9911796707
TMI Blog2004 (7) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... is-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 571 of the erstwhile CER. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout 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 Circular No. 654/45/2002-CX. dated 19-8-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (DGCEI) and in respect of the remaining errors not accepted by Revenue, the difference in terms of duty between the claim of the applicant and Revenue is marginal, it was asked of the Counsel of the Applicant whether they would accept to pay duty on the un-reconciled errors also in view of the small amounts involved and the Revenue s claim that they have evidence in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cleared by the applicant to M/s. AVT, it is contended by the applicant that the goods actually involved were labels , on which they had paid duty on labour charges by mistake, though the said product was not even excisable. It is further contended that they were initially supplying cartons (boxes) to M/s. AVT on payment of duty and that thereafter they have been receiving printed labels on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 deeming the value adopted for demand in duty as cum duty price requiring abatements there from under Section 4(4)(d)(ii) of the Central Excise Act. Reliance is placed on the decision of the Apex Court, in the case of CCE New Delhi v Maruti Udyog, 2002 (141) E.L.T. 3 (S.C.). Revenue has not been able to indicate that this decision has been reviewed and revised by the Apex Court till date. Accordingly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clause (a) ) then in terms of sub-rule (1) the assessee shall not be allowed credit on such quantity which is used in the manufacture of exempted goods. Consequently, where the assessee has not paid the amount, the availment of corresponding credit on inputs is incorrect. The recovery of such credit taken incorrectly is squarely covered by the provisions of Rule 12 (erstwhile Rule 57-I). 12.2 It is true that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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 15-4-2004. But they have not indicated how it should otherwise be worked out and the consequential effect on duty liability. Therefore, the applicant s claim to restrict its admission of duty liability, to only Rs. 1,67,362/-, is fair and acceptable. 13. Coming to the immunities sought for, the Bench observes that the applicant company has co-operated fully during the settlement proceedings by conceding to many of the issues as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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