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TMI Blog1997 (11) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... t and to some extent through their PLA account under Rule 57F(i)(ii) of Central Excise Rules, 1944 and that the assessees in turn were availing Modvat credit of duty paid on such duty free material received from TIDC contravening Central Excise Rules, 1944, as Rule 57F(i)(ii) of Central Excise Rules, 1944 does not apply to the duty free goods imported and subsequently supplied to a job work manufacturer. 2.2 The Assessees were converting the raw material so received from TIDC into industrial and automotive chains and clearing these goods either to the Depot of TIDC for home consumption or to TIDC Madras for Export under AR 4s for which assessees were receiving conversion charges from TIDC. Both the units belong to MURUGAPPA GROUP Madras manufacturers of Automotive parts. 3.1 The officers of Anti-evasion, Central Excise, Hqrs. Office, Hyderabad visited the factory of assessees on 11-1-1996 and verified the stocks. During verification of stocks, the officers seized 10,932 kgs of CRCA strips and 1,362 kgs of alloys steel wire of foreign origin. On scrutiny of the records, it was found that the assessees had availed Modvat credit of Rs. 62,22,694 during 19-5-1993 to 28-8-1995 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees asking them to show cause as to why :- (i) irregularly availed Modvat credit of Rs. 62,22,694/on duty free DEEC material received under Rule 57F(i)(ii) should not be paid by them under Rule 57-I of Central Excise Rules, 1944 read with proviso to sub-section (i) of Section 11A of the Central Excises Salt Act, 1944; (ii) penalty should be imposed on them for irregular availment of Modvat credit under Rule 173Q of Central Excise Rules, 1944; (iii) the seized goods viz. 10,932 kgs of CRCA strips and 1,362 kgs of Alloy Steel Wire totally valued at Rs. 3,10,900/- which were provisionally released should not be confiscated under Rule 173Q of Central Excise Rules, 1944 for the contravention of Rules 57A, 57G, 57F of Central Excise Rules, 1944. 5.1 The assessee in their reply dated 5-8-1996, contended inter alia, that :- (i) they are manufacturers of chains and parts thereof falling under Heading 73.15 of Central Excise Tariff Act, 1985; (ii) unit was earlier known by the name of M/s. Sathavahana Chains Limited and they had taken over the unit on orders of BIFR dated 5-10-1992 and the unit was renamed as Rolmor Chains Divn.; (iii) the activity of manufacturing chains c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.C.E. - 1994 (74) E.L.T. 9 (S.C.) 3. C.C.E. v. Chemphar Drugs and Liniments - 1989 (40) E.L.T. 276 (S.C.) (xiv) there is no mala fide intention on their part in regard to availment and utilisation of Modvat credit or in regard to clearances. Hence no penalty is to be imposed on them for the alleged irregularity in respect of availment of Modvat credit; (xv) in respect of seizure of goods, there was no contravention of law on their part and the seizure of goods valued at Rs. 3,10,900/- on 11-1-1996 was unwarranted. Hence question of confiscation of goods would not arise. Finally they requested to drop the proceedings. 5.2 The assessees were heard on 3-9-1997 through Shri S. Venkatarama Iyer, Consultant, Shri M.R. Diwakar, Chief Manager and Shri A. Venkataramana, Senior Accounts Officer of the company. The learned Consultant, reiterated the contentions raised in the reply to the show cause notice. He also stated that show cause notice was issued to their client on the basis of the show cause notice to M/s. T.I. Diamond Chains, Madras. The proceedings on the show cause notice issued to T.I. Diamond Chains, Madras were dropped by the Commissioner, Central Excise, Chennai vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.4 Now the question to be decided is whether the said credit availed by the assessee during the relevant period can be disallowed under Rule 57-I read with proviso to Section 11A(1) of Central Excise Act, 1944. 7.5 As far as the declaration filed under Rule 57G is concerned, the format of declaration does not require the assessee to indicate whether goods received were imported or indigenous. According to the statement of Shri N. Chandrasekhar, Accounts Executive of the assessee company they came to know about the nature of the inputs only in November, 1995, thus it cannot be said that the assessee had wilfully misdeclared or suppressed any information in Rule 57G declaration. 7.6 The AR 4s for exports were signed both by TIDC and assessees. For some time, the export goods were permitted to be taken to TIDC factory at Madras for further process of manufacture before export. This permission was withdrawn towards the end of 1995. Till the end of October, 1995 the exports were categorised as others under AR 4s. As the exports were by TIDC it is for TIDC to reflect the correct facts on AR 4s. The responsibility of the assessee as job worker is not as that of the principals viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X
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