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TMI Blog2004 (4) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) of Section 11A of the Central Excise Act, 1944. [I allow adjustment of duty of Rs. 4,00,000 (Rupees four lakhs) already paid by M/s. CDC Carboline (I) (P) Limited, in the duty confirmed above]. The balance shall be paid forthwith. (b) I also demand interest on the duty confirmed as above under Section 11AB of the Central Excise Act, 1944. (c) I impose on M/s. CDC Carboline (I) (P) Limited a Penalty of Rs. 7,35,384 (Rupees seven lakhs thirty-five thousand three hundred and eighty-four only) under Section 11AC of Central Excise Act, 1944. (d) I also impose a penalty on M/s. CDC Carboline (I) (P) Limited of Rs. 10,00,000 (Rupees ten lakhs only) under Rule 173Q(1) of the Central Excise Rules, 1944. (e) I impose a penalty of Rs. 5,00,000 (Rupees five lakhs only) on Shri Daniel Chittayagam, MD, M/s. CDC Carboline (I) (P) Limited under Rule 209A of the Central Excise Rules, 1944. (f) I order expungement of Modvat credit of Rs. 1,29,917/- (Rupees one lakh twenty-nine thousand nine hundred and seventeen only) wrongly availed on packing material used in the manufacture of undeclared items viz. thinners. (g) I demand under Rule 57-I(5) interest on the ineligible Modvat cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also stated that documents were only issued on the direction of Shri Daniel Chittayagam, MD of M/s. CDC and that the transaction was only for mutual benefit. Since the agreement was only to issue documents without supply of materials for a commission of 2% of the sale of thinners, he used to return money to Daniel Chittayagam on encashment of the cheque after deducting the commission. Enquiry made by the Mumbai Central Excise vide their letter No. V/P1/12/13 Gr-C/97/201, dated 9-10-1997 reported that there was no company by name M/s. Crystal Chemicals at 203/B Prakash Nagar, Off Mougal Lane, Mahim Mumbai-16 and that the premises were the residential premises of one Ms. Deepak Govankar, a Senior Clerk in Bank of Baroda for the past 20 years. Statement was also recorded from Daniel Chittayagam on 1-10-97 in which he admitted manufacture of thinner was not made in the declaration made to the Department. He has also stated that during the years 1994-95 and 1995-96 thinner was manufactured in the factory and was cleared from there. During the years 1996-97 and 1997-98 (up to 18-9-97) the thinner supplied by M/s. Y. Chem was sold by CDC after repacking and affixing their own label. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries v. CCE, Calcutta reported in 1995 (75) E.L.T. 377. It was argued that activity of re-packing the thinner was not an activity of manufacture till 1-3-97 i.e. the date on which Chapter Note 5 to Chapter 38 was inserted vide Finance Act, 1997. Therefore, the question of invoking the longer period up to 31-3-97 does not arise and thus the order is not sustainable. 4.1 So far as the period from 1-4-97 is concerned, the learned Counsel submitted that even though the activity was shifted outside the factory, there was no suppression inasmuch as they were under the bona fide belief that they were not liable to pay duty. The demand for the said period works out to Rs. 3,47,875/- and the appellants have already paid the same which fact is not in dispute. It was further submitted that the show cause notice is for the period 1993-97 and the demand was based on the statement of the one Hariprasad of M/s. Y. Chem who has stated to have supplied only Modvatable invoices under Rule 57GG and not the goods. The learned Counsel submitted that the appellants have submitted complete details of thinner procurements for trading along with affidavits from the suppliers of thinner, other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and hence longer period of limitation is invocable for demand of duty and that confiscation of plant and machinery was also warranted, yet the Commissioner while confirming the duty demand has arrived at the assessable value considering the invoice price as cum- duty price. Acceptance of the assessees' prayer for taking the value of clearances as cum-duty price is not correct. The Commissioner should not have allowed abatement of excise duty from the total aggregate value of clearances for each year from 1993-94 to 1997-98. (b) In terms of Section 4(4)(d)(ii), value does not include the amount of duty of excise, sales tax and other taxes, if any, payable on the goods. Therefore, such taxes claimed as abatements are indeed payable and abatements will not apply to goods cleared without payment of any taxes. Further, in terms of Section 4(1)(a) of the CE Act, the normal price of the goods is the price at which such goods are ordinarily sold by the assessee to buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not related persons the price is the sole consideration for sale. Therefore, the normal price of the goods must be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Central Excise records, GP1, invoice and RT 12 returns. The contention of the appellants was that re-packing and re-labelling thinners for the period from 1-3-94 to 31-3-96 did not amount to manufacture as for the said period as the matter is covered by the judgment of the Tribunal in the case of Hindustan Petroleum Corporation v. CE reported in 1985 (19) E.L.T. 425, wherein it was held that re-packing of duty paid goods does not amount to manufacture. We observe that the tariff entry was amended in 2/97 under Chapter 38, the effect of which is that the process of re-packing and re-labelling of thinner amounted to manufacture. For the period from 1-4-97, the contention of the appellants was that their activity was shifted outside their premises there was no suppression involved, since they were under the bona fide belief that their activity of re-packing continued to be an activity not amounting to manufacture. In the above back ground of the case and considering the arguments advanced by both the sides the following issues arise for determination. (a) Whether the activity of re-packing of thinner amounted to manufacture and whether longer period of limitation in terms of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncies has stated in his statement dated 25-9-97 that he never supplied thinners but had only raised Modvatable invoices in the name of appellants for a commission. The appellants have produced purchase orders, invoice and delivery challans of the said M/s. Y. Chem Agencies apart from payment of bill to the said supplier for the supply effected. The point is, in the face of this material evidence like, purchase orders, payment of bill by means of Cheque, can the statement of the proprietor of M/s. Crystal Chemicals be taken to be true. As noted above, the allegation of the department is based on the statement of the said Hariprasad of M/s. Y. Chem Agencies that he has not supplied goods, but only the Modvatable invoice. In this connection, it is necessary to look into the rule regarding maintenance of stock account by Registered dealers as per prescribed proforma viz. RG 23D. Rule 57GG requires that the stock register is kept ready by the Registered dealer for inspection by the proper officer on demand. It is surprising that there is no scrap of paper by way of evidence to show that the register required to be maintained by the dealer was inspected by the proper officer more particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above that the Department has failed to bring home the charge of suppression of fact against the appellants. We have also held that mere statement of the supplier of the goods, viz. Hariprasad of M/s. Y. Chem that he has not supplied the goods, but only the Modvatable documents on a commission, cannot demolish the documentary evidence such as purchase order, invoice, delivery challan and payment of bill by means of cheque, produced by the appellants. Further in the impugned order, we note that there is no detailed discussion about role played by the Managing Director in regard to his involvement in the violations of rule alleged against him. It is also not understandable as to why the department chose to remain silent when it was found that the dealer has not issued goods, but only the Modvatable documents. The action of the Department in not drawing proceedings against the dealer was therefore clearly discriminatory. In views of above, we do not find any material to sustain the penalty on the Managing Director and accordingly we set aside the penalty of Rs. 5,00,000/- imposed on the Managing Director under Rule 209A. (g) Penalty under Rule 57-I and interest under Rule 57-I(5). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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