue show cause notice on 15-4-2003 by invoking the extended period of limitation and demanded duty for the period from June, 1998 to March, 2000. We find that the findings recorded by first appellate authority as regards limitation are uncontroverted. Accordingly, we find that the impugned order is liable to be upheld as it is correct and legal on the ground of limitation hence the Revenue s appeal is rejected.

Summary

Issues:
1. Interpretation of Notification No. 5/98-C.E. for availing exemption.
2. Applicability of Modvat credit and duty liability on products manufactured in the same factory premises.
3. Imposition of penalty for non-declaration of Modvat credit.
4. Decision on limitation period for demanding excise duty.

Analysis:

Issue 1: Interpretation of Notification No. 5/98-C.E. for availing exemption
The case involved a dispute regarding the eligibility of the respondent to avail the benefit of Notification No. 5/98-C.E. The Revenue contended that the exemption under the said Notification could not be availed as duty paid and Cenvat credit were utilized in the manufacturing process. The argument was supported by reference to previous Tribunal decisions. The Tribunal confirmed the demand against the appellant based on the interpretation of the Notification, but directed a re-quantification of the demand after considering the Modvat credit and cum-duty price.

Issue 2: Applicability of Modvat credit and duty liability on products manufactured in the same factory premises
The case highlighted the scenario where two units within the same factory premises were involved in manufacturing products, with one unit availing Modvat credit while the other claimed exemption. The Tribunal referred to a previous decision to confirm the demand against the appellant. However, the penalty was set aside considering it as a question of interpretation without any malafide intentions on the part of the appellant.

Issue 3: Imposition of penalty for non-declaration of Modvat credit
The case addressed the imposition of penalties on the appellant for non-declaration of availing Modvat credit. The Tribunal disposed of the cross-objection filed by the assessee summarily as it supported the impugned order. The penalty was set aside based on the interpretation of the Notification and the absence of mala fide intentions.

Issue 4: Decision on limitation period for demanding excise duty
Regarding the limitation period for demanding excise duty, the first appellate authority found that the show cause notice issued invoking the extended period of limitation was not valid. The authority noted that the appellant had filed declarations to avail the benefit under Notification No. 5/98-C.E., and the Department was aware of these facts. As a result, the extended period could not have been invoked, and the demand for duty for the specified period was held to be hit by the law of limitation. The Tribunal upheld the appellate authority's decision on limitation, leading to the rejection of the Revenue's appeal.

In conclusion, the judgment addressed various issues related to the interpretation of Notification No. 5/98-C.E., the utilization of Modvat credit, imposition of penalties, and the limitation period for demanding excise duty, providing detailed analysis and decisions on each aspect of the case.