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TMI Blog2014 (2) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... . 13,05,482/- towards reversal of credit in respect of 38 Nos. of DSRM Rolls sold to Indian Seamless Metal Tubes Ltd. (ISMTL in short) and leased back to the appellants. He has also imposed a penalty amounting to Rs. 89,22,882/- on the main appellant; Rs. 15 lakhs on Shri M.G. Apte, General Manager (Finance) of the appellant firm under Rule 209A of the Central Excise Rules, 1944 and a penalty of Rs. 25.00 lakhs on Shri Sanjay Gupta, the agent of scrap dealer. However, Shri Sanjay Gupta has not appeared before us. Therefore, we are taking up the appeals only in respect of the main appellant, M/s. ISMT Ltd. and Shri M.G. Apte, General Manager (Finance) of the main appellant. 3. The first demand of Rs. 1,43,84,829/- has been made on the ground that during the year 1995-96 the appellant took credit on a quantity of 92,427 MTs of scrap said to have been received as per RG-23A Part-I Register maintained by the appellant, whereas in form 3CD, which is a statutory return filed by the appellant with the income tax authorities, the appellant had shown the purchases of all raw materials including non-cenvatable raw materials at 80,990 MTs. Further, in the daily stock statement maintaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions. 4.1 As regards the first demand of Rs. 1,43,84,829/- is concerned, the reason for the difference between the RG-23A Part-I account and the daily stock statement account is due to the fact that the part of the goods weighing 14434 MTs were received during 1994-95, however, the appellant did not take credit for want of receipt of duty paying documents and when the documents were received during 1995-96, they took the credit. Availing of credit for the goods received in 1994-95 during 1995-96 is not prohibited in law and hence, the demand is not sustainable in law. The appellant also relies on the decision of this Tribunal in the case of Sunrise Structurals & Engineering Ltd. v. CCE, Nagpur - 2004 (117) ECR 307 (Tri.- Mum.) and Milton Polyplast v. CCE - 2006 (205) E.L.T. 210 (Tri.- Mum.) (sic) in support of his contention that the Cenvat Credit Rules pertaining to availment of credit was substituted in the year 2000 without any saving clause and therefore, the duty demand could not have been confirmed after 2000. As regards the denial of credit of Rs. 3.00 lakhs is concerned, the learned Counsel submits that the credit has been taken based on duty paying documents an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atable inputs whereas the figures in the 3CD return reflects both Cenvatable inputs as well as non-centavable inputs and in the normal course, the figures declared in form 3CD should be higher than those reflected in RG-23A part-I register. He also points out that for the previous two years, 1993-94 and 1994-95 are concerned, the figures declared in form 3CD is higher than those declared in the RG-23A register. Therefore, during the year 1995-96 alone, the declaration of a lower figure in form 3CD does not stand to any reason. Further, in the daily stock statement which accounts for the receipt, consumption and during stock of raw materials, the receipt shown is only 78,408 MTs. As per the procedure followed by the appellant, as evidenced from the statement of Shri Pattanshetti, Assistant Manager (Stores), it is clear that the appellants have been maintaining the daily stock an actual basis and as soon as the goods are received, entries are made in the register. If that be so, the actual receipt of goods during 1995-96 can be taken only at 78,408 MTs and not 92,427 MTs as indicated in the RG-23 Part-I register. Therefore, the adjudicating authority is right in denying Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted three different figures, 80990 MTs in form 3CD which is a statutory return under the income-tax law, being the total quantity of Cenvatable inputs and non-cenvatable inputs received, 92,427 MTs in the RG-23A Part I register for the quantity of cenvatable inputs received and 78,408 MTs in the daily stock statement, which is a statutory register prescribed for receipt of raw materials. In view of the variations in the receipts, the appellant was directed, during the course of hearing on 25-9-2013, to produce copy of the balance sheet and schedules showing the details of inventory held for the year 1995-96, so as to resolve the difference among the three figures reflected in the three different accounts maintained by the appellant. The appellant has produced a copy of balance sheet and the schedule. However, the said document does not reflect the opening balance, receipt and the closing balance of the raw material, but merely indicates the quantity of raw material consumed during the year. Thus, this document is of no use in ascertaining the receipt of raw materials, during 1995-96. The statutory document prescribed (during the relevant period) as regards receipt of raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving been substituted by the Cenvat provisions by Notification No. 27/2000-C.E. (N.T.), dated 31-3-2000 without any saving clause in the notification. It was in that context, this Tribunal held that the show cause notice issued subsequent to the substitution when the rules were not in force is not sustainable in law. In the Milton Polyplast Ltd. case, the earlier decision of Sunrise Structural & Engineering Ltd. was followed. However, in the present case, the show cause notice has been issued on 23-2-1999 when the provisions were in force for the cause of action which had arisen during 1993-94 to 1995-96.Therefore, the issue of show cause notice, when the rules were in force, cannot be questioned. Further, Section 38A of the Central Excise Act, provides saving clause in respect of rules, notifications and orders made or issued under Central Excise Act, 1944 and the said section has been given retrospective effect with effect from 1944 and the proceedings initiated have been validated vide Section 132 of Finance Act, 2001. In these circumstances, the challenge to the issue of show cause notice and the proceedings would not sustain. 6.3 Coming to the next demand of Rs. 3.00 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 13,05,482/-, the Revenue has proceeded to confirm the demand on the ground that the goods were sold to ISMTL Excise duty is on manufacture and not on sale; whether the goods are sold or not, the liability to excise duty would arise on manufacture of the goods and the liability has to be discharged at the time of removal of goods from the factory. In the present case, in respect of 78 Nos. of DSRM Rolls manufactured by the appellant and captively used within the factory of production, Notification No. 67/95-C.E., dated 16-3-1995 provided for exemption on the capital goods captively used within the factory in the production or manufacture of excisable goods. It is not in dispute' that the appellant used the capital goods in the manufacture of final products specified in Notification No. 67/95-C.E. If that be so, the demand on the ground that capital goods were sold, would not sustain at all. Similarly, in respect of 38 Nos. of DSRM Rolls imported by the appellant and used within the factory of production and sold to ISMTL, reversal of credit is envisaged only when the capital goods are removed as such or removed after use or removed as waste and scrap under the provisions of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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