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TMI Blog2024 (7) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... ss paid by it to NMMC is required to be deducted from assessable value of goods. Various decisions relied upon by the Appellant on this aspect supports their submissions. Consequently, considering Octroi and Municipal Cess paid by Appellant and the discount given to the various buyers by Appellant, the net amount of duty difference payable Rs. 3,81,322/- is also accepted by Appellant in their written submissions as against confirmation of duty demand of Rs. 40,70,142/- by the Commissioner under the impugned order - the Appellant is liable to pay the differential duty of Rs. 3,81,322/- along with interest and penalty and Appellant would also be eligible for reduced penalty @ 25 % of the duty demand, subject to the condition that Appellant pay the differential duty Rs. 3,81,322/- with interest and reduced penalty @ 25 % of duty is also paid within 30 days of communication of this Order. This differential duty of Rs. 3,81,322/- with interest and reduced penalty @ 25 % payable may also be deducted from the amounts deposited during the proceedings which is appropriated by O-I-O. Duty demand of Rs. 43,19,238/- confirmed on clearance of showers holding that the same were cleared as such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 9D of Central Excise Act 1944 not followed in this matter. There are force in the submissions of Appellant on this ground. It is also found that demand on the basis of certain private records viz. dispatch Register recovered during search are not supported by any other corroborative clinching evidence not sustainable - since there is no evidence to support clandestine clearance of goods without payment of duty, confirmation of demand of duty amounting to Rs. 3,12,373/- also is not sustainable as we set aside the same. Penalty imposed under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- Since major/substantial demand of duty with interest penalty is set aside, separate penalty imposed under Rule 26 of Central Excise Rules, 2002 on the co-Appellants Shri Shri Hemantkumar N. Shah, Director and Shri Kalpesh M. Sapa, Ex-Dy. Manager is not warranted and deserves to be set aside, and is set aside. The differential duty of Rs. 3,81,322/- with interest and penalty are upheld. Remaining duty demands with interest and Penalty are set aside - Appeals are partially allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. RAJU Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Separate penalty was also proposed under Rule 26 of the Central Excise Rules, 2002 on Shri Hemankumar N. Shah its Director and Shri Kalpesh M. Sapa Deputy Manager/ Authorized Signatory of the Appellant Company under the above Show Cause Notice. 1.3 The Appellant replied to SCN dated 02.05.2012, filed the submissions dated 19.12.2012 and also participated in adjudication making few fresh submissions by its Advocate vide letter dated 24.06.2013. Thereafter, impugned O-I-O dated 30.08.2013 issued on 12.09.2013 by the Commissioner, Central Excise, Rajkot which has partially dropped duty demand of Rs. 1,62,67,038/- out of Rs. 2,03,37,180/- and confirmed the following duty demands with interest Penalty :- 1) Rs.27,61,517/- under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AA/ 11AB of Central Excise Act, 1944 for wrong availment of Cenvat Credit of Additional duty of Custom. 2) Rs.43,19,238/- under Section 11A(4) {erstwhile 11A(1)} of the Central Excise Act, 1944 treating the same deposit under Section 11D of the Central Excise Act, 1944 3) Rs.40,70,142/- differential duty under section 11A(4) {erstwhile 11A(1)} of the Central Excise Act, 1944 for clearance made through Depot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EX. - 2004 (178) E.L.T. 268 (T) CCE, NASHIK Vs Mahindra Mahindra Ltd.: 2011 (273) E.L.T. 385 (Tri. - Mumbai) 2.1 He also submits that the Ld. Commissioner has grossly erred while confirming demand of Rs. 43,19,238/- on clearance of showers alleging such clearance of imported goods as such without any process, which amounted to the manufacture and holding that it is nothing but trading of goods and/or clearance of inputs as such and process carried out thereon does not amount to manufacture. It is misconceived impression of department that appellant had imported readymade showers. As per Note 6 of Section Note XVI which governs Chapter 84, conversion of an article which is incomplete or unfinished but having the essential character of the complete or finished articles, into complete or finished article shall amount to manufacture. Appellant after import had carried out testing which included inspection viz. main body leakage testing, high/low pressure working flow rate testing, spray sheet flow test, working test for internal mechanism etc. Each of the result includes scientific testing. While testing, whenever it was found that some of parts of overhead shower were not performing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egister for which there were no corresponding sale invoices for the period from 21.03.2008 to 09.02.2009 was not made available due to seizure by the department. However, it had cleared the finished goods on payment of duty. In many instances, it had supplied the finished goods in small quantities for samples through sales marketing persons and the same was adjusted at the time of final clearance in the invoice. Since the documents were seized by Preventive Department, Appellant could not produce the relevant sales invoices and tally the same with dispatch register. 2.3 He further submits that it is on record that during the course of inquiry the department had obtained all details of suppliers of raw materials, buyers of finished goods, transporters etc. from Authorized Signatory of appellant vide statement dated 11.02.2009. However, no further investigation about actual receipt of clandestine receipt of raw materials, actual receipt of finished goods by buyers (based on details mentioned in dispatch register) was conducted. Similarly, no inquiry was made with the transporters about actual transportation of such goods. It is settled position of law that even if oral admission is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods. As per Section 4(b) of Central Excise Act, 1944, valuation of goods was to be determined in manner prescribed under Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Transaction value defined under sub-section (3)(d) of Section 4 of Central Excise Act, excludes amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. All these amounts were required to be deducted so as to arrive at correct transaction value in terms of the above statutory provisions of Central Excise Act. Therefore, the deduction