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TMI Blog2022 (4) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal is perverse in holding conclusively that the inputs which have not been received back by the respondent-assessee from the job workers, is 'waster and scrap' only? (ii) Whether the value of the said non-returned inputs as adopted by the respondent-assessee and confirmed by the Learned Tribunal is correct when the footings of the entire findings is based on some assumptions, without having any conclusive evidence? (iii) Whether the Respondent is liable to pay an amount equivalent to the Cenvat Credit attributable to the inputs or capital goods by debiting the Cenvat Credit or otherwise if the inputs are not received back within 180 days from the premises of job workers in terms of Rule 4(5) (a) of the Cenvat Credit Rules 2002/2004? (iv) Whether the Respondent violated and contravened the mandatory provision of Rule 4(6) of the Cenvat Credit Rules, 2002 by not obtaining permission from the jurisdictional Central Excise Authority when the goods are not received back into the factory and are removed from Job Workers' premises? (v) Whether the impugned Order of the Learned Tribunal dehors the settled principles of law pertaining to the issue of Res judicata which is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring finally assembled in the assessee's factory at Kharagpur. The assessee also explained as to how they have adopted various standards so as to have better control over the manufacturing process at the job workers end as each type of tube and bar, based on its dimensions are used to produce pre-determined number of rings and in that process certain pre-determined quantity of waste and scrap is also generated. According to the assessee, these quantities are as per industry standards. Thus, the assessee contended that they are aware of the total quantity of waste and scrap that would be generated from a certain dispatch of tubes and bars to the job workers. Further it was stated that challan-wise statement is prepared mentioning the equivalent weight of the rings as per the standards and the balance amount is treated as scrap. The scraps so generated is normally manufacturing loss and the same is not brought back to the assessee's factory premises as it would be uneconomical to do so and therefore at the end of each month, Central Excise duty is paid on the scrap that was generated based on challan-wise statement. Therefore, it was submitted that there is no case of non-payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actically possible to cut tubes and pipes into smaller pieces and machined suitably to manufacture "rings" without generating any waste and scrap. It is an impossible proposition to get back the entire tubes and pipes (raw materials) from the job workers' premises after completion of cutting and machining. It has been provided in law that cenvat credit need not be reversed or varied because of generation of scrap and waste emerging out of such inputs while manufacturing the final products. Even if a part of the input gets lost during the process of manufacture cenvat credit need not be reduced proportionately whether such loss of input is visible or an invisible loss. The generation of ferrous waste and scrap here is in the nature of normal processing to that quantum of input attributable to such processing loss. I further find that the notice has paid CE duty on scrap generated and cleared from the job workers premises by keeping a separate record for the same and the end-pieces of tubes and bars are nothing but waste and scrap which cannot be processed any further by the manufacture for the purpose of manufacture of finished goods. Even though rule 57 F has been dispenses with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectness of the order passed by the Learned Tribunal. 3. We have elaborately heard the Learned Counsels Mr. Uday Sankar Bhattacharya assisted by Mr. S. Seal and Ms. B. Bhattacharya for the appellant and Dr. Samir Chakraborty, Senior Advocate assisted by Mr. Avra Mazumdar, Sudeshna Mazumdar and Binayak Gupta for the respondent and carefully perused the materials placed on record. 4. The first aspect which has drawn our attention is the manner in which the Commissioner of Central Excise had proceeded with the matter. Initially we were under the impression that the show cause notice dated 30.04.2007 has been issued based upon certain facts which had been culled out by the authorities much after the Central Excise duty was paid by the assessee in respect of the waste and scrap not returned to the assessee's factory from the job workers. However, after close scrutiny, we found that the show cause notice dated 30.04.2007 is an exact replica of the show cause notice dated 31.03.2004 except for the period and the amount which was proposed to be demanded as Excise duty. In our considered view, the then Commissioner could not have proceeded to issue such a show cause notice except under ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in not only issuing the show cause notice dated 30.04.2007 but also by preferring this appeal. In fact, we are of the opinion that this is a fit case where exemplary cost has to be imposed on the concerned official of the department for attempting to resurrect a settled issue. However, taking note of the persuasive submissions of Mr. Uday Sankar Bhattacharya we refrain from imposing costs. 5. The legal issue as to whether the show cause notice can be issued on the same grounds for the part of the relevant period when the earlier show cause notice was dropped by the Commissioner after adjudication, is no longer res integra and in this regard we refer to the decision of the Hon'ble Supreme Court relied on by the Dr. Samir Chakraborty, Learned Senior Counsel in the case of Jayaswal Neco Limited Versus Commissioner of Central Excise, Nagpur (2006) 195 E.L.T. 142 (S.C.). Reliance was placed on the decision in the case of Birla Corporation Ltd. Versus Commissioner of Central Excise 2005 (186) E.L.T. 266 (S.C.), wherein it was held that the department having accepted the principles laid down in the earlier case cannot be permitted to take a contra stand in the subsequent cases. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re much better and stronger than the facts in the decided cases referred supra. We say so because the Commissioner who issued the show cause notice dated 31.02.2004, after receiving the reply from the respondent assessee and after hearing the authorized representative in person by a speaking order dated 25.05.2004 dropped the proceedings. The department did not challenge the said order before the learned Tribunal. That apart, part of the period for which the show cause notice dated 30.04.2007 was issued overlaps the period covered in the earlier show cause notice dated 31.03.2004. Therefore, we can safely conclude that the proceedings initiated in the year 2007, presumably after change of the Commissioner, were without any legal basis and can also be termed as misuse of statutory power conferred on the authority. 9. The next aspect to be seen is as to whether the show cause notice dated 30.04.2007 was issued within the time permissible or was it time barred. Admittedly, the show cause notice was not issued within the time prescribed under Section 11A (1) of the Act. But the Commissioner had invoked the extended period. If such be the case, what are the fundamental tenets which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. So far as the assessee is concerned, it has all along been contending that they were not related person, so, it cannot be said to be guilty of not filling up the declaration in the prescribed proforma indicating related persons. The necessary facts had been brought to the notice of the authorities at different intervals from 1985 to 1988 and further, they had dropped the proceedings accepting that M/s. Pharmachem Distributors was not a related person. It is, therefore, futile to contend that there has been suppression of fact in regard M/s. Pharmachem Distributors being a related person. On that score, we are unable to uphold the invoking of the proviso to Section 11A of the Act for making the demand for the extended period." This judgment was followed by this court in the case of ECE Industries Limited v. Commissioner of Central Excise, New Delhi reported in (2004) 13 SCC 719 = 2004 (164) E.L.T. 236 (S.C.). In para 4, it was observed: "4. In the case of M/s. P&B Pharmaceuticals (P) Ltd. V. Collector of Central Excise reported in [2003 (2) SCALE 390], the question was whether the extended period of limitation could be invoked where the Department has earlier issued show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a facie conclusion that there has been wilful mis-statement or suppression of facts. Therefore, mere use of the said words and expression cannot validate the show cause notice. Therefore, the initiation of the proceedings itself is bad in law. Further we note that it not the case of the appellant revenue that the respondent assessee had not disclosed about the manufacturing activities done by them as to how the quantity of scrap generated is determined using a standardized formula which is adopted as an industrial practice and how Central Excise Duty has been remitted. In fact, the Commissioner does not dispute any of these facts but would only state that the Central Excise duty so paid on such value was much less than the Cenvat Credit attributable to such quantity not received back the factory. There is nothing to indicate that the appellant revenue doubted the bona fides of the respondent assessee. In such circumstances extended period of limitation could never have been invoked in the assessee's case. Thus, if Section 11A of the Act could not have been invoked, the question of imposing penalty or levying interest also does not arise. All these factors are taken into considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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