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TMI Blog2025 (2) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... by them in their company amounts to 'manufacture' in terms of Section 2(f)(iii) and they were liable to pay excise duty which they actually paid. In view of their own admission accepting that the activity amounts to manufacture and is leviable to excise duty, the issue stands concluded against them and in favour of the Revenue. Eligibility to CENVAT Credit - HELD THAT:- Reliance placed on the decision of Delhi High Court in Global Ceramics Pvt. Ltd. versus Commissioner Central Excise, Nagpur [2019 (5) TMI 1432 - DELHI HIGH COURT], where it has been held that the amendment to Rule 4(1) of CCR prescribing a time limit for claiming CENVAT Credit will not apply to the consignments, where the import took place prior to the date of the amendment and the deemed manufacture took place when the MRP was altered, which also happened prior to the amendment. The facts of the present case are quite identical with the facts of the case before the Delhi High Court and, therefore, there are merit in the submission of the learned Counsel that the appellant having paid appropriate duty at the time of import has to be considered as an 'input' for the purpose of CENVAT Credit Rules. Here the Bill of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts were properly maintained and duly reflected in the balance sheet, it cannot be said that there was any misstatement or suppression of facts with intent to evade payment of duty. Therefore, the demand of excise duty is justified only qua the normal period i.e., 01.03.2015 to 05.10.2016. Interest and Penalty - HELD THAT:- As the activity has been held to 'manufacture' and, therefore, leviable to excise duty, the appellant is liable to pay interest on the delayed payment of duty. The liability to interest is mandatory and automatic which the appellant cannot escape - The levy of penalty under Rule 25 read with Section 11 AC is not sustainable as we have already held that extended period of limitation is not invokable in the absence of any mis-statement or willful suppression of facts. The penalty under Section 11 AC is mandatory only when duty is confirmed by invoking the extended period of limitation. Personal penalty imposed on Director of the appellant company under Rule 26 of the Rules - HELD THAT:- The personal penalty imposed on Shri Rajesh Mohan under Rule 26 of the Rules is also not sustainable as the penalty under Rule 26 can be imposed for actions related to goods wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeping in view the market conditions, overhead expenditure trade margins of dealers/retailers, higher MRP were declared on the packages of the goods and the goods were sold on payment of appropriate VAT paid by them. In addition to the import, the appellant had also purchased goods from Bangalore based importing firm, M/s. Stanley 'Black & Decker India Pvt. Ltd.' and some goods were manufactured on job work basis from the units situated at Baddhi & Parmanu, Himachal Pradesh. Based on intelligence, searches were conducted at the business premises and the residence of the Director, whereby it was revealed that the activity of altering MRP of the goods amounted to 'manufacture' in terms of Section 2(f)(iii) of the Act rendering the goods liable to payment of excise duty. During the course of investigation, statements of Shri Rajesh Mohan, Director and Shri A.K. Jindal, General Manager of the Company were recorded, wherein it was stated that they were not aware that the activity carried out by them amounted to 'manufacture' under the provisions of Excise Act and after going through the provisions of Section 2(f)(iii) and the Third Schedule of the Act, he understands that their goods we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of Rs. 70 lakhs already deposited is ordered to be appropriated against Central Excise duty confirmed above. (v) I impose a penalty of Rs. 20,00,000/- (Rupees Twenty Lakhs only)on Sh. Rajesh Mohan, Director of M/s Gryphon Appliances Ltd., B-1/A-6, Mohan Cooperative Industrial Estate, New Delhi- 44 under Rule-26 of the Central Excise Rules, 2002. (vi) I order for confiscation of excisable goods valued at Rs. 41,71,395/-(Rupees Forty-One Lakhs Seventy-One Thousand Three Hundred Ninety-Five only) seized on 5.10.16 under Rule 25 of Central Excise Rules, 2002. However, I give an option to redeem the goods on payment of redemption fine of Rs.10,00,000/- (Rupees Ten Lakhs only). (vii) I impose a penalty of Rs.4,00,000/- ( Rupees Four Lakhs only)upon M/s Gryphon Appliances Ltd., B-1/A-6, Mohan Cooperative Industrial Estate, New Delhi- 44 under Rule-25 of the Central Excise Rules, 2002, read with Section-11AC of the Central Excise Act, 1944. 5 (viii) I impose a penalty of Rs. 1,00,000/- (Rupees One Lakh only) on Sh. Rajesh Mohan, Director of M/s. Gryphon Appliances Ltd., B-1/A-6, Mohan Cooperative Industrial Estate, New Delhi- 44 under Rule-26 of the Central Excise Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of imported goods and were not aware of the liability towards excise duty, which they learnt only at the time of search. Had they known that the activity carried out by them amounts to manufacture, they would have obtained the registration and availed CENVAT Credit and paid the duty on the differential amount of RSP and MRP. Thus, it is not a case of deliberate and wilfull mis-statement or suppression of facts to evade payment of duty. The records /books of accounts were properly maintained and duly recorded in the balance sheet. The learned counsel cited a series of decisions on the principle that mere non-payment of duties is not equivalent to collusion, wilful misstatement or suppression of facts. Hence, demand of duty by invoking the extended period is not sustainable. On the same analogy, the appellants have challenged the imposition of penalty also for the reason that the issue involves interpretation of provisions of law. Submissions by the Revenue 7. Learned Authorised Representative has contested the appeal by reiterating the findings of the Authorities below. He submitted that the CENVAT Credit is statutory right and can be allowed only in terms of the Statute. