9911796707
TMI Blog2002 (5) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... yderabad-II Commissionerate. Applications have also been filed by S/Shri Naryan Lal Munduda, Managing Director of the Main Applicant, and Rajgopal Baldwa, Proprietor of M/s. Shri Santhosh Textiles, Hyderabad, the wholesale distributors of book binding cloth of the main applicant. (The latter two are referred to hereinafter as co-applicants). 2. The applications were admitted to be proceeded with vide order of Admission Order No. 19/2001, dated 11-10-2001. The main applicant was directed to pay an additional amount of Rs. 12,14,284/- within 30 days (from the date of receipt of the order). The said order specifically gave a finding that additional excise duty (AED for short) is payable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (hereinafter referred to as Act, 1957). 2.1 Thereafter, the applicant had filed a miscellaneous application dated 8-11-2001 indicating that he has since paid part amount, and to pay the balance amount of Rs. 7,00,000 (approx.) due as per the admission order, they may be granted six months time to pay in instalments. The applications were posted for hearing on 29-1-2002. During the hearing, the Bench observed that the Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition, for a better understanding and analysis of the issues. 3.1 SGCL had manufactured and cleared book binding cloth without payment of any duty during 95-96 (the value of clearances itself was within the limit eligible for total exception under SSI Notfn. 1/93 as amended). Thereafter they had got registered with the Deptt. on 4-10-96. They availed benefit of the prevalent SSI exemption Notifications during the subsequent years 96-97, 97-98, 98-99 and 99-2000 for discharge of BED on the statutorily accounted clearances. They also discharged AED on the said clearances at applicable rates, without reference to the SSI Notfns. They filed a declaration under Rule 57G of the erstwhile Central Excise Rules, 1944 for availment of Modvat credit and availed the first credit of AED on inputs in Feb., 97 and utilized it to discharge AED on their final products. The declaration continued in the year 1997-98 also, and they continued to avail Modvat credit till July, 97. According to the report of respondent Commissioner, there was no specific application for coming out of Modvat credit even after they commenced production of dyed cloth in house. They also did not reverse the credit availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant has admitted the entire quantity indicated in SCN as clandestine clearances along with the values adopted by Revenue. However, it is contended that the main applicant is entitled to SSI exemption benefits in regard to AED also during the material period. It is pleaded that when exemption is provided under Notification Nos. 1/93, dated 28-2-93, 16/97 and 8/99 as amended from specified duties in the first schedule of the Central Excise Tariff Act, 1985, and the rate of duty specified under the first schedule is both basic and additional duty of excise, no duty (BED as well as AED) is payable upto the full/total exemption limit. The exemption from duty of excise would include exemption from additional excise duty as well, since it is levied on the goods specified in the First Schedule to the Central Excise Tariff Act. Section 3(3) of Act, 1957, provides that the provisions relating to exemption issued under the CEA, 1944 would be applicable to the aforesaid AED also. AED is charged only in addition to the BED. Therefore, when the BED is exempt, there should be no question of paying AED. 4.1 Reliance is placed on the decision of the Supreme Court in the case of M/s. Ujagar P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of SSI exemption, per se, cannot be denied to the applicant for BED. 4.3 The applicant s Counsel had, during the final hearing on 27-3-2002, contested the Revenue s quantification of duty liability in terms of Notification 38/97. It is urged that since the applicant had opted for and availed only Notification 16/97, and not of 38/97, the Revenue cannot thrust upon them the provisions of Notification 38/97. As a matter of detail, it was also submitted that while under Notification 16/97, there was no option to avail Modvat credit, the latter Notification 38/97 gives an option to pay duty on slab rates, availing Modvat credit. 