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TMI Blog2003 (7) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... e of tyres and tubes falling under chapter 40 of the Central Excise Tariff Act, 1985. They have two factories at Bhandup in Mumbai and Nashik in Maharashtra. In the Bhandup factory of the appellant, the appellant is also engaged in the manufacture of intermediate product called DIPPED TYRE CORD FABRIC out of the raw material purchased from grey nylon tyre cord fabric manufacturers. The grey nylon tyre cord fabric is classified by such manufacturers under chapter heading 5902 of the CETA. On the grey nylon tyre cord fabric, basic Excise Duty and Additional Excise Duty under the Additional Duties of Excise (Goods of Special Importance) Act were paid. Central purchase department of the assessee at Bhandup places order for grey nylon tyre cord for both factories namely Bhandup factory as well as Nashik factory. At the Assessee s Bhandup factory the grey fabric is received and it is subjected to process of dipping and coating within that factory. The purchase order indicated that the supplier should deliver the material to Ceat Ltd. Bhandup on behalf of Ceat Ltd., Nashik. The purchase order also requires the supplier to indicate in their invoice the name of the consignee as Ceat Ltd., B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory. On the basis of the statements recorded from various officers of the appellant company, the show cause notice charges that the challans were prepared and issued at Bhandup as if raw materials/inputs were supplied by Ceat Nashik. It is further charged by the department that Nashik factory did not purchase any input therefore they could not have sent any inputs either from the factory or from the supplier directly and therefore the appellant have misdeclared the fact by issuing false Annexure-II challans. It is further charged by the department that all inputs were directly purchased and procured by M/s. Ceat Bhandup which consumed the inputs, manufactured the DIPPED TYRE CORD FABRIC on their own account. On the basis of other allegations with which we are not dealing, as it is not relevant for the disposal of these appeals and on the basis of the replies filed by the appellant, the show cause notice proposed to demand duty of Rs. 71.53 crores on dipped fabric cleared from Bhandup factory and also proposed to deny, as far as Nashik factory is concerned, Modvat credit on dipped nylon tyre cord taken at Nashik factory. The show cause notice also proposed to impose penalty. Subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned it has submitted before the adjudicating authority that for the period from September 1999 to December 2001, Nashik factory has paid the duty of Rs. 89.41 crores in cash. If 5.7 crores could have been paid in Bhandup factory the same would have been taken as Modvat credit and the Nashik factory would have paid less duty in the PLA and therefore it was pleaded on the basis of the judgment of the Tribunal in the following cases namely CCE v. Chloride Industries reported in 1997 (22) RLT 586, Gopal Zarda v. CCE - 2001 (128) E.L.T. 409, the demand is wrong in law. It was further specifically pleaded before the adjudicating authority that input need not come to the factory where the final product is produced. The raw material can go directly to the factory situated outside the factory of production of the final product. This is what envisaged Rule 57F(4) of the Central Excise Rules and also the judgments of the Tribunal in the cases of Lupin Laboratories Ltd v. CCE - 1994 (74) E.L.T. 914 and Kinetic Honda Motors Ltd. v. CCE reported at 1996 (88) E.L.T. 508. It was also pleaded before the adjudicating authority that CBEC circular dated 4-5-94 was also relevant in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabric. Therefore after it is dipped and coated the same and is sent to Nashik factory by the Bhandup factory. It is not the case of the department that the procedures of Central Excise Rules have been violated. It is useful to refer to page 21 of the impugned order of adjudicating authority wherein he has held as follows : Now let us see the provisions of Rule 57F(4) that is enabling the movement of inputs for further process, which are reproduced below : (4) The inputs can also be removed as such or after they have been partially processed by the manufacturer of the final products to a place outside his factory under the cover of a challan specified in this behalf by the Central Board of Excise and Customs, for the purposes of test, repair, refining, re-conditioning or carrying out any other operation necessary for the manufacture of the final products or for the manufacture of intermediate products necessary for the manufacture of final products and return the same to his factory within a period of sixty days ... What one can understand from the above provisions is that inputs can be removed for certain purposes. In the instant case it is not test, repair, refining or ..... 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