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TMI Blog2007 (3) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... 95.510 MTs of iron and steel, which was ship breakage input, sold to it "as such" by the other appellant, M/s. Vashist Ispat Product, (the original noticee no. 2). The appellant, M/s. Vashist Ispat Product, had received the inputs from M/s. Vijay Sharma Sons through the invoices on which the said appellant had availed the Cenvat credit of Rs. 1,49,373/-. According to the Revenue, as per the provisions of sub-rule (4) of Rule 3 of the Cenvat Credit Rules, 2002, the appellant, M/s. Vashist Ispat Product, was required to reverse only an amount equal to the Cenvat credit taken by them i.e Rs. 1,49,373/- in respect of the said inputs at the time of their clearance "as such" to M/s. Lakshmi Steel Rolling Mills, and only that was the amount available as Cenvat credit to the appellant, M/s. Lakshmi Steel Rolling Mills, as per the provisions of Rule 3(5) of the said Rules. In the show cause notice issued on these appellants, it was alleged that, since the appellant, M/s. Vashist Ispat Product, was going to opt for full exemption under SSI Notification No. 8/2003 w.e.f. 1-4-2003, the said appellant was required to reverse the Cenvat credit involved on the stock of inputs lying "as such" or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was observed that, even if higher value may have been charged, the Cenvat credit could have been reversed only to the extent that it was taken at the time of receipt of the inputs. As regards the contention that, though the show cause notice referred to the provisions of Section 11AC for proposing penal action against the appellant, M/s. Vashist Ispat Product, the penalty was imposed under Rule 13 of the Cenvat Credit Rule, 2002, the Commissioner (Appeals) held that, mere wrong mention of Section 11AC in the show cause notice did not vitiate the action taken against that appellant. 5. The learned counsel appearing for the appellants in both these appeals, has contended that, the appellant, M/s. Vashist Ispat Product, by selling the goods at a higher value to the other appellant, has, in fact paid a higher amount of duty and therefore there was no revenue loss caused by the higher sale price It was submitted that, since Cenvat credit was available to the appellant, the payment was lawfully made by utilizing that credit It was submitted that, merely because the said appellant had opted for the benefit of the SSI Exemption Notification from 1-4-2003, no adverse inference could h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the appellant, M/s. Vashist Ispat Product, was justified. 7. The material on record clearly discloses that, the Cenvat credit taken by the appellant, M/s. Vashist Ispat Product, in respect of the quantity of inputs, which it sold to the other appellant at a higher value, was Rs. 1,49,373/-. According to the appellant, M/s. Vashist Ispat Product, better quality scrap was sorted out for the sale of the inputs "as such" to the appellant, M/s. Lakshmi Steel Rolling Mills, and, therefore, higher value was justifiably charged under the invoices, when the clearance of goods was made "as such". 7.1 It would appear from the provisions of Rule 3(4) of the Cenvat Credit Rules, 2002 that, when the inputs on which Cenvat credit was taken are removed "as such" from .the factory, the manufacturer of the final product was required to pay an amount "equal to the credit availed in respect of such inputs" and such removal was required to be under the cover of an invoice, referred to in Rule 7. The invoice under Rule 7 was required to be issued in terms of the provisions of the said Rules of 2002. Therefore, no amount higher than the amount, equal to the credit availed in respect of the inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were independent partnership firms. If the names of these sole-proprietors had appeared as manufacturers and assessees, as ought to be done under the relevant legal provisions, as will presently be seen, there would have been a natural consequential inquiry, whether these individuals running business in the names of proprietory concerns were "related" persons. in fact, excise registrations contemplated by Rule 9 can be done only of person(s) who are manufacturers and such person(s) alone can be the assessees. A proprietory concern has no legal existence of its own and is not a person like a company or a living individual. The use of the prefix "Messers" in a proprietory name misleads the public at large and the officials, by suggesting that it is a body of persons. A registered partnership firm would be a group of persons who are its partners and will collectively be manufacturers and assessees, though doing a business in the name of their partnership firm. Only a registered partnership firm can sue or be sued in the firm's name, that too for convenience sake. Beyond that, it has no juristic personality. The scheme of the said Act and the Rules contemplates, registration and asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and is capable of perpetuating frauds due to the real name of the person concerned being camouflaged by the assumed proprietory name. The word "assessee", as defined in Rule 2(c) of the Central Excise Rules, 2002, means any per who is liable for payment of duty or a registered person of a private warehouse. Under Rule 4, duty is payable on removal of excisable goods by every person who produces or manufactures or stores in a warehouse. Thus, none of the provisions of the Act or the Rules war rants recognition of mere sole proprietory name as manufacturer or assessee, who would be liable to pay the duty. Only a person living or juristic can be registered for the purposes of the Act and will be liable to assessment and payment of duty irrespective of any name/names that he may adopt for doing the proprietory business. All the excise registerations and assessments under the Act and the Rules are required to be done in the name(s) of the persons concerned even when they run their proprietory business in different names. In fact, the practice of registering manufactures in the name of proprietory concerns, appears to have been unwittingly recognized by a seemingly innocuous but a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provisions. All excise registrations and assessments are required to be done in the name(s) of the persons concerned even when they run proprietory business in different names. It will be for the Parliament, the rule making authority, the Board and the excise officials to recognize the potential mischief and large scale abuse that is caused by allowing the excise registrations and doing assessments in the names of proprietory concerns and not in the names of the real persons who are the manufacturers and assessees, and take appropriate remedial measures. 10. As held above, the excess Cenvat credit was wrongly availed by the appellant, M/s. Vashist Ispat Product, and, therefore, its recovery with interest, was justified. No penalty was imposed on the appellant, M/s. Lakshmi Steel Rolling Mills. However, penalty of equal amount of Rs. 45,467/- has been imposed on the appellant, M/s. Vashist Ispat Product, under Rule 13 of the Cenvat Credit Rules, 2002 Though there is an allegation of malafide intention made against the said appellant in the show cause notice, in the context of the penalty proposed under Section 11AC, it appears that the adjudicating authority has resor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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