9911796707
TMI Blog1996 (9) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... e with M/s. MUL, manufacture seats for motor vehicles exclusively for supply to MUL. The seat assembly consists of three parts. These three parts are first manufactured by BSL and thereafter sold to MUL. The parts, thereafter, are re-issued by M/s. MUL to BSL for manufacture of seats on job work basis, after which, M/s. BSL supplies the complete seats to M/s. MUL, who use the seats in the manufacture of their motor vehicles. Prior to 21-1-1989, parts of seats used to be physically transported by BSL to MUL under a gate pass. MUL availed Modvat credit on the basis of those gate passes. Thereafter, the parts were physically re-supplied to the BSL under the procedure for the purpose of sending inputs to job workers as per Rule 57F(2) of Central Excise Rules. However, for the period, after 21-1-1989, parts of seats did not physically move from the factory of BSL to that of MUL nor was there any physical movement of them to BSL. However, Central Excise duty was paid by BSL and credit was taken by MUL of the duty paid as per the gate passes. They were issuing necessary challans under Rule 57F(2). 2. Department initiated proceedings against MUL that for the period after 21-1-1989, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Rule 57C cannot be applied in a case where the assessee opts to pay duty without claiming the exemption under the notification available to him. The ld. Counsel, thereafter, referred to a series of stay orders passed by the Tribunal in similar circumstances, in cases, arising under unconditional exemption Notification No. 1/93, which gave exemption to non-registered SSI units upto clearance value of Rs. 30 lakhs. In all those cases, the department had sought to deny Modvat credit where the units had paid excise duty without availing of the exemption. But in all these cases, the Tribunal had consistently been granting unconditional stay on the prima facie view that the Modvat credit cannot be denied in these circumstances. The ld. Counsel, further, submitted that in their own case, there is an order of the Commissioner (Appeals) dated 24-9-1992 holding that the automobiles seats, manufactured by them, is covered by Serial No. 4 of the Notification 80/90, whereunder there is lower rate of duty at 20 per cent. The Commissioner (Appeals) order has become final and, therefore, the department cannot invoke the Rule 57C saying that the seats are totally exempted from duty. The ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, seats , at the time of their receipt were not accompanied by duty paying documents of the parts. However, the applicants MUL are relying upon Para 3.1 of the Trade Notice and the procedure therein, which is relevant to their case and not Para 4 relied upon by the Commissioner. Again, ld. Counsel pointed out that Notification 351/86 was amended in March, 1987 to include goods under Chapter 94, which has been omitted to be noticed by the Commissioner. The ld. Counsel argued that the Commissioner is wrong in concluding that BSL have captively consumed the parts for their factory and for such captive consumption, gate passes cannot be issued as there is no removal under Rules 4 and 49. Therefore, the documents, on the basis of which MUL had taken Modvat, are not valid documents. But the ld. Counsel submitted that the Commissioner has overlooked the Explanation to Rules 9 and 49, Proviso to Rule 52A(2) and Rule 173G(2), which provides for issue of gate passes, even for captive consumption. It was contended that none of the particulars mentioned in the gate passes or 57F(2) challans were in any way incorrect and there is stage by stage correlation possible of all these documents. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow payment of duty would arise, according to the department. In this case goods were neither removed nor received back or any duty need be paid thereon because of the exemption. The ld. C.D.R. further, argued that the requirement under Rule 57G that the inputs should be received in a factory under cover of valid duty paying document, is not merely an enabling provision, but a prohibitory Rule which prohibited credit unless the goods are received under proper gate pass or such other valid document. Applicants MUL in this case took credit without receiving the goods and the ld. C.D.R. contended that the assessee cannot choose the rules, which he will follow and those he will not follow. The applicants MUL have flouted the provisions of Rule 57F(2) for which they had obtained permission. The ld. C.D.R. drew attention to the Commissioner s order citing the Supreme Court decision in the case of McDowell Co. v. C.T.O. that tax evasion should be put down and in this case the applicants have made use of a device for evasion of tax. 6. The submissions made by both the sides have been carefully considered. The main charge against applicant MUL is that they had received gate passes of par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Column 5 requires information whether the raw-materials are supplied directly to the job worker without first bringing the materials to the factory of the applicant manufacturer. On the other hand, the department s case is that they had detected this lapse on visit to the applicants factory and check of their records. Prima facie, there is a failure on the part of applicant MUL to adhere to the prescribed procedure. The issues are, therefore, arguable, and it cannot be said that applicants MUL have made out a case for total waiver of pre-deposit of duty and penalty for hearing their appeal. As regards the quantum of the pre-deposit to be made, the fact that the Commissioner, himself, has dropped the demand for the period prior to 21-1-1989 when there was physical to and fro movement of parts and of seats between BSL and MUL, could be taken as a relevant aspect, and, accordingly, we direct that the appeal of MUL be heard on the condition that they deposit Rs. 20 crore (Rupees twenty crores only) on or before 15-10-1996 which may be done by reversal of credit in their RG 23A Part II Modvat credit register. On compliance with this direction, the pre-deposit of the balance of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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