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TMI Blog1999 (6) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... d substance, are as follows :- (a) The appellants had cleared from the factory W S to the job workers without payment of duty and without following the central excise procedures, and (b) The appellants had not filed the classification list with regard to the clearance of W S leading to suppression of facts from the department, with an intention to evade payment of duty. 1.4 Show cause notices, on adjudication, have resulted in the following demands of duty and imposition of penalties :- (a) Hebbal Plant Duty demand : - Rs. 20,82,229.71 for the period 1-3-1986 to 13-8-1989 Penalty :- Rs. 2 Lakhs (b) Mysore Road Plant Duty demand :- Rs. 16,27,307.69 for the period 1-3-1986 to 13-8-1989 Penalty :- Rs. 1,50,000/- Hence these two appeals before us. 2.1 Ld. Advocate Shri V. Sridharan for the appellants has urged that the adjudicating authority has erroneously denied the benefit of Notification No. 186/84-C.E., dated 1-8-1984 to such W S by assuming that the appellants have admitted using non-duty-paid lead ingots by admitting that lead ingots partly used by them and (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad W S. Therefore, none of the refiners pays duty being exempted under Notification 37/81. Similarly the job-workers of the appellants receive W S from the appellants arising out of duty-paid lead ingots i.e. duty paid ingots imported by the appellants and duty paid ingots obtained from MMTC, exempted lead ingots purchased from refiners and exempted lead ingots received from job-workers (out of the appellant s own scrap). Therefore, such lead ingots (i.e. obtained from refiners and job - workers) are exempted under Notification No. 37/81-C.E. He submits that it is settled law that goods exempted from duty are to be treated as goods on which duty has already been paid in view of Apex Court s judgment in the case of Collector v. Usha Martin Industries [1998 (94) E.L.T. 460]. 2.4 Once the lead ingots from refiners and job-workers, even though exempted under Notification No. 37/81-C.E., become duty paid in view of Usha Martin (supra) W S, benefit of Notification No. 186/84-C.E., dated 1-8-1984, as it stood before 2-11-1987 (when the said Notification 186/84-C.E. was amended by Notification No. 246/87-C.E.), cannot be denied because proviso (i) to the said Notification No. 186/8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h requires to be eliminated. 8. Ld. Advocate has also raised the plea of limitation against demand of duty since the show cause notices to both units have been issued well beyond the normal limitation of six months for the entire period of demand, inasmuch as the entire exercise is revenue neutral and there could not be any intention to evade payment of duty. Non-following of procedure in such circumstances could not amount to suppression of any pact wilfully. 9. In the above circumstances, penalty is also not imposable. 10.1 Opposing the contentions, ld. SDR submits that the question of applicability of Notification No. 186/84-C.E. to the waste and scrap generated in the course of manufacture of electric storage batteries and parts thereof has to be examined for two different periods namely (i) 1-3-1986 to 1-11-1987 and (ii) 2-11-1987 to 13-8-1989, because of a very material change made by amending Notification No. 246/87-C.E., dated 2-11-1987 in the context of the facts and circumstances of this case. 10.2 He submits that the ld. Advocate has taken support of Apex Court s judgment in Usha Martin (supra) to contend that lead ingots obtained from refiners and job-workers ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Departmental Officers knew about the process of manufacture of their final product, about generation of the W S and about its clearance but no evidence has been brought on record to show that the departmental officers knew about the removal of W S. The appellants want to prove knowledge of the officers only because the C.E. Officers had been visiting their factories from time to time. Visits of the officers by themselves do not impart knowledge to them regarding removal of W S without payment of duty. 12. Even the plea of bona fide belief is not justified without production of the material generating such a belief, as found by the adjudicating authority. 13. As regards the argument of revenue neutrality i.e. there is neither any gain or loss of revenue to the department, ld. SDR submits that this plea is without substance. Duty on W S becomes payable by the appellants. Refiners and job-workers, receiving such duty paid W S could or would have taken Modvat credit only if they had been paying duty. It is the appellant s own case that they are not paying duty. Therefore, the argument is hollow, submits the ld. SDR. 14. Notification No. 217/86-C.E. cannot also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 186/84-C.E. (as amended) was added immediately before the existing Explanation. Said proviso is also reproduced below :- Provided further that the exemption contained in this notification shall apply only if :- (i) no credit has been taken on the input from which such scrap has been generated under Rule 57A of the Central Excise Rules, 1944; or (ii) an amount equivalent to the credit taken, if any, on the input from which such scrap has been generated, has been debited back in the RG 23A account or the current account maintained by the assessee. 16.4 Ld. Advocate s contention is that W S in this case is exempted under the said notification because it fulfils the condition No. (i) of the first proviso. This contention is plainly incorrect because lead ingots received from two sources - refiners and job workers - have not paid any duty. Contention, however, is that ingots from these two sources is to be deemed to have paid duty because these have been cleared after availing exemption under Notification No. 37/81-C.E. and therefore, in view of Apex Court s judgment in Usha Martin (supra), these are to be deemed to have paid duty leviable on them. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. Argument of the ld. Advocate is that if the W S removed to the job-workers is charged to duty, the job-worker would have taken the Modvat credit of duty paid on such W S and would have had adjusted the duty payable on lead ingots manufactured by him out of such W S. This assumes that job-workers would be simultaneously working under exemption as well as paying duty in respect of lead ingot manufactured by him out of his own W S and those out of duty-paid W S supplied by the appellant to such a job-worker respectively. This would be an unworkable proposition would any job-worker undertake such type of job-work. These are all the questions which would arise in considering the plea of the appellant regarding revenue-neutrality. Appellants have only raised a hypothetical plea without reference to the facts and circumstances of this case. 18.2 For the reasons cited by the ld. SDR, benefit of Notification No. 217/86-C.E. would not be available because of the intervention of third person a (job-worker) in this case. 19.1 We are now left with the last plea regarding the show cause notices being barred by time. In this regard, the appellants have made two fold pleas :- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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