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TMI Blog2004 (6) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the factory of production for the manufacture of footwear of value not exceeding Rs. 75/- per pair are exempted from duty. It appeared that the appellants are not eligible for exemption under the said notification in respect of parts of footwear cleared by them to the other manufacturers. Accordingly, investigation was carried out and a show cause notice was issued to the appellants, M/s. Bata (India) Ltd., demanding duty of Rs. 36,01,238/- and proposing imposition of penalty and charging interest for the duty. Show cause notice was also issued to the other appellant, Shri N.K. Chakraborthy, Manager Accounts of the appellants Company for imposition of penalty under Rule 209A of the Central Excise Rules, 1944. The case was adjudicated by the Commissioner under the impugned order wherein he confirmed the demand of duty amounting to Rs. 36,01,238/- and imposed penalty of equal amount on M/s. Bata (India) Ltd. under Section 11AC and penalty of Rs. 5 lakhs under Rule 173Q (1) of the Central Excise Rules, 1944. He also imposed penalty of Rs. 20,000/- on Shri N.K. Chakraborthy under Rule 209A of the Act. 3. Shri S.K. Bagaria, learned Advocate appeared for M/s. Bata (India) Ltd. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsolidated licence for manufacturing different excisable goods and not to the claim for benefit of Notification No. 40/85 which is in dispute in the present appeal, since the ground of denial of Notification No. 40/85 is due to the Department treating J.K. Staple Tows as an entity separate from M/s. J.K. Synthetics while the Tribunal has treated both as one entity, we are in agreement with the ld. Counsel for the appellants that the ground for denial in the present case is no longer available to the Department. We, therefore, hold that since there is only one corporate/legal entity and the other is only a division or unit of the same corporate entity and recognized as such by the Tribunal in its order, supra, the appellants herein are entitled to the benefit of Notification No. 40/85 as amended. The first issue is answered in the affirmative. (ii) H.M.M. Ltd. v. CCE - 1996 (87) E.L.T. 593 (S.C.) wherein the Supreme Court held that even if the notification is to be strictly construed as per the language, the object must be seen. (iii) Prescast Engineering Pvt. Ltd. v. CCE - 2000 (118) E.L.T. 288 (T-LB) = 2000 (38) RLT 501 (CEGAT-L.B.) (iv) Ashok Organic Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E. if used within its own factory, the exemption would be applicable even if such use is in the job workers factories for manufacture of Bata footwear for the appellants. The Internal Audit party has carried out audits at the appellants factory during the relevant time. It is now well settled that mere failure or negligence to take out the license or to pay duty does not attract extended period of the limitation which can only apply if there was fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of duty. These ingredients postulate a positive act and if there was a scope for conclusion or for formation of belief on the appellants part, the failure to take out the licence or to pay the duty would not attract longer period of limitation. The formalities like filing of classification declaration, getting the some approved, etc. were not complied with by the appellants, in view of the bona fide belief and impression about full exemption in respect of the said parts and not due to any intention to evade the duty. In Para 16 of the order, the Commissioner has accepted that the letters/declarations regarding the job workers were filed with the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he production of these goods and were required to be utilised in the manufacture of footwear of value not exceeding Rs. 75/- per pair. The contention of the appellants that since they have cleared the footwear parts to other manufacturers who were job workers should be construed as used within the factory of production is totally unwarranted. The taxation statute and notification have to be construed strictly as held by the Supreme Court in the case of Rajasthan Spinning and Weaving Mills v. CCE - 1995 (77) E.L.T. 474 (S.C.) and CCE v. M/s. Shibani Engineering - 1996 (86) E.L.T. 453 (S.C.). The words are very specific that the goods should be used within the factory of the production and in the manufacture of the specific finished goods. The claim of the appellants that it should be given a wider interpretation cannot have a meaning that they should clear the goods to some other manufacturers without payment of duty. The wider interpretation of this has already been given in the case of J.K. Synthetics v. CCE - 1996 (88) E.L.T. 461 (Tribunal) wherein it was held that - We, therefore, hold that since there is only one corporate/legal entity and the other is only a division or uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his order that - I agree with the contention of the assessee that the substantive benefit of Modvat credit cannot be denied to a manufacturer for non-compliance of certain procedures such as filing of declarations regarding the inputs and final products etc. in terms of the ratio of the judgments cited by them supra. In this case there is no dispute that the inputs in question formed a common stock and were used in the manufacture of both exempted (i.e. the parts of footwear which the assessee claimed as eligible for exemption under Notification No. 10/96-C.E., dated 23-7-96 as explained above) and dutiable goods. However, the assessee has not produced any records to show that they were maintaining separate accounts in respect of such inputs in order to conclusively prove that the impugned parts of footwear were manufactured out of such input only, on which they are claiming Modvat credit now? Since the appellants could not produce any record before the Commissioner, therefore, he could not give benefit of Modvat credit, although he has agreed to in principle that Modvat credit cannot be denied to them. He pleaded that since the appellants had deliberately suppressed the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude goods consumed by a division of the same corporate entity. The other decisions relied upon by the appellants are not applicable to the facts and circumstances of the present case. Therefore we are unable to accept the plea of the appellants that they were under bona fide belief that goods consumed by the job workers are to be treated as goods consumed within the factory of production. Job workers had independent factories and not a division or factory of the same corporate body who had manufactured footwear parts. Therefore they are not entitled for exemption under Notification No. 10/96. 11. Regarding the claim of the appellants for Modvat credit, we find that the Commissioner has already accepted that they are eligible for Modvat credit on the inputs used in the manufacture of dutiable goods. However, the appellants could not produce relevant documents before the Commissioner to establish their claim. However, before us they have pleaded that they are maintaining proper accounts and they can produce relevant documents/evidence before the Central Excise authorities to prove that they are eligible for Modvat credit of Rs. 18,42,791.24. We are of the view that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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