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TMI Blog2004 (7) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... and also that they had mis-declared the value of the dutiable goods to certain customers and had adopted different modes of documents for realization of sale proceeds thereby indulging in short payment of duty, and also that they fabricated documents by fragmenting the actual production at its premises and cleared part of the production under the documents of M/s. Aditya Packaging, a Proprietary Company sans any production facility or any other infrastructure, floated by the wife of the Managing Director of the main applicant company as Proprietrix. It further alleges that they had utilized common inputs both for the dutiable goods and goods which attract nil rate of duty without maintaining separate set of accounts for the said goods and failed to pay 8% of the price for the final products cleared under nil rate of duty in terms of Rule 57CC of the erstwhile Central Excise Rules, 1944 (CER, for short). The Notice accordingly proposes to demand from the main applicant duty of Rs. 23,59,099/- for the period 1996-97 to 99-2000 in terms of proviso to Section 11A(1) and Rs. 13,269/- under Sec. 11D of the Central Excise Act, 1944 and Rs. 9,99,648/- in terms of Rule 57CC read with Rule 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dutiable and exempted products without maintenance of separate records and without debiting an amount of 8% of the sale value of the exempted final goods, the main applicant relies on Circular No. 591/28/2001-CX (F. No. 267/58/2001-CX. 8) dt.16-10-2001 of the Central Board of Excise & Customs and, accordingly, pleads that the amount to be reversed would be only the quantum of Modvat credit availed on such inputs utilized in the manufacture of exempted goods. On account of these reasons, the applicant has admitted lesser duty liability than that demanded in the SCN. The main applicant pleads that out of the admitted amount also, they have already paid Rs. 4 lakhs and that the same may be ordered to be adjusted. 5. The revenue, viz. DGCEI, Chennai in its letter F. No. INV/DGCEI/ CHE/35/2000 dt. 29-3-2004 contested the issues raised in (Paras 3 to 8 of) the application. They also contested the (issue in Paras 17 and 18 of the application) of the applicant company on the point of non-payment of 8% under Rule 57CC of the Modvat Rules. The Revenue submitted that the circular referred to in the application will not apply to the period covered under SCN and that the Board in its C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Malini Textiles Pvt. Ltd., 2003 (157) E.L.T. 356 (Sett. Comm.) INTEREST 1. Shri Gajanand Coaters, 2002 (143) E.L.T. 704 (Sett. Comm.) 2. Malwa Industries Ltd., 2002 (143) E.L.T. 444 (Sett. Comm.) 3. Saurashtra Cement Co. Ltd., 2003 (156) E.L.T. 307 (Sett. Comm.) 4. Nava Karnataka Steels Ltd., 2003 (155) E.L.T. 389 (Sett. Comm.) 5. M.M. Silk Mills, 2003 (153) E.L.T. 456 (Sett. Comm.) 6. Maruti Udyog Ltd., 2002 (143) E.L.T. 686 (Sett. Comm.) 7. Malt Manufacturers Pvt. Ltd., 2002 (143) E.L.T. 700 (Sett. Comm.) 8. Krishna Ganga Spinning Mills Ltd. & Others, [2003 (56) R.L.T. 235 (Sett. Comm.) = 2003 (155) E.L.T. 408 (Sett. Comm.) 7.1 As it was observed during the hearing with reference to the calculation errors in the demand for Rs. 23,59,099/-. claimed by the applicant that the Investigation Report by the Commissioner (Inv.), indicated that some of the errors of duplication, etc. have been conceded by Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Hence, it is not necessary to discuss this issue any further. 10. As for the demand for Rs. 23,59,099/-, relating to 1996-97 to 1999-2000, initially the applicant contested duties to the extent of Rs. 24,889/- demanded on 8 counts on grounds of calculation errors and also the amount of Rs. 4,97,106/- demanded on wrappers allegedly manufactured and cleared by the applicant to M/s. AVT. Of the contested amount of Rs. 24,889/-, Revenue has since conceded a duty demand of Rs. 8,548/- disputed by the applicant on the grounds that there were some duplication and adoption of incorrect value, reducing the duty liability on the above counts to Rs. 16,341/50. This has ultimately been conceded and accepted by the applicant also at the time of final hearing on 15-4-04. Hence the admitted liability on other than wrappers amounts to Rs. 18,53,445/- which is accepted by Revenue also. On this amount of Rs. 18,53,445/- the applicant also seeks revision, deeming the transaction value on which duty is worked out, as cum duty value. This contention is discussed in a subsequent para below. 