4.4 Finally, even though, as stated earlier, the applicant has been claiming (specifically in their written submission dated 11-3-2002) that they admit the entire quantity indicated in the SCN as clandestine clearances along with the values adopted by the Revenue, in their application dated 11-3-2002 and also during the final hearing on 27-3-2002, a claim has been made to deem their sale price as cum-duty price, eligible for abatement under Sec. 4(4)(d)(ii) even in respect of clandestinely removed goods, as held by the Hon ble Supreme Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was continued in the year 1997-98, and hence the benefit of Notification 16/97 effective from 1-4-1997 is not available, as one of the essential conditions therein was that the assessee should not avail Modvat facility. Notification 38/97 came into force from 27-6-97 and was applicable to SSI units availing Modvat facility. This notification did stipulate a condition that the manufacturers intending to avail its benefit should exercise option in writing, which was not done by the main applicant under the said notification. However, the applicant has been availing Modvat facility from 27-6-97 and continued to avail the same till July 1997 on the strength of their declaration filed on 9-2-97. It is, therefore, pleaded that the request to permit benefits of SSI notifications on their reversing belatedly the Modvat credit availed during 96-97 and 97-98 at this stage, is not permissible under law. The decisions of Hon ble Supreme Court and Tribunal relied upon by the applicant in this regard are contended to be irrelevant to the facts of the present case. The Commissioner has finally referred to the investigation report of the Commissioner (Inv) attached to this Bench and has, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 and also the Special Duty of Excise specified in the Second Schedule to the Central Excise Tariff Act, 1985). Clause (a) of Section 3 of the Central Excise Laws (Amendment Validation) Act, 1982 specifies that where any Central law providing for the levy and collection of duty of excise makes the provisions of the Central Excise Act and the Rules made thereunder, applicable by reference to the levy and collection of duty of excise under such law it shall be necessary for the purpose of granting, by any notification or order, any exemption from duty of excise or fixing by any notification or order, any rate of duty leviable under such Central law to expressly refer to the provisions of the said Central law in the preamble to such notification or order, or to state by express words in such notification or order that the exemption provided for, or the rate of duty fixed by such notification or order is an exemption from, or the rate of duty under, such Central law , (emphasis supplied). It is seen that the relevant SSI exemption notifications mentioned above do not refer to Additional Duties of Excise (Goods of Special Importance) Act, 1957 in their preamble, and also do not state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabrics sold by the assessee did not fall under Entry 41 of Schedule A to the Act in view of the specific exclusion of rayon tyre cord fabrics on which additional duty of excise was not leviable or was not levied from the ambit of the said entry. The Commissioner noted that the uncontroverted factual position in regard to levy of additional duty of excise on rayon tyre cord fabrics at the material time was that such tyre cord fabrics were exempted from the whole of duty of additional excise by notification issued by the Central Government in exercise of powers under Rule 8 of the Central Excise Rules, and in view of the same, no additional duty of excise was leviable or was levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 on the manufacture of rayon tyre cord fabrics sold by the asessee. He, therefore, held that the rayon tyre cord fabrics did not fall under Entry 41 of Schedule A to the Bombay Sales Tax Act, and hence, fell under Entry 10A of Schedule C to the Act and were taxable under the Act at the rate of 3 paise in the rupee . Therefore, the controversy before the Hon ble High Court was, whether, in the light of the exemption to rayo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and concessional rate thereafter to those who do not avail credit of duty paid . It also laid down different concessional rate of duty (and not total exemption) right from very first clearance to those who did avail credit of duty paid under erstwhile Rules 57A or 57Q or both. Notification 16/97 extends its applicability only to manufacturers who do not avail of the credit of duty paid under the erstwhile Rule 57A of the erstwhile Central Excise Rules (CER), 1944. Notification 8/98 was applicable if the manufacturers did not avail of the credit of duty paid under erstwhile Rule 57A or Rule 57Q. Similar is the condition under Notifications 8/99 and 8/2000. In short, in all these notifications, exemption (or the total exemption under Notification 1/93) contained therein and availment of Modvat credit of duty under Rule 57A or Q of the erstwhile CER were mutually exclusive. 7.2 Rule 57A of the CER as it stood during material time up to 1999-2000 allowed credit of any duty of excise or the additional duty under Section 3 of the Customs Act, 1975 paid on the goods used in the manufacture of the said final product. Similarly, Rule 57Q allowed credit of the duty of excise or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of SSI notifications in regard to their AED liability, irrespective of whether they avail or otherwise of Modvat credit of AED on inputs. 