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TMI Blog2002 (8) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... d used within the factory of production. During 1-4-1995 - 6-2-98, M/s. Autolite manufactured Dies, Plungers and Rings and cleared the same out of their factory under invoices for captive consumption without payment of duty, claiming exemption under the above Notification. The department detected this activity and investigated the matter. During the course of investigations, M/s. Autolite paid an amount of Rs. 25 Lakhs towards duty on the clearances. On the basis of the investigative findings, the department, invoking the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944, issued show cause notice (SCN) dated 24-9-99 for recovering duty from the company and imposing penalties on the company and its Director, Sh. M.P. Gupta. The SCN was contested by the noticees on classification of the goods, valuation of the goods and quantification of the demand and also on the ground of limitation. The Jurisdictional Commissioner, after examining the parties contentions in detail and analysing the evidence in the case, passed the following order :- (I) I confirm the demand of CE duty Rs. 1,22,71,810/- (Rupees one crore twenty two lakh sevent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-4-95 to 6-2-98 has not been pressed before us by the appellants Counsel. We, therefore, uphold, at the outset, the decision of the Commissioner classifying the above goods as parts of moulds under CSH 8480.90. 4.2 M/s. Autolite had, admittedly, no facility in their factory for manufacture of glass lenses. They manufactured Dies, Plungers and Rings in their factory and removed the same without payment of duty to lens-manufacturers at Firozabad through their Branch Office there. The said lens- manufacturers manufactured glass lenses, using moulds assembled from the above parts, and cleared such lenses, on payment of duty, to M/s.Autolite and the latter took Modvat credit of such duty and availed the same for payment of duty on their final product. These facts have been admitted by Sh. M.P. Gupta and other functionaries of the company whose statements were recorded by Central Excise Officers under Section 14 of the Central Excise Act. Thus it has been clearly proved by the department that the goods removed from the factory of M/s. Autolite without payment of duty were not captively consumed by them and, therefore, such goods were not exempted from duty under Notification No. 67/9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 plungers were returned to the factory; and, out of the goods so returned, 15 dies and 2 plungers were for destruction and the remaining dies and plungers were for repairs. The appellants have relied on the above statement to support their contention that the quantity of goods actually manufactured and cleared from the factory is much less than that of the goods on which duty has been confirmed. The appellants have a further grievance that the Commissioner demanded duty doubly on the goods removed from the factory from December 1996 to December 1997 - firstly on the basis of the production record of the factory and then on the basis of the invoices. The appellants' contention is that the production of the period April to October 1996 was recorded in RGI register from December 1996 only and the goods were removed from the factory during December 1996 to December 1997. They complain that their work-in-progress (WIP) report resumed by the officers has been treated as work completion report by the Commissioner and the unfinished goods entered in the WIP report has been treated as finished goods for charging duty. They have further submitted that all the goods shown in the WIP repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s manufactured goods; Since, in the instant case, the revenue neutral situation as visualized by the appellants depends on the eventuality of the lens-manufacturers of Firozabad taking Modvat credit on the goods cleared to them by the appellants, the above Larger Bench ruling works against the appellants. Above all, the admitted fact that the Firozabad parties cleared glass lenses to the appellants on actual payment of duty would also deal a blow to the revenue neurality plea. 4.6 Yet another argument of the Counsel, advanced in the context of pleading revenue neutrality, is that the Dies, Plungers and Rings could have been sent outside the appellants' factory in accordance with Rules 57-S (8) to (10) without payment of duty, in which event the appellants could have debited the duty in the inputs credit account and credited the equivalent amount in the capital goods credit account. We have to reject this argument as well, following the view recorded by the Larger Bench in para 13(a) and (b) of its judgment as under :- (a) Revenue neutrality being a question of fact, the same is to be established in the facts of each case and not merely by showing the availability of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule (8) could have been made only with the permission of the Commissioner and subject to such terms and conditions and limitations as he might impose. The Sub-rule required the appellants to apply for the Commissioner's permission, if they wanted to work under the scheme. Undisputedly, they have not even satisfied the initial condition, thereby rendering the scheme itself unworkable for them. Existence of such a scheme (unworkable for the appellants) on the statute book can hardly be a valid basis for a revenue neutrality plea in answer to the department's allegation of intent to evade payment of duty . As held in Jay Yuhshin (supra), revenue neutrality is a question of fact. The appellants have not succeeded in proving this fact. 4.8 It is a categorical finding of the Commissioner that the goods viz. Dies, Plungers and Rings were cleared from the appellants factory during the period of dispute, not for captive consumption but for home consumption. It has also been found that the appellants factory had no facility for manufacturing glass lenses. There is no effective challenge to these findings, in these appeals. Admittedly, the appellants had made the clearances without paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner's decision on classification of the dies, plungers and rings manufactured by M/s. Autolite and removed from their factory to Firozabad during the period of dispute is upheld; (b) We hold that the Commissioner has valued the goods on a legally and factually correct basis; (c) The demand of duty is not time-barred; (d) As the quantification of demand is not correct, we set aside the demand and remand the matter to the Commissioner for re-quantification in terms of this order; (e) In view of our order regarding the quantum of demand, we set aside the penalty imposed under Section 11AC and direct that the quantum of the penalty be re-determined by the Commissioner having regard to the quantum of duty which may be found, on requantification, to have been evaded by the assessee from 28-9-96; (f) The penalty of Rs. 75 lacs imposed on the assessee is set aside. The adjudicating authority will decide this aspect afresh in terms of this order; (g) The penalty of Rs. 20 lacs imposed on Sh. M.P. Gupta, Director of M/s. Autolite, is set aside . 6. Appeal No.E/2175/2000-B is rejected on classification, valuation and limitation issues and allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workers at Ferozabad have been received back or not. If the Moulds and Dies have been received back, the question of charging duty on them will not arise in view of the provisions of Rule 57-S(8) to 57-S(10). Certainly, the duty will be chargeable in respect of goods which have not been received back by the Appellants. Larger Bench of the Tribunal in the case of Jay Yuhshin Ltd. v. CCE, New Delhi, 2000 (119) E.L.T. 718 has held that with reference to Modvat Scheme it has to be shown that the Revenue neutral situation comes about in relation to the Credit available to the Assessee himself and not by way of availability of Credit to the buyer of the assessee's manufactured goods. In the present matter the Revenue neutral situation is in respect of the Appellants themselves and not in respect of their buyers. In the case referred to the Larger Bench in Jay Yuhshin Ltd. availability of Credit was to the buyer and not to the Assessee himself. Sd/-(V.K. Agrawal)Member (T)Dated 10-1- 2002 DIFFERENCE OF OPINION 9. Whether, as held by Member (Judicial), the assessee has failed to prove Revenue neutrality on the strength of the Tribunal s Larger Bench decision in Jay' Yuhshin Ltd v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings were meant. Since the goods were not subjected to any payment of duty, the question of taking Modvat credit of the duty paid on them and sending them out to the job worker would not arise. The provisions of Rule 57-S(6) are appended below :- (6). Notwithstanding anything contained in sub-rule (1), a manufacturer may, with the permission of the Commissioner of Central Excise and subject to such terms and conditions and limitations as he may impose, remove the moulds and dies, without payment of duty, to a job worker for the purpose of production of goods on his behalf and according to his specifications : Provided that the goods so manufactured and the said moulds dies are returned to the factory of the manufacturer, who supplied the moulds and dies, within a period of three months from the date of their receipt or such extended period as the Commissioner of Central Excise may permit : Provided further that where such moulds and dies are not received back within a period of three months from the date of removal of such moulds and dies or within such extended period as the Commissioner of Central Excise may permit, duty shall be paid equivalent to the credit taken on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into force of the second proviso to the rule. One of the appellants before the Apex Court even contended that six months period contemplated under the newly introduced proviso expired in its case on 30-6-95 i.e. a day after the introduction of the new proviso, therefore, it had no opportunity of availing the credit which was otherwise due to it. Consequently, the introduction of the proviso amounted to cancelling the credit itself. The Apex Court in their judgment however, held that in our opinion the language of the proviso concerned is unambiguous. It specifically states that a manufacturer cannot take credit after six months from the date of issue of any of the documents specified in the first proviso to the said sub-rule. A plain reading of this sub-rule clearly shows that it applies to those cases where a manufacturer is seeking to take credit after the introduction of the rule and to cases where the manufacturer is seeking to do so after a period of six months from the date when the manufacturer received the inputs. Consequently, the Apex Court held that Modvat credit in this case was not admissible and rejected the appeal of the appellants. 14. The second judgment is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed application for refund only on 15-7-80 in respect of the period viz. 25-4-1979 to 29-7-1979 in respect of which the refund was claimed, the same was time-bar. They observed that the Collector of Central Excise as well CEGAT erred in coming to the conclusion that the period of limitation would commence from the end of the financial year. The period of limitation was to be determined with reference to the language of Rule 11 read with Rule 173J and was not be influenced by the provisions of the notification dt. 20-6-1977. The notification was a reason for the respondents to apply for refund but the period of limitation had to be determined as per the terms of the said Rule 11 read with Rule 173J. Consequently, the Hon ble Supreme Court allowed the appeal of the Revenue. 15. The above judgments of the Supreme Court clearly show that the provisions of a Rule have to be strictly followed to claim the benefit of such Rule. Since in this case the appellants have not followed any provision of the Rules, they are not entitled to get such benefit. Coming to the plea of Revenue neutrality, suffice it to say that this benefit would be available only when it is held that the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X
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