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TMI Blog2008 (2) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to ₹ 13,75,331/- involved on the goods found short and appropriated the same against the debits made by the appellants in RG-23A Part II. He confirmed the duty amounting to ₹ 59,35,797/- under proviso to Section 11A(1) of the Central Excise Act, 1944. The amount of ₹ 51,65,671/- already paid by the appellants was appropriated against the demand and the appellants were ordered to pay balance amount of ₹ 7,70,126/-. He also confirmed Central Excise duty amounting to ₹ 5,16,548/- under proviso to Section 11A(1) of the Central Excise Act, 1944 on the goods cleared after slitting. He also imposed mandatory penalty of ₹ 12,86,674/- on the appellants under Section 11AC of Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. He also ordered the appellants to pay the interest at appropriate rate on the amount confirmed for recovery in terms of provisions of Section 11AB of the Central Excise Act, 1944. 3.1. Excise Appeal No.687 of 2006 has been filed by M/s Siddhartha Tubes Limited, Sarangpur, against the order-in-original No. 96/Commr/CEX/IND/05 dated 28.11.2005 passed by the Commissioner, Central Excise, Indo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit No. I issued supplementary invoices by debiting the differential duty, the details of which are as under:- Sl. No. Supplementary invoice No. date Duty Rs. For clearance during (i) 1012 dt. 17.9.01 12,20,319/- 1.3.01 to 31.3.01 (ii) 1013 dt. 17.9.01 30,52,488/- 1.4.01 to 22.8.01 (iii) 1072 dt 26.9.01 8,92,864/- 24.9.2000 to 26.2.2001 Total ₹ 51,65,671/- 9. The Deputy Commissioner, Central Excise issued show cause notice dt. 1.10.2002 to Unit No. II alleging that on scrutiny of ER-1 for the months of September, 2001 and December, 2001, it is noticed that Unit No. II had taken Cenvat Credit of ₹ 71,09,312/- in terms of Rule 7(1) (b) of Cenvat Credit Rules, 2001 on the strength of the supplementary invoices issued by Unit No. I for the differential duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . During verification of stock, certain shortage in the stock was found. The Unit No. I has debited the duty amount of ₹ 13,75,331/- involved on such shortage. The Unit No. I is not in appeal on this count. The Commissioner did not impose any penalty on Unit No. I on account of the shortage detected as entire duty of ₹ 13,75,331/- was paid by it before the issue of the show cause notice. 12. It was further alleged in the show cause notice dated 25.8.2005 that on further investigations, it was noticed that Unit No. I is clearing inputs as such to their sister concern i.e., Unit No. II since September, 2000 by debiting the equal amount of duty. The invoices issued show realization of additional consideration on which no Central Excise duty was paid. During the period 1.3.2001 to 22.8.2001, the Unit No. I charged extra amount under the head. Other Addition . However, on pointing out, the Unit No. I debited the excise duty amounting to ₹ 51,65,671/- on the charges under the head Other addition and on Freight . It was further noticed that freight was calculated @ ₹ 250/- PMT for the receipt of HR Coils at Shajapur Unit (i.e. Unit No.I) whereas the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch inputs are removed as such or after being partially processed, or such capital goods are removed as such. Explanation: When inputs or capital goods are removed from the factory, the manufacturer of the final products shall pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the said factory, and such removal shall be made under the cover of an invoice prescribed under rule 52A. 16. Rule 57AB was amended vide Notification No. 6/2001-CE (NT) dt. 1.3.2001. As per para (1C), if the inputs on which credit has been taken are removed as such, the manufacturer of final product shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal on the value determined under Section 4 of Central Excise Act, 1944 Para (1C) read as under:- (1C) When inputs or capital goods, on which credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Section 4(1)(a) or the Valuation Rules. [Provided tariff values have not been fixed for the inputs or they are not assessed under Section 4A on the basis of MRP]. There may be case where the inputs or capital goods are removed as such to a sister unit of the assessee or to another factory of the same company and where no sale is involved. It may be noticed that sub-rule (1C) of Rule 57AB of the erstwhile Central Excise Rules, 1944 and Rule 3 (4) of the Cenvat Credit Rules, 2001 (now 2002), talk of determination of value for 'such goods' and not 'said goods'. Thus, if the assessee partly sells the inputs to independent buyers and partly transfers to its sister units, the transaction value of 'such goods' would be available in the form of the transaction value of inputs sold to an unrelated buyer (if the sale price to the unrelated buyer varies over a period of time, the value nearest to the time of removal should be adopted). Problems will, however, arise where the assessee does not sell the inputs/ capital goods to any independent buyer and the only removal of such input/ capital goods, outside the factory, is in the nature of transfer to a sis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This has also been so held by the larger bench of the Tribunal in the case of Eicher Tractors vs. CCE, Jaipur - 2005 (189) ELT 131 (Tri.-LB) That the Board, which were administering the Central Excise Laws, were themselves not sure about the correct position, will be evident from the fact that they issued further clarification under the circular dated 16.6.2005 on the subject matter giving reference to the earlier circulars dated 1.7.2002 and 25.4.2005. 21. Clearly, there was bonafide doubt as to whether the transaction value should be adopted for the payment of duty on the inputs cleared as such or the reversal of the credit taken on the inputs will suffice. It is not denying the fact that there were frequent changes in the rules coupled with the Board clarifications, which created confusion both in the Trade and the Department regarding the correct legal position in this respect. 22. In such a scenario, it will be preposterous to charge the Unit No. I that they wilfully misstated or suppressed the facts with intention to evade payment of duty. In any case, whatever duty paid on H.R.Coils at Unit No. I was available as credit to the Unit No. II, which was cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Kores India Ltd., vs CCE, Hyderabad - 2004 (178) ELT 901 (Tri.-Bang.) observed that the appellants clearing barium carbonate to their own granulation unit on payment of duty by taking average value of barium carbonate of various grades, and granulation unit was taking credit of duty paid by appellants. There was revenue neutrality, despite the fact that appellants had not determined correct value of each grade of barium carbonate. Since there was revenue neutrality, intention to evade payment of duty cannot be alleged and extended period is not invokable. 25. Another plea advanced by the appellants is that the prohibition to take credit on the supplementary invoices operates only in the case of sale and in the case of stock transfer, prohibition under Rule 7(1)(b) of the Cenvat Credit Rules is not applicable even if presuming that the additional amount of duty becomes recoverable from one unit on account of fraud, suppression of fact etc. They relied upon the decision of the Tribunal in the case of Karnataka Soaps and Detergents Ltd. vs. CCE, Mysore, Bangalore reported in 2005 (192) ELT 892 (Tri. Bangalore) in this connection. They maintaine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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