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TMI Blog2000 (8) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... . 202/88 which allowed total duty exemption for manufacture of final products viz., tubes and pipes and blanks therefor of steel, other than seamless tubes and pipes of steel if they are manufactured out of goods specified in Column (3) of the Table viz., skelp, hoops, sheets of thickness not exceeding 5 mm, strips of thickness not exceeding 5 mm and flats of thickness not exceeding 5 mm . By SCN dated 19-2-1993 the Department alleged that the appellants had manufactured pipes out of strip bars, rectangular bars etc. which are not specified inputs for manufacture of pipes under Notfn. 202/88 and therefore not eligible for the exemption. 3. The matter was adjudicated by the Commissioner resulting in the impugned order. The Commissioner found on a perusal of GP1s resumed by the Department that the appellants had purchased bars, hot rolled bars, strip bars and rectangular bars having uneven thickness and uneven width falling under Tariff sub-heading 7214.90 for the manufacture of their final products. Commissioner observed that Tariff sub-heading 72.08 to 72.12 relate to flats, rolled products of different categories and the sub-heading under each category was further categorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the necessary declaration under Rule 57G(1), which formed the basis for availing the Modvat credit, no claim on the basis of availability of Modvat credit would also be admissible to the appellants. As regards the imposition of penalty the Commissioner held that the contention of the appellants that there was no mala fide intention on their part for contravention of any rule was not tenable because appellants had wilfully suppressed the fact of production of 11,307.149 M.Ts of welded GI/MS Pipes from the Department with intention to evade duty and had cleared the same without payment of Central Excise duty amounting to Rs. 1,19,46,941/-. 4. Arguing the appeal before us, Shri G. Shiv Das, ld. Advocate (along with Shri M.P. Devnath, ld. Advocate) submits that duty exemption has been denied to the appellants on the ground that they had used strips, bars, rectangular bars etc. in the manufacture of their final products. Since in terms of Sl. No. 3 of the Table II in Notfn. No. 202/88 only pipes and tubes manufactured out of flat, skelp, H.R. coil etc. are to be used, the exemption claimed by the appellants was not maintainable. The ground on which the inputs used by the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has become wholly unsustainable and since there was no intention to evade payment of duty the demand raised beyond the six months period was also not maintainable. For the said reason no penalty was also imposable, contends ld. Counsel for the appellants. 5. Defending the impugned order. ld. SDR, Shri R.K. Sharma has argued that the first question to be considered was whether the appellants were entitled to the benefit of Exemption Notification No. 202/88. It is the settled legal position that while Tariff Entries are to be interpreted in terms of Section Notes, Chapter Notes etc. in the Tariff, the terms and expressions used in Exemption Notifications are to be interpreted in their own terms, independent of rules of interpretation of Tariff items which were governed by Section Notes/Chapter Notes. The assessments were initially made provisional. Further, the GP1s under the cover of which the inputs were received clearly showed that they consisted of bars, hot rolled bars, rectangular bars etc. having uneven thickness and uneven width which would clearly fall under Chapter sub-heading 7214.90. As had been rightly observed by the Commissioner in the impugned order, the Chapter he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent Larger Bench decision of the Tribunal in M/s. Jay Yuhshin Ltd. v. CCE (Final Order No. 578/2000-A, dated 12-7-2000 [2000 (119) E.L.T. 718 (Tribunal-LB)] in which it was held that availability of Moavat credit to the assessee would be a valid defence against allegation of intention to evade duty for purposes of proviso to Section 11A(1). Ld. Counsel also submitted that in Annexure C to the SCN there was a calculation error resulting in excess duty demand of Rs. 7,75,963.00. 7. We have considered the above submissions. 8. The duty demand has arisen on two counts, viz., the manufacture of pipes by the appellants out of flats and the other, for clearance of M.S. Pipes after galvanisation of the pipes purchased by them from the market. Pipes manufactured from flats were eligible for duty exemption under Notfn. No. 202/88. The Department s case in short is that the appellants had purported to avail of the exemption available under Notfn. No. 202/88 though the inputs received by them were material other than flats. Department relies on the Gate Passes issued to the appellants by the suppliers of the raw material describing the inputs as bars . The Department therefore maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the supplier of the goods and shown in the Gate Passes rather than by the description of the goods in the Gate Passes or the specification of the Tariff item. 9. We find some force in the above submissions of the appellants. It is no doubt true that the correct classification of flat products had been a matter of dispute and the interpretation of the various Tariff Entries pertaining to the iron and steel products like flats, bars, strips etc. were the subject matter of dispute and amendments in the Tariff description from time to time. We are therefore, of the view that there was scope for a bona fide mistake being made by the supplier of the goods incorrectly describing the product in the Gate Passes and the mere description of the goods as bars in the supplier s GP1s should not be taken as the conclusive factor, especially when the same Gate Passes show that the rate of duty paid is the rate applicable to flats. In the facts of the present case, we agree with the contention of the appellants that once the payment of duty at the rate applicable to flats has been accepted by the Department, it is not open to the Department to take the stand that the same goods would be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey would be entitled to claim Modvat credit on the inputs and the Department itself has accepted this position in the counter-affidavit filed by it in the High Court when the matter came up before the Hon ble High Court in relation to Stay Order passed by the Tribunal earlier. The amount of Modvat credit on this account comes to Rs. 74,62,000.00. If the said Modvat credit available to the appellants is deducted from the balance amount of Rs. 88 lakhs the demand would get further reduced to Rs. 14 lakhs or so. When the additional amount of Modvat credit of Rs. 17.82 lakhs on Zinc purchased by the appellants as input for galvanisation is deducted from the total demand, according to the appellants, the entire duty demand raised in the SCN would get wiped out. 12. It is also claimed by the appellants that in a case where the duty demand gets neutralised on account of availability of Modvat credit available to the assessee, the intention to evade payment of duty cannot be attributed to the assessee. Reliance has been placed in the Larger Bench decision of the Tribunal in Jay Yuhshin Ltd. v. CCE Final Order No. 578/2000-A, dated 12-7-2000 [2000 (119) E.L.T. 718 (Tribunal-LB)] in suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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