10.1 As regards the duty demand of Rs. 4,97,106/-, on the wrappers allegedly manufactured and clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he correct identity of the product was questioned by the Bench. The counsel continued to plead that the item involved during the material period was only 'label' received from M/s. AVT on which criss-cutting was performed and returned, which does not transform the returned product to carton. However, the counsel also admitted that they were not able to produce the copy of purchase order relating to labour charges payable as there was no specific order in this regard. The negotiations with M/s. AVT was going on, and in the meanwhile the latter was in need of wrappers after criss-cutting immediately and accordingly the supplies effected. He also admits in his subsequent petition dated 7-7-04 that they are not in a position to submit the copies of records relating to TO & FRO movements of printed wrappers/labels. Accordingly in the said petition they accept the duty liability in this regard, without prejudice to their earlier and different submissions till date on merit. However, the liability admitted is Rs. 4,62,404/- as against Rs. 4,97,106/- proposed to be demanded in the SCN, deeming the value realized as cum-duty price. 11. Finally, the applicant seeks the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irculars F. No. 654/45/2002, CX dated 19-8-2002 and No. 739/55/2003-CX dated 25-8-2003 both of CBEC. 12.1 The Bench observes that the SCN relates to the period up to 2000. The Boards' circular dated 16-10-2001, relied upon by the applicant specifically stated that : "The matter has been examined in the Board. It is stated that the basic principle underlying the Cenvat scheme is that credit is admissible if duty is paid on final product's. Attention is drawn to sub-rule (1) of Rule 6 of the Cenvat Credit Rules, 2001, which clearly provides that Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in circumstances specified in sub-rule (2). The provisions of sub-rules (2) and (3) of Rule 6 provide as to how to deal with and account for the inputs and credit of duty in cases where the inputs are used in the manufacture of both dutiable as well as exempt products. It follows from the provisions that if the manufacturer does not fulfil the requirements of either sub-rule (2) (i.e. maintaining separate accounts) or sub-rule (3) (i.e. paying 8% of total price of exempted goods, other than exceptions specified in cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject. Be that as it may, on a reference to said decision of CEGAT in the case of M/s. Pushpaman Forgings, it is found that the assessee had contended that the amount demanded under Rule 57CC in the said case is not a duty or a Modvat credit, and hence the said money cannot be claimed or recovered. CEGAT had concluded that "We have considered the interesting submission made by the assessee before us. It is true that the amount sought to be recovered is neither duty nor Modvat credit. That is specifically made clear by the Boards' circular referred to above. When that is so, in our view, in the absence of recovery proceedings machinery, provided under the Act and Rules, the amount cannot be claimed fully from the assessee." 12.4 On the other hand, in the instant case, the applicant admits to reverse the credit availed on the inputs utilized in the manufacture of exempted/NIL rated final product, which is also inline with the Boards' circular dated 16-10-2001 mentioned above. The Revenue has not questioned the amount itself, though they have disputed the method of working out the inputs used in the manufacture of exempted goods indicated in the applicants' submission dated 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed vide written submissions dated 23-4-2004 with reference to incorrect amount of duty shown to have been said for the year 99-2000 as per enclosure to settlement application). The applicant has paid so far an amount of Rs. 17,36,816/- (as at Para 6.0 above). The balance amount of Rs. 5,25,623/- has to be paid within 30 days from the date of receipt of this order. (ii) Immunity from penalties on the applicant company and co-applicants proposed in the show cause notice is granted. (iii) Immunity from interest proposed in the SCN is granted in excess of simple interest @ 10% p.a. on the duty amount settled above. The department should calculate the simple interest payable @ 10% p.a. within 15 days from the date of receipt of this order and communicate to the applicant company, and the applicant company shall pay the same in the next 15 days thereafter and report compliance. (iv) Immunity from prosecution under the provisions of Central Excise Act, 1944 is also granted to all the applicants. 15. All the above immunities are granted in terms of Section 32K(1) of the Central Excise Act, 1944. Attention of the main applicant and the co-a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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