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TMI Blog2024 (12) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... im on its inputs and capital goods are credited to its account so as to enable him to adjust the said amount at the time of payment of duty on the final product, so that the ultimate consumer will not suffer the burden of duty liability again again on the product purchased by him/her and also on all its components, those were used to manufacture the final product. Appellant had already paid more than ₹11 lakhs for the relevant period in addition to what was taken in total towards accumulated CENVAT Credit, which of course is not due to it legally, as per provision of law but judicial decision is consistent on this issue starting from what is being relied on by this Tribunal in its final order dated 21.11.2005 namely the case of Narayan Polyplast (Respondent) [ 2004 (11) TMI 112 - SUPREME COURT] , Punjab Tractors Ltd. [ 2005 (2) TMI 141 - SUPREME COURT] and Narmada Chematur Pharmaceuticals Ltd. [ 2004 (12) TMI 93 - SUPREME COURT] and the one passed in CENVAT regime namely Commissioner of Central Excise Vs. Ajinkya Enterprises [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] , as relied upon by learned Counsel for the Appellant, wherein it had been consistently held that once duty on fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmon order. 2. Facts of the case would go to reveal that Appellant was a manufacturer of refined edible oil (vegetables oil) primarily that constitute 99% of its total production and rest are its by-products but it had not revealed at the time of applying for registration in October, 1996 under Rule, 174 of Central Excise Act, 1944 and only registered itself for its by-product like soap stock, acid oil, industrial monocarboxylic fatty acid etc. It had started taking MODVAT Credit from November, 1996 and also paid excise duty on those by-products. Undisputed fact remained in this appeal is that total amount of credit availed by Appellant was ₹1,54,71,283/- for the disputed period from March, 1997 to August, 2001 for which period, demand-cum-showcause notice was issued to the Appellant by the Respondent that resulted in ultimate confirmation of duty demand alongwith interest and penalty while during the relevant period Appellant had paid excise duty of ₹1,62,80,444/- by way of adjustment of MODVAT CENVAT Credit amount noted above and by debiting its cash balancing in PLA Account for an amount of ₹11,25,600/-. Contention of the Respondent-Department, as revealed from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as revenue neutral . 3.1 Being aggrieved Revenue preferred an appeal before Hon'ble Bombay High Court wherein appeal was allowed in part by way of remand on 24.02.2018 to this Tribunal with the directions as contained in para 11 12, reproduce below: 11. Firstly, the Commissioner has not recorded a finding of fact that the entire exercise was revenue neutral. No reasons have been assigned by the CESTAT for coming to the conclusion that entire exercise was revenue neutral. None of the specific findings of fact recorded by the Commissioner have been dealt with by the CESTAT. In our view, when the CESTAT was the final Court of fact, the same ought to have dealt with the findings recorded by the Commissioner and ought to have recorded findings one way or the other. There is complete absence of findings of fact. Perusal of three decisions relied upon by the CESTAT show that same were rendered in the facts before the Apex Court. We have already quoted the decisions in the case of Commissioner of Central Excise (A) v. Narayan Polyplast (supra) and in the case of Commissioner of Central Excise v. Narmada Chematur Pharmaceuticals Ltd. (supra). There was a finding of fact that the exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of fixed vegetable oil which was chargeable to nil rate of duty and also since they had not paid eight percent of the price of the fixed vegetable oil cleared, M/s. Parekh Foods Ltd. were not entitled to avail of MODVAT/CENVAT credit on all the inputs used by them in their factory. 10. On the aspect of penalty also there are findings of fact recorded by the Commissioner. There is a clear cut finding of suppression of material facts in paragraph-33. The relevant part of the said finding reads thus : 33. .. From the above, it is clear that M/s. Parekh Foods Ltd., by resorting to the aforesaid modus operandi, had contravened different provisions of the Central Excise Rules, 1944 and the CENVAT Credit Rules, 2001 with intent to evade duty (availment of ineligible MODVAT/CENVAT credit and passing on the same to the customers to enable them to make use of such credit for payment of duty on their final products amount to evasion of duty). They suppressed the manufacture of fixed vegetable oil while applying for registration. In the various classification declarations filed by them, they did not declare the manufacture of fixed vegetable oil by them. Similarly, in the decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944, prevailing then, that required maintenance of separate accounts and also provided for recoveries and penalties for its violations. Thereafter, in next para at para No. 27 learned Commissioner had also provided answer to this in expressed words that Appellant was not entitled to MODVAT/CENVAT Credit on all inputs used by it in the factory as all the end products manufactured by it were either exempt from the whole of duty of excise duty leviable thereon or were chargeable to nil rate of duty . Admittedly all the end products manufactured by Appellant including the main refined vegetable oil and its by-products were not dutiable products and therefore, Appellant was not entitled to CENVAT Credit, but it is required to place on record that since not a single end product was dutiable maintenance of separate records as per Rule, 57 was also not a requirement for the reason that the same Rule, which is para materia to Rule, 6(2) of the CENVAT Credit Rules, has in express, clear and unambiguous term directed that both final products or any of the several final products were to be chargeable to duty and one or several of it was chargeable to either nil rate of duty or an exempted pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax that would increase the final price for the end customer and at no point, tax evasion would occur. Therefore, when the final product is not subjected to duty means either exempted from excise duty or subjected to nil rate of duty, then tax collection from the components like would, cushion, etc. would be retained with the Government and would not be passed on to the manufacturer who is not going to pay any excise duty on its final product. However, due to erroneous understanding of some of the provisions, many manufacturers take credit of those inputs and pay duty on its final product, which they feel are liable to pay duty and therefore, when duty that is finally paid on final product exceeds the total input credit taken by the manufacturer, it causes no loss to the Revenue and Revenue-Department remains in an advantages position and in common trade parlance, such a scenario is called revenue neutral situation for the reason that there would not be any revenue gain or loss for the Department since any such exercise proposing to levy or collect tax will only result in unnecessary utilisation of resources of the Revenue and yield nothing in return. In the case on hand, Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of Bombay, which ratio was unavailable before this Tribunal while rendering its final decision in 2005. To bring more clarity to the issue, we feel it proper to place on record that utilisation of MODVAT Credit which is known as availment of MODVAT Credit in common parlance was done alongwith payment of differential duty on the final product on which Appellant was entitled to get refund with interest as no duty was payable and therefore, no interest is said to have accrued to the Revenue to bring it out of the purview of revenue neutrality. 6. Going by our observation made above and concurring with the findings of the Commissioner that not a single final product was dutiable, invocation of extended period would result in the same situation as that of a duty assessment for normal period but having regard to the fact that there is a clear observation of Hon'ble Bombay High Court that specific finding concerning allegation of suppression of material fact was available in the order passed by the Commissioner, that has not been dealt with properly by the Tribunal, we would consider it worthwhile to reiterate that at no point of time for the entire extended period covering calen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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