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess -- (iii) which in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labelling or re-labelling of unit container, including the declaration or alteration of retail sale price on it or adoption of any treatment on the goods to render the product marketable to the consumer." The words used in the definition of 'manufacture' are simple, clear and unambiguous and as per the cardinal principles of construction of a statute as noted by the Apex Court in U.O.I Vs. Hansoli Devi [(2002) 7 SCC 273], when the language of the statute is plain and unambiguous, the Court must give effect to the words used in the statute. Said principle has been further elaborated in Bansal Wire Industries Ltd. Vs. State of U.P [2011(269) ELT 145 (SC)], where the Apex Court observed that in a taxing statute, nothing is to be read in, nothing is to be implied, one can only look fairly at the language used. Examined in view thereof, we find that the process of affixing MRP by the appellant on the goods in question i.e. various electrical home appliances, which are covered under Third Schedule, there is no manner of doubt that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011-12 to 2015-16 and, therefore, on the analogy drawn by the Delhi High Court, the amendment w. e. f. 01.09.2014 prescribing the time limit for making the CENVAT Credit claim shall not apply to imports covered prior to the said date. Moreover, once the activity has been held to be manufacture, exigible to excise duty, the Credit on CVD paid by the appellant on the goods imported is available. In the case of Komatsu India Pvt. Ltd. (Supra), the Tribunal has held that if the appellant is saddled with the central excise duty on the ground of 'deemed manufacture', the parts which have been imported by the appellant in bulk if they have suffered CVD, the benefit of CENVATcannot be denied as the same parts are considered as manufacture on repacking and central excise duty is paid. However, for the imports made subsequent to 01.09.2014, the time limit of six months/one year shall apply and therefore, the claim made by the appellant on 15.02.2018 is time barred. 10. The decision cited by the learned Authorised Representative in Osram Surya (P) Ltd. Vs. Commissioner of Central Excise, Indore [2002 (142) ELT 5 (SC)], where the Apex Court interpreted the amendment introducing second provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the essence of the crystalisation of the charge as would be apparent from a reading of Section 4 of the Act and Rule 49 of the Excise Rules. The quantum of the charge is on the value at the time of removal and the value at the time of removal is the yard-stick for quantifying the charge. Though levy is attracted on production the power to collect duty is only on removal. There may be circumstances where production may take place and yet the product may not be issued out, utilised, or marketed in which case the scheme of the Act and the Rules tend to show that no excise duty would be collected on the product. For example the glut of a particular article in the market may make it expedient for a manufacturer to hold back his product or financial circumstances may prevent the finished product to be marketed. It is in this context, therefore, that the provisions of Section 3 of the Act and Rules 9 and 49 of the Excise Rules have to be harmonised. Indeed, these provisions complement each other. Section 3 lays down the legislative policy on what products excise duty may be levied. Rule 9 is an injunction on the manufacturer that he has not to remove any excisable goods from the place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were still within the factory premises and there was no requirement of duty payment. Consequently, the confiscation was also held to be uncalled for. Similarly, in K.K. Tobacco Company versus Commissioner of Central Excise, Allahabad (supra), the basic principle enunciated was that the duty is to be paid only when the goods are cleared from the factory and only such goods are liable for confiscation, which are removed without payment of duty and therefore, seizure and confiscation of goods manufactured in the factory and not cleared is not sustainable in law. It is also relevant to refer the decision of the Mumbai Bench in Nakoda Enterprises versus Commissioner Central Excise, Mumbai-V [2017 (357)ELT 474 (Tri.-Mumba)], where all the goods were covered under the SSI exemption, except few and therefore, they were under bonafide belief that since the unit is eligible for SSI exemption, they were not required to obtain any registration. It was held that just because the exemption notification is not applicable on one of the products, the goods lying within the factory should not be confiscated and it cannot be equated with the case of attempt to clear the goods clandestinely. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n so as to warrant an inference that the appellant waived such right by addressing the letter dated 25th June, 1970. We accordingly reject the plea of waiver raised on behalf of the State Government. ........." There is no reason to doubt the statement made by Shri A. K. Jindal or by Shri Rajesh Mohan and on the other hand, Revenue has not produced any further evidence to show that non-registration and non-payment of excise duty was deliberate and wilful to evade payment of duty. In view of the fact that all the records/books of accounts were properly maintained and duly reflected in the balance sheet, it cannot be said that there was any misstatement or suppression of facts with intent to evade payment of duty. Therefore, the demand of excise duty is justified only qua the normal period i.e., 01.03.2015 to 05.10.2016. 15. The learned Counsel in support of his arguments have cited series of decisions, which needs to be referred now. The settled principle of law enunciated by the Apex Court in Collector of Central Excise versus Chemphar Drugs & Liniments [1989 (40) ELT 276 (SC)] is that extended period of limitation is applicable only when something positive other than mere inacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant." 17. Following the decision of the Apex Court in Uniworth Textile Ltd. (supra), the Tribunal in the case of Savira Industries versus Commissioner of Central Excise, Chennai [2016 (331) ELT 504 (Tri.-Chennai)] held that the assessee was under bonafide belief that mere cutting, welding of steel pipes and sheets did not amount to manufacture as no new commodity emerges and there was no marketability and, therefore, would attract excise duty. In the circumstances, the demand was held to be hit by limitation. We are conscious of the fact that in the said case the activity of such fabrication was the subject matter of decision in favour of the assessee and was finally decided in favour of the Revenue by the Larger Bench in Mahindra & