9911796707
TMI Blog2004 (7) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... from Hongkong. The Directorate of Revenue Intelligence (DRI) had carried out search and seizure operations in the applicant s premises in Sep., 1997 and October, 1998. Though till the filing of the application for settlement on 9-2-2001, no Show Cause Notice by DRI had been issued though 180 days were over from the date of search and seizure, the applicant came forward and admitted an additional amount of duty of Rs. 48,52,382.01 on account of under invoicing of the goods imported by him. After hearing, the application was admitted by the Commission and allowed to be proceeded with and liberty was given to DRI to investigate further and issue show cause notice, if necessary. Subsequently, DRI issued three Show Cause Notices on 31-12-01, 9-1-2002 and 14-1-2002 demanding duty cumulatively amounting to Rs. 3,91,60,885/- 32 basically on the ground that the goods imported by the applicant had been under invoiced. The DRI had worked out the duty on the basis of evidences received from Hongkong customs in respect of 36 out of 107 consignments involving duty of Rs. 1,20,53,871/- and in respect of the remaining 71 consignments they had applied/derived values from the evidences of the said 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V duty demanded. 6. The Hon ble High Court disposed of the Writ Petition dismissing the contention mentioned at (i) (ii) of Para 5 above. However, in respect of the applicant s contention regarding relief of Modvat, the Hon ble High Court directed as follows :- 34. What now remains to be considered is the plea of the petitioner that the Commission has failed to grant relief of modvat against the additional customs duty demanded. We find that in the impugned order there is no discussion on the issue. Although the stand of the revenue is that the petitioner is not entitled to Modvat credit as they have not paid any CV duty on the under invoiced components but without recording any final opinion on the issue, we permit the petitioner to move an appropriate application before the Commission in respect of the said claim. We are confident that as and when such an application is moved the Settlement Commission shall deal with it on its own merits. 7. Following the Order of the Hon ble High Court, the applicant filed the instant miscellaneous application dated 30-5-2003 requesting that their claim for grant of modvat of the additional duty of customs paid on the imported componen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasoning given by the DRI in respect of 5 out of 16 invoices where the claim of the applicant was not accepted by the revenue. However, the claim in respect of 11 invoices, involving an excess duty demand of Rs. 72,69,385/-, was wrongly rejected by the revenue. In respect of the claim for relief on the ground of Modvat the applicant contended that had the actual duty been paid at the time of import, the applicant would have taken the CVD component towards Modvat credit and utilised the same for payment of C. Ex. duty on the final product. In the absence of the same, the applicant had to pay Excise duty on final product in cash from PLA. Hence, the applicant requested the Commission to order that the duty paid from PLA may be considered as duty paid out of Modvat account and the consequential excess amount of PLA may kindly be adjusted against the duty payable on the enhanced value. 11. The Bench directed Commissioner (Investigation) to verify the claims of the applicant and to submit report on the same. As a result, the total excess duty demanded was quantified by Comm. (Inv.) as Rs. 93,82,531.44. 12. Copies of the report of Commissioner (Investigation) were made available to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the C. Ex. Rules were not applicable and quantify the credit admissible which both sides have since given. 16. The applicant vide submission dated 1-6-04 intimated that Rule 57E(3) of the Central Excise Rules was introduced from 1-3-97. Prior to that there was no bar on adjustment of excess duty demanded towards Modvat. The amount of additional duty (CVD) during the period 1-1-97 to 28-2-97 worked out to Rs. 16,32,996/-, by the applicant. On 1-3-97 Rule 57E(3) has barred admissibility of additional credit in certain cases of contravention of the provisions of Central Excise Act, 1944 or the Rules made thereunder with the intent to evade payment of duty. Later on 1-9-97, Rule 57E(3) was further amended to include contravention of Customs Act and its rules also. As the present case involved contravention of Customs Act only, the applicant submitted that he is entitled to the CVD of Rs. 25,44,224/- pertaining to the period 1-3-97 to 31-8-1997 as Modvat credit. 17. The Revenue, while replying to the submissions of the applicant has conceded the amount for the period 1-1-97 to 28-2-97, i.e., Rs. 16,32,996/-. However, it is not agreeable to the Modvat credit for the period 1-3-97 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any revision of the additional duty on account of any fraud, collusion or any wilful misstatement etc. under Customs Act was made only from 1-9-97. As the offences committed in this case relate to the Customs Act only, the bar stipulated in Rule 57E(3) would apply only from the period subsequent to 1-9-97. 23. We do not also agree with the plea of the applicant to offset the modvat amount against the duty liability on the applicant. This is for the reason that the manufacturer is eligible to avail the Modvat credit of the additional duty of customs paid on the inputs which are utilised by him in the manufacture of finished goods. This Modvat credit can only be used for payment of the excise duty on finished goods. Thus, payment of additional duty of customs has to be first complied with and thereafter the question of availing of Modvat credit for the payment of duty on the finished manufactured goods arise. If the Modvat credit relating to the CV duty on the imported goods is offset against the customs duty demanded on the very same imported goods, it would indirectly amount to exempting him from the payment of the CV duty on the imported goods. Looked at another way, it would a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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