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TMI Blog2014 (12) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... sealing, it is inconceivable that they would not be aware of the activity in the factory which they were visiting. There is no allegation against the departmental officers, who had given permission for in factory examination of the export consignments and the officers who had regularly visited the Nathupur unit for examination and sealing of the export consignments, that they were in connivance with the appellant. In view of this, at this prima facie stage, it is difficult to accept the Department’s allegation that there was no manufacturing activity at Nathupur unit and it was a dummy unit and it is Kathua unit which was manufacturing and clearing fully finished Sputtering Targets. Classification of Sputtering Targets - Held that:- Sputtering targets consist of a flat piece of copper bonded with a layer of gold or silver or any other metal whose film is to be deposited on a substrate. In Physical Vapour Deposition Machine, the Sputtering Targets is bombarded by very high energy atoms of an inert gas like Argon as a result of which the atoms of gold/silver/other metal in the Sputtering Target get ejected, and are deposited on a substrate like silicon wafer, forming a thin film. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit at Nathupur, Sonepat where according to the appellant, the same are subjected to further processing like drilling holes, threading operation, counter sunk operation, buffing, cleaning of copper plate, etc. as a result of which, the fully finished sputtering targets emerge. The fully finished sputtering targets are cleared by the Nathupur unit on payment of duty and the same were being exported under rebate claim. The Nathupur unit was availing Cenvat credit in respect of the sputtering target blanks received from the Kathua unit in terms of the provisions of Rule 12 of the Cenvat Credit Rules, 2004 and the Cenvat credit was being used for payment of duty on fully finished sputtering targets cleared for export. 1.2 The sputtering targets are used as part of Physical Vapour deposition machines to coat the desired substrate with a thin film of the requisite metal which in this case is the gold or silver. The substrate on which the thin film layer of gold/silver can be deposited by the use of sputtering targets, can be mirrors, CDs, semi conductor devices and gems and jewellery. Since the physical vapour deposition machines are classifiable under heading 85.43, the sputtering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11AC of Central Excise Act, 1944. The show cause notice was issued by invoking extended period under proviso to Section 11A(1) of Central Excise Act, 1944 by alleging that the appellant unit had suppressed the relevant facts from the department and has availed this credit by adopting fraudulent means. 1.4 The above show cause notice was adjudicated by the Commissioner, Central Excise, Rohtak vide order-in-original dated 31-1-2013 by which the above-mentioned Cenvat credit demand was confirmed against the appellant alongwith interest thereon under Section 11AB of Central Excise Act, 1944 and beside this, penalty of equal amount was imposed on them under Section 15 of Central Excise Act, 1944 read with Section 11AC of Central Excise Act, 1944. Against this order of the Commissioner this present appeal has been filed alongwith stay application. 2. Heard both the sides in respect of stay application. 3. Shri C. Harishankar and Shri S. Sunil, Advocates, the learned Counsels for the appellant, pleaded that the Kathua unit was manufacturing only Sputtering Target blanks which were being subjected to further processes of drilling holes, threading, counter sunk operation, buffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factory premises concluded that there was no manufacturing activity, that as regards classification of the Sputtering Targets, the same are correctly classifiable under heading 8543 90 00 and not as articles of gold under sub-heading 71159090, that the letter dated 9-10-2009 of Deputy Commissioner, Kundli addressed to the Deputy Commissioner (Shed), Air Cargo Complex, New Delhi mentions that while the physical vapour deposition machines are classifiable under heading 8543, the Sputtering Targets being part of such machine are correctly classifiable under sub-heading 85439000, that in view of this, the Department cannot revise the classification of this Sputtering Targets to heading 71159090 as otherArticles of gold , that in any case, the correct classification of these goods is under sub-heading 85439000 as the Sputtering Targets are of specific use with Physical Vapour deposition machine falling under 8543, that as per Chapter Note to Chapter 71, identifiable parts of machines are excluded from the purview of Chapter 71 and even HSN explanatory notes of heading 7115 exclude such parts from the purview of HSN heading 7115, that from the notings of the Air Cargo Complex, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty had been found and the condition of the factory indicated that there was no manufacturing activity at that place. She also pointed out to the statement of Shri I. Rajasekar, Production Supervisor of Kathua unit, wherein he stated that the unit had started manufacturing gold Sputtering Targets since February 2009, that finished Sputtering Targets are packed by individually wrapping the same in bubble sheets to avoid any damage to surface and that the statement of the Production Supervisor of the Kathua unit shows that the Sputtering Targets as cleared by Kathua unit were in fully finished condition. She also pleaded that Shri Debrabrata Mohanty, Consultant, in the appellant company in his statement dated 18-1-2011 has stated that he agrees with the statement of Production Supervisor Shri I. Rajasekar. She also pointed out to the statement of Shri Raj Kumar Pathak, Security Guard of the Nathupur unit of the appellant company, wherein he stated that he was working in Nathupur unit for the last 4 to 5 months and that this factory was closed even prior to his coming and ever since he started working in this unit, no work was being done and neither any goods arrived nor any goods have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dummy unit created to wrongly avail the Cenvat credit by misusing the provisions of Rule 12 of the Cenvat Credit Rules, 2004 and in this regard, the Department relies upon the statements of the employees at Kathua unit according to which each piece of Sputtering Targets was individually packed in bubble plastic sheets to avoid any damage to the surface and that at the time of officer s visit to the Nathupur unit, there was no manufacturing activity found in it and the condition of the factory indicated that it was closed for a long time. However, we find that the Deputy Commissioner, Incharge of Nathupur unit in his letter dated 9-10-2009 addressed to the Deputy Commissioner (Shed), Air Cargo Complex, New Delhi has stated that the appellant unit is getting Sputtering Target blanks from its sister unit at Kathua, Jammu and same thing is repeated in the Assistant Commissioner, Kundli s letter dated 4-2-2010 to the Deputy Commissioner (Shed), Air Cargo Complex, New Delhi. Moreover it is also seen that the Sputtering Targets were being cleared for export from Nathupur unit under ARE-1s and permission for in factory examination and sealing had been given by the Jurisdictional Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine , the same would be excluded from the purview of Chapter 71. Moreover, the correspondence of the Deputy Commissioner, Kundli, Sonepat, the Jurisdictional Deputy Commissioner with the Deputy Commissioner (Shed), Air Cargo Complex and internal notings in the files of Air Cargo Complex clearly indicate that the Central Excise Authorities at Sonepat as well as Customs Authorities at the Air Cargo Complex have treated the goods, in question, as classifiable under 85439000, not as other articles of gold under sub-heading 71159090. Therefore, the Department s contention that these goods are classifiable under sub-heading 71159090 and being fully exempt from duty would not be eligible for exemption under Notification No. 56/2002-C.E., and hence there was no question of Kathua unit availing of exemption under Notification No. 56/2002-C.E. and the Nathupur unit availing of Cenvat credit in terms of Rule 12 of the Cenvat Credit Rules, 2004, is not correct. 8. Moreover from the circumstances of the case, as discussed above, it is clear that the departmental officers were aware of the activity at manufacturing unit of the appellant company at Nathupur and hence Nathupur unit cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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