7.5 In the light of above findings, the plea of the applicant to permit them to reverse Modvat credit of AED and, thereafter, avail benefit of small scale exemption notifications for BED and AED become redundant. 8. As for the plea that Notfn. 38/97 has been thrust upon them by way of calculation of duty liability under the said Notfn. when he had opted for the benefit of Notification 16/97, dated 1-4-97 only, for the period between 1-4-97, when notification of 16/97 came into effect, and 27-6-97, when Notification No. 38/97 came into operation, undoubtedly the applicant cannot be deprived of the benefit of SSI exemption under Notification 16/97 (insofar as BED is concerned). As regards the period subsequent to 27-6-97, it may be seen that while Notfn. 16/97 is available to assessees who do not avail Modvat credit, 38/97 is applicable to those who opt for Modvat facility. But, as already observed above, Notification 16/97 applied only to BED. Also, availment of Modvat credit of AED, would not disentitle the benefits of the said exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in excess of the sale price already paid. 10.2 However, as observed from Annexure V [Not printed] (containing, inter alia, year wise quantum and value of sales on which duty was not paid) to the SCN, quantity of clandestine clearances during the years 97-98 and 98-99 have been taken out of the alleged fictitious purchase bills of M/s. SST as listed out in Annexure I [Not printed] to the SCN, which supplies are alleged to be actual sales by the main applicant to M/s. SST. Though the said Annexure I [Not printed] to the SCN itself contains details including quantum (2,22,000 LMTs) of purchase of M/s. SST from the main applicant under fictitious bills of bogus companies during 99-2000, the SCN has relied upon the quantum (2,95,184 LMTs) of unaccounted purchase of grey cloth by the main applicant, as reflected under Annexure II [Not printed] to the SCN. However, to determine the value of clearances during these years, the SCN appears to have (as seen from a comparison of the assessable value of statutorily accounted clearances and the value adopted for demand in respect of clandestine clearances) adopted the value on which duty had been discharged by the main applicant on statutorily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN. But, the Bench has delinked the availment of Modvat credit of AED from the eligibility to SSI notification benefit for BED and has also held that AED would not be exempted under any of these SSI exemptions during the material period, thus requiring AED to be discharged from the first clearance of the fabrics in question. However, the error pointed out by the Commissioner (Inv.) that even after crossing Rs. one crore in value of clearances, the applicant has worked out their duty liability only at 5% for 1999-2000 as against which, the correct rate should be 8%, is admitted by the Bench and stands adopted for calculating the differential duty. 12. As for the immunities from penalty and fine under the CEA and Rules made thereunder sought for by the main applicant, the Bench observes that the main applicant has accepted the allegation of short accounting and clandestine removal to the entire extent (quantitative and valuewise) alleged in the SCN. They have only sought for the benefit of SSI exemption notifications to AED, as also for the availment of the said exemptions to BED even when Modvat credit of AED is availed. They have also sought for the benefit of treating the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o above immunities to the main applicant, the co-applicants S/Shri Naryan Lal Munduda, Managing Director of the main applicant and Rajgopal Baldwa, proprietor of M/s. Sri Santhosh Textiles are also eligible for immunity from penalty. The said Sri Rajgopal Baldwa also becomes eligible for immunity from interest and fine in lieu of confiscation under Central Excise Act and Rules. Both also deserve immunity from prosecution under Central Excise Act. 14. Accordingly, in view of the findings stated above, the case is ordered to be settled in accordance with provisions of sub-section (7) of Section 32F of the Central Excise Act, 1944 as follows :- The duty payable in the instant case is determined as Rs. 14,13,921/- (Rupees Fourteen lakhs thirteen thousand nine hundred and twenty one) (Rs. 7,88,627/- as BED and Rs. 6,25,294/- as AED) as in Annexure to this order [Not printed]. The said amount is adjusted from the payments made already in terms of Admission Order. The main applicant (M/s. Sri Gajanand Coaters Limited) as also the co-applicant, Rajgopal Baldwa) are granted immunity in terms of Section 32K(1) of the Central Excise Act, 1944 from penalty, fine and interest under Central ..... X X X X Extracts X X X X X X X X Extracts X X X X
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