of taxes (Octroi, Municipal Cess) and Discount are admissible in applying depot price as cum-duty-price to the goods cleared from factory under Rule 7 of the Central Excise Valuation Rules, 2000. Evidence in relation to above deductions were also submitted by Appellant to the Ld. Commissioner with reply dated 19.12.2012. However, Ld. Commissioner has given finding that since appellant has not co-related invoice wise payment of Octroi, Cess and trade discount and has only furnished year wise details, he is unable to extend benefit of payment of Octroi, Cess and trade discount for calculating dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had paid customs duty [including CVD] as per law at the time of import on these goods and taken credit of the CVD so paid, as inputs required for manufacture of final product. Appellant had carried out process as shown in Para 6.2 above. Thereafter, Appellant cleared such manufactured Showers heads with Arms on payment of duty classifying the same under CTH No. 84818020. The Note 6 of Section Note XVI which governs Chapter 84 shows that conversion of an article which is incomplete or unfinished, into complete or finished article shall amount to manufacture. Thus, after their import on payment of duty, when the inputs of chapter 39 have been processed in the factory and cleared under CTH No. 84818020 on payment of appropriate Central Excise Duty, it would be arbitrary to allege that process carried out on inputs does not amount to manufacture in terms of section 2(f) of the Central Excise Act 1944. The definition of manufacture under Central Excise Act, 1944 is very wide and includes any process incidental or ancillary to the completion of a manufactured product. The process carried out by the Appellant on subject goods was incidental and ancillary for making the product marketable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he composite activity of de-coiling of HR/CR coils, cutting and slitting into specific sizes and thereafter pickling and oiling amounting to manufacture or not. That was clarified only on 24-6-2010. In the case of Resistance Alloys (supra) and P.V. Sanghvi (supra), wherein it was held that process of pickling and oiling would not amount to manufacture, but in the case in hand before us, the appellants were undertaking composite activity of de-coiling of HR/CR coils thereafter cutting and slitting into specific sizes and after that pickling and oiling taken place, which was clarified by the department only on 24-6-2010 saying that the said activity does not amount to manufacture. Therefore, following instructions issued through Circular No. 911/1/2010-CX., dated 14-1-2010, the appellants approached to the Commissioner for issuance of appropriate rectification for regularization of the CENVAT credit availed as their activity does not amount to manufacture and they have paid duty on clearance of the goods more than the credit availed. The Commissioner has also considered the representation of the appellant and forwarded to the Board for issuance of the required notification. The Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed by the Hon ble Apex Court in 2009 (243) ELT A120 (Supreme Court):- 6. When one goes through the order of the first appellate authority, it is apparent that the respondent has been held to be a manufacturer as defined in Section 2(f) of the Central Excise Act, 1944. The appellate authority has taken into consideration the activities carried on by the respondent-assessee. The Tribunal is justified in holding that if the activity of the respondent-assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture. 7. In the aforesaid set of facts and circumstances of the case in light of concurrent findings of fact recorded after appreciating the evidence on record by both Commissioner (Appeals) and the Tribunal, no question of law, much less a substantial question of law, arises out of impugned order of Tribunal. The appeal is accordingly dismissed. (iii) J K Files and Tools Raymond Ltd. v. Commr of C. Ex. Cus., Mumbai-III [2011 (273) ELT 280 (Tri.- Mumbai)]:- 8. We do agree with the submissions of the learned DR that appellant are not entitled to take such credit as held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is required to be recovered. 4.2 Without prejudice to our above observation, we further find that the such activity involved in the present case is otherwise covered by provision of Rule 16 of Central Excise Rules, 2002, which reads as under:- .. . The above Rule 16 unambiguously provide that if an assessee even does not carry out manufacturing activity but carried out any activity whether the same is amount to manufacture or not manufacture, the assessee can avail the Cenvat credit on the goods received in the factory. And after any process, if it is cleared from the factory, in case of activity amount to manufacture it is cleared on payment of duty on the transaction value and if the activity does not amount to manufacture then the same is cleared on payment of duty equivalent to the Cenvat credit. 4.4 Therefore, we are of the view, it is clear that the assessee can take the Cenvat credit even though their activity does not amount to manufacture and clear the same on payment of duty. Therefore, in our considered view, the entire transaction of the appellant is squarely covered by the provision of Rule 16 of Central Excise Rules, 2002 therefore, for this reasons the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of clandestine removal cannot be sustained without supportive credible evidence as well as cross examination of such witnesses. Investigation could not adduce any corroborative evidence for clandestine production of goods, removal thereof from factory, confirmation from transporters or buyers of such goods allegedly cleared clandestinely and receipt of sale proceeds of such clandestinely clearance of goods. Therefore, since there is no evidence to support clandestine clearance of goods without payment of duty, confirmation of demand of duty amounting to Rs. 3,12,373/- also is not sustainable as we set aside the same. 4.6 Since we decide these Appeals on merits, the other issues raised by the appellant are not taken up or discussed, and the same are left open. 4.7 Since major/substantial demand of duty with interest penalty is set aside, separate penalty imposed under Rule 26 of Central Excise Rules, 2002 on the co-Appellants Shri Shri Hemantkumar N. Shah, Director and Shri Kalpesh M. Sapa, Ex-Dy. Manager is not warranted and deserves to be set aside, in the facts of this case and we do so. 5. Accordingly, the impugned order is set aside. However, the differential duty of Rs. 3,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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