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TMI Blog2024 (11) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 14 of the Cenvat Credit rule 2004 which is not legally sustainable we are therefore are of view that the show cause notice is hit by period of limitation and we hold that extended time proviso is not invokable in this case as the department was in know of facts since 28.04.2008. The show cause notice has been issued in the month of March, 2013 much beyond the normal period of limitation. The impugned show cause notice as well as impugned order-in-original are bared by period of limitation. The impugned order-in-original is without any merit and therefore same is set aside - appeal allowed. - HON'BLE MR. RAMESH NAIR , MEMBER ( JUDICIAL ) And HON'BLE MR. C. L. MAHAR , MEMBER ( TECHNICAL ) Shri Anand Nainawati , Advocate for the Appellant Shri Ajay Kumar Samota , Superintendent ( AR ) for the Respondent ORDER C L MAHAR The brief facts of the matter are that the appellant are engaged in manufacturing of cotton made textile articles and cotton blended processed fabrics falling under chapter heading 63041910, 52082270 and 52101900 of the first schedule to the Central Excise Tariff Act, 1985. The appellant have been exporting the finished product under DEPB scheme prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7834521 Rs.8.66 per meter. 4.2 The aforesaid calculation by the department is incorrect inasmuch as process of sizing is not done on all the processed fabrics and done only in respect of that much quantity of yarn which is purchased by the Appellants and is subjected to process of weaving within the factory. The Appellants submit that only 7059069 meters of grey fabric is manufactured out of purchased yarn and subjected to sizing process and the remaining grey fabric is weaved outside the factory of the Appellants and no sizing chemicals were used on such grey fabrics by the Appellants. Since the demand has been raised by showing usage of sizing chemicals on all the grey fabrics, the demand of the department which includes cost of sizing even on that quantity of fabric which is not weaved in-house is incorrect and liable to be set aside. 4.3. It is therefore submitted, that while arriving at the actual value of reversal to be done in respect of processed fabrics the cost of sizing, it has to be taken individually as Rs.4.94 per meter and colour chemicals for finishing at the rate of as Rs.7.40 per meter. The fact that cost of sizing chemicals is Rs.4.94 per meter and colour chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reversal accepted by the Appellants is only to the extent of Rs.95,247/- (iv) Demand of Rs.79,477/- on dyes and sizing chemicals used in made ups lying as on 31.3.2008 is not sustainable. Out of a total of 1418804 meters of Made-Ups (finished), 484297 meters of Made-Ups were manufactured out of grey fabric manufactured in-house and 934507 meters of Made-Ups were out of purchased grey fabric. Therefore, the department erred in applying cost of sizing and colour chemicals on the total quantity. (v) Demand of Rs.5,15,857/- on Made-Ups (WIP) is not sustainable the calculation was done by the Appellants before or after the audit is irrelevant. The Appellants have arrived at the amount of Rs.11,60,182/- based on the 733908 meters of Made-Ups(WIP) lying in stock as on 31.03.2008 as against the stock of 987571 meters of closing stock alleged by the department. (vi) Demand of Rs.7,10,002/- on furnace oil is not sustainable. Out of 1461583 meters, 498899.23 meters of fabric in stock is of own loom and balance 962683.77 meters of fabric is of purchased grey fabric. The consumption of Furnace Oil per meter of own loom is Rs.3.84 per meter and for purchased grey fabric it is Rs.2.50 per meter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is barred by period of limitation or not is to be decided first. From the facts of the matter it emerges that appellant has informed the department 28.04.2008 regarding the reversal of Cenvat Credit availed by them on various inputs like dyes chemicals, sizing chemicals, finishied yarn, packing material etc. They have also informed in the annexure to mentioned letter dated 28.04.2008 regarding the quantities of inputs, semi-finished goods, finished goods and amount of the Cenvat Credit which have been reversed by them to the department, while shifting from DEPB scheme of export to duty drawback scheme. We find from the audit report that the appellant firm has regularly been audited by the department and alleged short reversal of the Cenvat Credit has been detected by audit party during the audit which took place between December-2010 to April-2011. We are of the considered view that the department was aware fully about the facts of the matter since 28.04.2008 as the appellant has informed them in detail regarding reversal of Cenvat Credit done by them on various inputs as mentioned in the annexure to their letter dated 28.04.2008. These facts categorically establish that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was not open to the CEGAT to come to a conclusion that the appellant was guilty of suppression of facts . In Densons Pultretaknik v. Collector of Central Excise (2003) (11) SCC 390], this Court held that mere classification under a different sub-heading by the manufacturer cannot be said to be willful mis-statement or suppression of facts. This view was also reiterated by this Court in Collector of Central Excise, Baroda v. LMP Precision Engg. Co. Ltd. [2004 (9) SCC 7031. 28. However, in the case of LMP Precision Engg. Co. Ltd. (supra), this Court came to the conclusion that the manufacturer was guilty of suppression of facts. In that decision, manufacturer did not make any attempt to describe the products while seeking an approval of classification list and in that background of facts, it was held that it amounted to suppression of facts and therefore, Excise authorities were enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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