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TMI Blog2017 (5) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants are engaged in the manufacture of Elastic Rail Clips in terms of contract with railways. In March 2007, the Central Excise officers conducted certain physical verification of raw materials and accounts maintained by these two main appellants. The officers seized 36.986 tonnes of raw material (spring steel bars) worth Rs. 11,05,881/- in the premises of M/s Pathick Engineering Works on the ground that these items are not approved raw material for the manufacture of rail clips for the railways. For confiscation of such seized items, proceedings were initiated separately which resulted in the order dated 25/12/2008. The Original Authority ordered confiscation of the seized items and permitted the same to be redeemed on payment of fine o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplied to railways. He submitted that these items are not used or forming part of the rail clips manufactured and sold to Indian Railways. However, these are used in connection with preparation for the manufacture of rail clips, by using them in trial or for setting up of the deformed dyes. All these items are used in the process of manufacture though not finding place in the final product. After usage these items becomes scrap and were cleared on payment of duty, after due accounting. 4. The learned Counsel submitted that the Original Authority ordered the confiscation of raw material SS bars only on the ground that these are found in excess and are not accounted for in the books of M/s Pathick Engineering Works. Rule 15 of Cenvat Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. I have heard both the sides and perused the appeal records. The first issue for decision is the correctness of denial of credit on SS bars procured by both the manufacturing appellants from non-approved sources. The impugned order recorded the following findings :- "6. I have carefully gone into the facts of the case and submission made by the appellants in appeal memo as well as during the course of hearing. The limited issue involved in the instant case is whether SS Bars as purchased by the appellants from the non-approved suppliers of Railways and simply used for trial/die setting purposes in the manufacture of Elastic Railway Clips could be considered as an admissible input for availing Cenvat credit or not. In the instant case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-prescribed raw materials or for legal purposes but for similar reasons for practice and manner followed by similar other manufacturers could also be the same as they are also the parties who participate in similar tenders with Railways and are engaged in the manufacture of Elastic Railway Clips like the appellants in the present case and therefore, the appellants have completely failed on this account. Therefore, on going through with the findings of the adjudicating authority and above reasoning. I find that the orders passed by the adjudicating authority in the instant case against the main appellants and co-appellants are correct and fair and the Cenvat credit utilized by them on un-prescribed raw materials is to be paid/reversed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their factories. As already noted there is no evidence of any diversion of duty paid raw materials. The denial of credit cannot be only on the basis that the raw materials are from non-approved sources or similarly placed manufacturer has asserted that these items are not required even for trial or testing. I find that the duty paid raw material if used in relation to manufacture of dutiable final products, credit cannot be denied on the grounds recorded by the lower authorities. 9. Regarding seizure and confiscation of raw material, SS Bars, I find that the proceeding have been initiated and concluded invoking provisions of Rule 15 of Cenvat Credit Rules, 2004. The said rule reads as below :- "[RULE 15. Confiscation and penalty. - (1) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) Any order under sub-rule (1), sub-rule (2) or sub-rule (3) shall be issued by the Central Excise Officer following the principles of natural justice.]" 10. The above provisions authorized confiscation in respect of inputs or capital goods on which credit has been taken wrongly in contravention of any of the provisions of Cenvat Credit Rules, 2004. I find the confiscation ordered in the present case is due to non-accountal of these raw materials in the statutory records. If these raw materials are not accounted in the records, the question of availing credit on them does not arise. Accordingly, for non-accounted raw material Rule 15 of Cenvat Credit Rules, 2004 has no application. The whole premise of seizure and confiscation has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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