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TMI Blog2011 (10) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... e the appellants have failed to supply the quantity and value of the goods, the finding of the Commissioner that intent to evade payment of duty is proved and accordingly, the penalty under Sec.11AC of the Central Excise Act and interest payable under Sec.11AB is also upheld. - E/1069/07-Mum & E/CO-191/07-Mum - Final Order Nos. A/902-903/2011-WZB/C-II(EB) - Dated:- 19-10-2011 - Mr S.S.Kang, Mr.Sahab Singh, JJ. Appearance Shri P.Shah advocate with Shri V.Sridharan, advocate for Appellants Shri R.K.Mahajan,Jt.CDR for Respondent Per : Sahab Singh This is an appeal filed by M/s. Raymond Ltd. (hereinafter referred to as 'the appellants') against the order passed by the Commissioner of Central Excise, Mumbai.III. 2. The brief facts of the case are that the appellants are the manufacturers of excisable goods falling under Chapter 51, 52, 53, 58, 59 62 of CETA, 1985. The appellants were availing exemption for captive consumption under Notification No.67/95-CE dated 16.3.95 for their intermediate products tops, yarn and grey fabrics and were paying duty on their various finished products till 8.7.2004. After the budget of 2004-05, the appellants opte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rics in WIP and finished fabric lying as such on 9.7.04 cannot be made as the reversal of credit availed thereon amounts to proper discharge of duty. He further submitted that when the appellants manufactured tops, yarn and grey fabrics and availed exemption under Notfn. No.67/95 dated 16.3.95 the final product ie. processed fabrics was dutiable and in view thereof at the time when the appellants consumed the tops, yarn and grey fabrics within the factory of production the exemption claimed by the appellants was correct. He further argued that it is a settled position that duty becomes payable on manufactured product once it is removed from the place of manufacture for consumption and in terms of Rule 5 of CER, 2002, if any excisable goods are used within the factory, the date of removal of such goods shall mean the date on which the goods are issued for such use. Therefore, the date of removal of tops, yarn and grey fabrics manufactured by the appellants were exempted under the Notfn.No.67/95 by reason of the fact that the final product of the appellants was liable to duty at the time of removal of the goods. He relied on the decision of the Supreme Court in the case of Collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Notfn.No.67/95 is applicable if the intermediate products are used in the manufacture of dutiable finished products. Since in the instant case, tops, yarn and grey fabrics contained in WIP stock and the finished goods were not used in the manufacture of dutiable goods, the exemption is not applicable to them and the Commissioner has correctly demanded the duty from them. Regarding the applicability of Notfn.No.30/04, the ld. Jt.CDR submitted that the proviso to the Notification states that nothing contained in the Notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been availed by them. He submitted that once the credit has been availed by them, the subsequent reversal of the same would not make the inputs as duty paid in view of the CESTAT decision in the case of Cheviot Company Ltd. vs. CCE, Kolkata reported in 2010 (255) E.L.T. 139 (Tri-Kolkata) He also relied upon the decision of the Supreme Court in the case of Amrit Paper vs CCE, Ludhiana reported in 2008 (12) S.T.R. 536 (S.C.) wherein it was held that the assessee who availed the credit at the time of clearance of the goods is not entitled to exemption on reversal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) goods specified in column (1) of the Table hereto annexed (hereinafter referred to as 'input') manufactured in a factory and used within the factory of production in or in relation to the manufacture of final products specified in column (2) of the said Table; [from the whole of the duty of excise leviable thereon which is specified in the Schedules to the Central Excise Tariff Act, 1985 (5 of 1986) or additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act:] Provided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products which are exempt from the whole of the [duty of excise or additional duty of excise leviable thereon] or are chargeable to nil rate of duty . ---------------- ---------------- From the Notification it is clear that inputs manufactured in the factory and used within the factory in or in relation to the manufacture of final products are exempt from whole of the duty of excise provided the final products manufactured in the factory are not chargeable to Nil rate of duty. Proviso to the Notification clearly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest in at least two of such manufacturing activities . And there was also in operation another Notification 131/77 which granted a partial exemption from excise duty to the cotton yarn but because of the Notification No.132/77 such yarn captively consumed was exempted from whole of the duty. This exemption was partially withdrawn by another Notification No.226/77 dated 15.7.1977 under which different rate of duty was prescribed for the cotton fabrics. There was a proviso to the Notification dated 15.7.77 which reads as under:- Provided further that in cases where cotton fabrics have been produced in a composite mill or are produced therein and in the production of such cotton fabrics cellulosic spun yarn falling under sub-item III (i) of item No. 18 of the said First Schedule or cotton yarn falling under item No. 18A(i) of the said First Schedule, or both, on which no duty of excise was paid prior to the 15th day of July, 1977, was or is used, the duty payable on such fabrics shall be (a) at the appropriate rate of duty as specified in this notification plus (b) the duty payable on such cellulosic spun yarn or cotton yarn or both, as the case may be, under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, from whole of the duty of excise leviable thereon under the said Central Excise Act : Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the CENVAT Credit Rules, 2002. In this Notification goods mentioned in Col.2 of the Table are exempt from whole of the duty of excise. Under the proviso to the Notification, it is stated that this exemption is not applicable to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the Cenvat Credit Rules, 2002. Proviso to Notification presupposes that inputs used in the manufacture of final product should be duty paid. It is the submissions of the appellants that cenvat credit taken by them on the inputs procured from outside has already been reversed. Therefore, they should be allowed to avail this exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods only and then, he came to the conclusion that as the subjected two notifications refer to the aspect of credit being taken or otherwise of inputs, maintenance of separate accounts for inputs is of prime importance. Since this condition was not satisfied, he confirmed the levy of duty, penalty etc. This finding of the learned Commissioner of Central Excise is not in consonance with the observations made and the ratio laid down by the Honourable Supreme Court in the case of Chandrapur Magnet Wires(P) Ltd. (supra). In para 6 of the order, the High Court observed that the ratio laid down by the Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. is squarely applicable to the facts of the present case and maintenance of separate books of accounts at the initial stage cannot be considered to be a condition precedent for the purpose of claiming the benefit of exemption Notification. 11. We find that in the case before us, there was no issue of maintenance of separate books of accounts before the original authority. 12. The department on the other hand relies on the decision of the Tribunal in the case of Cheviot Co.Ltd. (supra). The facts in that case were th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are unable to agree with the same. We are of the considered opinion that the decision of the Tribunal in the case of Hind Lamps (cited supra) which had taken into account the decisions in the cases of Chandrapur Magnet Wires (P) Ltd. [1996 (81) ELT 3 (S.C.)] and Hello Minerals Water Pvt. Ltd. ( cited supra), will be relevant to the facts of the present case. Further, we notice that the decision of the Hon'ble Supreme Court in the case of Chandrapur Magnet (cited supra) related to reversal of the credit prior to the removal of the goods and taking note of the Board's Circular regarding the difficulty faced in maintaining separate accounts in respect of common inputs. The Tribunal in this case has finally held that the benefit under Notification No.30/04 is not applicable to the appellants in that case. We find that the facts of this case are similar to the facts before us in the present appeal. 13. We also find that the Commissioner while adjudicating the case in para 22 of the order has already subtracted the quantity of the stock purchased by appellants from the market on which credit was reversed by the appellants. Therefore, the issue regarding the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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