2017 (8) TMI 775 - AT - Central Excise

Utilisation of raw materials procured under CT-2 form - Revenue alleged that the raw materials received under CT-2 forms were not used in the manufacture of power driven pumps primarily designed for pumping water - Held that - raw materials procured under CT-2 form prescribes that the goods procured through these forms shall be subject to the conditions of N/N. 5/1998-CE dated 02/06/2000, No. 6/2000-CE 01/03/2000 and 3/2001-CE dated 01/03/2001 - When the Notification requires that duty-free raw materials should be used for duty-free output, such object should not be defeated. Present cases are clear violation of law and that should not get any protection. Due to paucity of time the order could not be recorded and the order is reserved to come up on 30/06/2017. Proceedings having been recorded both sides are entitled to get copy thereof on proper application.

Issues:
Utilization of raw materials procured under CT-2 form, Allegations of not using raw materials in the manufacture of specified goods, Duty demand and penalty imposed, Examination of evidence and records, Compliance with Notification requirements, Misplacement of sympathy by Commissioner (Appeals), Violation of law, Proper examination of quantum of raw materials, Appeal grounds and objections, Invocation of Section 11A and 11AC.

Utilization of Raw Materials under CT-2 Form:
The appeals revolve around the utilization of raw materials procured under CT-2 form for manufacturing power-driven pumps designed for pumping water. The Revenue alleged that the raw materials were not used as required by the relevant Notifications. The show cause notices issued by the Revenue raised duty demands and penalties.

Examination of Evidence and Records:
The Revenue argued that the authorities did not properly examine the evidence and records, leading to errors in adjudication. The appellant was accused of not maintaining proper records, failing to furnish statutory records, and not accounting for the inputs received under CT-2 forms adequately.

Compliance with Notification Requirements:
The Revenue contended that the purpose of duty-free raw materials should align with duty-free output, and any deviation constitutes a violation of law. The lower authorities were criticized for not examining the real object of the Notification and for allegedly misplacing sympathy towards the respondent.

Proper Examination of Quantum of Raw Materials:
The Revenue urged for a reexamination of the quantum of raw materials purchased under CT-2 certificates and the actual utilization for the specified purpose to ensure appropriate levy in accordance with the law.

Appeal Grounds and Objections:
The respondent argued that there was no violation as the raw materials were used for manufacturing dutiable and non-dutiable goods as well as for repairs, compensating for the duty foregone on exempted raw materials. The respondent defended the examination done by the adjudicating authority and opposed any disturbance to the orders.

Invocation of Section 11A and 11AC:
The respondent relied on legal provisions and precedents to argue that Section 11A and 11AC should not be invoked in the present case, emphasizing compliance with Central Excise Rules regarding duty payment and utilization of inputs.

Conclusion:
The judgment highlighted the complexities surrounding the utilization of raw materials under specific forms, the importance of maintaining proper records, and the necessity for strict compliance with Notification requirements. The case underscored the need for a thorough examination of evidence, adherence to legal provisions, and the proper application of duty-related rules and penalties.

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