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TMI Blog2011 (6) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants towards shrinkage of fabrics - Trade Notice provided for a shrinkage of 4.2% whereas the appellants took shrinkage at 6.2% - Held that:- Trade Notice also provided that if the shrinkage is substantially more than 4.2% as provided in the Trade Notice, actual shrinkage should be taken into account. appellant-assessee is entitled to the adjustments on account of addition of 15% notional profit and also on account of shrinkage which was taken into account more than the actually incurred shrinkage. After making such adjustments, the department has to determine whether any demand towards short levy exist and only to that extent the department can make legitimate claim from the appellant-assessee. Denial of CENVAT credit – 'deemed credit' - Held that:- learned adjudicating authority has denied the deemed credit facility for the entire period even in respect of fabrics cleared under invoices wherein duty liability has been discharged correctly. Such a denial is not provided for in the Notification or in the law. adjudicating authority directed to re-compute the deemed credit wrongly availed only in respect of those quantum of fabrics specified under invoices in respect of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory during the period from August, 2001 to March, 2004.The show-cause notice further proposed to dis-allow deemed CENVAT credit amounting to Rs.90,89,899/- availed by the assessee on the clearance of processed fabrics for home consumption during the period from August, 2001 to March, 2004 under the provisions of para 6 of Notification No. 6/2002-CE (NT) dated 01.03.2002. The show-cause notice was also proposed to recover wrongly availed excess deemed credit of Rs.45,51,113/- on the clearance for export which were over-valued during the period from August, 2001 to March, 2004. The show-cause notices was adjudicated by the impugned order wherein the learned Commissioner confirmed duty demand of Rs.7,85,423/- under Section 11A(1) of the Central Excise Act, 1944 being the amount short paid by the assessee on the clearance of fabrics in respect of which the job charges were mis-declared. He also confirmed interest on the amount short paid under Section 11AB and also imposed equivalent amount of penalty under Section 11AC. The learned Commissioner further dis-allowed the 'deemed credit' amounting to Rs.90,89,899/- availed by the assessee under the provisions of Section 11AQ(1) read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notional margin of profit for valuation of goods manufactured on job work basis. However, Mumbai III Commissionarate continued to collect 15% notional profit margin and withdrew the Trade Notice in terms of the clarification given by the Board only on 30.09.2002. If the amount of 15% of the notional profit, which was not required to be included while arriving at assessable value but which was forced on the trade by the Commissionerate to include is taken into account, there will be excess payment of duty by the appellants than what is required to be paid under the law. If such excess payment is adjusted towards short payment, there will not be any requirement to pay any duty at all. It is their contention that due to inclusion of 15% notional profit they have paid excess payment of Rs.2,10,76,501/ as against the short payment of Rs.7,85,433/-. 4.2 The learned Counsel has further argued that as per the same Trade Notice they were required to take shrinkage only to the extent of 4.2% whereas in their case they have actually taken shrinkage @ 6.2%; thus they have taken 2% extra towards shrinkage and if this is also taken into account, there will not be any short payment of duty as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in doing so till 04.10.2002 on which date the Trade Notice No. 20 was modified by Trade Notice No. 63.' and, accordingly, he had dropped the demand for Rs.12,11,439/- in respect of exports. The same logic should be adopted in respect of clearance for home consumption also which he has not done. 5. The learned departmental representative submits that the loading of 15% notional profit in the assessable value of the processed fabrics till 4.10.2002, though contrary to the Board's instructions on the matter, was as per the general understanding of law at that time. If the appellants were aggrieved by this loading, they should have filed refund claim rather than asking for adjustment in respect of demand for short levy made by the department. As regards shrinkage, the learned DR submits that as per Trade Notice No. 20/2001 dated 24.03.2001 shrinkage was allowed @ 4%, however, the said notice also provided that if the actual shrinkage is substantially more than that, then the actual shrinkage should be taken. In the assessee's case, the actual shrinkage is more and, therefore, they have taken 6.2% as shrinkage. Therefore, the belated claim of the appellants that they have taken e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein the Board had clarified that in respect of job work, the assessable value shall consist of only the cost of materials at the premises of the job worker + job charges. Further in the instruction issued on 19.2.2002 the Board had reiterated the same in the light of the hon'ble apex court's decision in the case of Ujagar Prints. However, in-spite of these clear directions, the Mumbai III Commissionerate kept on insisting to load trade/job work charges by 15%.Therefore, it has to be noted that excess valuation has arisen as per the directions of the department. When the department alleges short levy of duty due to non-inclusion of processing charges in certain transactions, they cannot shut their eyes towards the excess payments collected by them on the very same transactions which is not in accordance with law. Therefore, such excess payments have to be necessarily adjusted towards the short payments alleged by the department on the very same transactions. Therefore, if the department alleges that the assessee had short paid duty amounting to Rs.7,85,425/- in respect of certain invoices pertaining to certain quantity of fabrics under clearance, they need to take into account wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct etc. The said provision does not say that even if in respect of the same fabrics when duty liability is discharged correctly 'deemed credit' can be denied. In the instant case, it is observed that the learned adjudicating authority has denied the deemed credit facility for the entire period even in respect of fabrics cleared under invoices wherein duty liability has been discharged correctly. Such a denial is not provided for in the Notification or in the law. Para 6 of Notification 6/2002-CE (NT) dated 1.3.2002 read as follows:- "The provision of this Notification shall not apply for final products on which duty of excise is leviable under the Central Excise Act, 1944 or as the case may be, the additional duty leviable under the Additional Duties of Excise (Goods of Special Importance)Act, 1957 has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion, willful mis-statement or suppression of facts, in contravention of any provisions of the Central Excise Act or of the Rules made thereunder with intent to evade payment of duty." Therefore, denial of entire credit of Rs.90,89,899/- has no legal basis what-so-ever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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