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TMI Blog2010 (6) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee has been afforded adequate opportunity to present his case in defence - The Show Cause Notice is the foundation in the matter of levy and recovery of duty, penalty and interest as held by the Apex Court in the case of CCE v. Ballarpur Industries Ltd. [2007 -TMI - 1670 - SUPREME COURT OF INDIA] cited by the appellants. - Decided in favor of assessee. - - - 900/2010 - Dated:- 16-6-2010 - S/Shri M.V. Ravindran, P. Karthikeyan, JJ. REPRESENTED BY : Shri G. Shivadass, Advocate, for the Appellant. Smt. Sudha Koka, SDR, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. - A Show Cause Notice was issued to M/s. Tilrode Chem Pvt. Ltd., Bangalore (TCPL), a job worker manufacturing pharmaceutical products mainly for M/s. Pfizer Ltd. It was proposed to recover duty not paid by them on various counts namely clandestine removal, availment of inadmissible benefit under SSI Notification, non-reversal of Modvat credit on inputs removed, etc. The proposals were confirmed. Penalty was imposed on the assessee as well as the MD of the assessee. On appeal filed against the order, vide Final Order No. 916-917/2003, dated 8-7-2003, the Tribunal allowed the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 781/- 51,000/- 4. 95,520/- Duty on goods said to have been destroyed. 95,520/-confirmed 9,500/- 5. 12,133/- plus 44,588/- Additional consideration demand on turnover tax 12,133/-confirmed and drop 44,588/- 1,200/- 6. 1,45,913/- Non-reversal Modvat credit on inputs returned. 1,45,913/-confirmed 14,500/- 2. Before the Commissioner, the appellants had submitted that if the ratio of the Apex Court s judgment in Ujagar Prints case was applied as directed by the Tribunal their total duty liability after adjusting the excess duty paid on the goods cleared in the normal course (under central excise invoices) would workout to Rs. 50,884/-. The Commissioner found that the appellants had cleared certain quantity of goods during the material period following the statutory provisions and certain other quantity without payment of duty. As regards the second category of goods, the Commissioner found that the duty amount recovered from the customers of the appellants was retained by it. The duty liability on these clearances worked out to Rs. 9,89,248/-. In respect of the clearances m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 11AC of the Act and imposing another penalty of Rs. 15,00,000/- under Rule 173Q of the erstwhile CER, 1944/Rule 25 of the CER, 2001. He also demanded applicable interest invoking provisions of Section 11AB of the Act. 4. In appeal filed before us, the following grounds have been taken. The Order-in-Original No. 5/2003 dated 31-3-2003/11-4-2003 had restricted the demand to only 52 invoices amounting to Rs. 24,55,273/- as against Rs. 58,09,607/- for 108 invoices proposed in the Show Cause Notice. The demand in respect of 56 invoices amounting to Rs. 33,89,224/- was dropped finding that the appellants had paid the duty due. Impugning the said order, they had argued before the Tribunal that the demand confirmed related to clearances made as a job worker to the principal manufacturer, M/s Pfizer Ltd and the goods cleared had to be assessed as per Ujagar Prints formula. The appellants had wrongly paid duty on those clearances based on the sale price of the principal manufacturer. The Tribunal had remanded the matter for re-computation to the original authority. The department did not challenge this finding of the Tribunal and the same had attained finality. On recalculation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard, they relied on the following case laws : (i) Hindustan Polymers Co. Ltd. v. Collector of Central Excise, Guntur [1999 (106) E.L.T. 12 (S.C.)] (ii) SACI Allied Products Ltd. v. Commissioner of Central Excise, Meerut [2005 (183) E.L.T. 225 (S.C.)] (iii) Chimique Industries Ltd. v. Commissioner of Central Excise, Bangalore [2005 (69) RLT 452 (Tri. - Bang.)] 4.2As the Tribunal had, vide Final Order No. 1398 1399/2006 dated 30-8-2006, ordered adjustment of the excess duty already paid, the appellants were liable to pay only a sum of Rs. 50,664/-. Consequently, the demand under Section 11D was not sustainable. The Commissioner had wrongly found in the impugned order that the appellants had not disputed the liability on the goods cleared under the central excise invoices and that the Tribunal had ordered re-assessment of the goods cleared under parallel invoices . He held that the duty liability in this regard was never a subject matter of dispute; if at all the assessee contended that excess duty had been paid, it should have been claimed under Section 11B of the Act. The appellants submitted that they were entitled to raise this issue before the appellate author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd. (supra). It is submitted that the excess payment for Rs. 4,52,595/- made during the material period had to be adjusted towards other amounts confirmed by the Commissioner in his Order-in-Original dated 31-3-2003/11-4-2003. The penalties imposed are assailed for the reason that duty demand itself was not sustainable. Penalty of Rs. 15,00,000/- imposed under Rule 173Q of the CER, 1994/Rule 26 of the CER, 2001 appeared to be pertaining to demand of Rs. 14,66,025/- confirmed under Section 11D of the Act. As this demand is not sustainable not being supported by matching proposal in the Show Cause Notice, the penalty of Rs. 15,00,000/- was also liable to be set aside. The demand of interest under Section 11AB was not also sustainable as the duty demand was not sustainable. They prayed for setting aside the impugned order. 5. Heard both sides. 6. We have perused the case records and considered the rival submissions. This matter arises before us for the third time. Demand of duty was confirmed against the appellants on various counts and penalties imposed on them by the Commissioner of Central Excise. Disposing the appeal filed in the second round, disputes as regards liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to make good the non-payment of duty. This amount of Rs. 21,08,073/- was demanded. The proposal to demand duty of Rs. 33,54,334/- had been dropped when demand was confirmed for Rs. 24,55,273/- by the Commissioner in the Order-in-Original No. 5/2003 BNG. II dated 31-3-2003/11-4-2003. In the appeal filed by TCPL impugning the order dated 31-3-2003/11-4-2003, it was submitted that it had adopted wrong valuation for the clearances that had entailed demand of Rs. 24,55,273/- and that had they adopted the correct valuation method, their duty liability would have worked out to about Rs. 50,000/-. While remanding the matter to the Commissioner for adjudicating the dispute considering the fresh legal plea on valuation, vide Final Order No. 916-917/2003 dated 8-7-2003, the Tribunal had allowed the appellants to raise all the connected issues in re-adjudication. We find that the assessee has raised the same plea about their net liability being around Rs. 50000/- in further proceedings including the appeal before the Tribunal which culminated in the Final Order No. 1398 1399/2006 dated 13-8-2005. The plea has been that the non-payment of duty found in respect of certain clearances shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Tribunal in the case of Vinir Engineering Pvt. Ltd. (supra) relied on by the appellants, the Tribunal had held that the assessee was entitled to adjustment of duty short paid in respect of certain clearances from excess payment on certain other clearances made during the same period. The Tribunal had relied on a judgment of the Apex Court in Hyderabad Divya Enterprises (supra) laying down the same ratio. In the circumstances, we find that the appellants are not liable to pay any duty on this account and the demand of duty of Rs. 9,89,248/- is liable to be set aside. As the duty liability is vacated, penalty under Section 11AC is liable to be set aside. We vacate the impugned demand and, penalty under Section 11AC of the Act. We find that the appellants had violated various rules as found by the adjudicating authority in the impugned order. However, considering the amount of duty involved on the clearances without payment of duty, we reduce the penalty to Rs. 2,00,000/-. (ii) As regards the demand of Rs. 14,66,025/- under Section 11D of the Act being the excess duty retained by the assessee, we find that this demand has no basis in the Show Cause Notice. No de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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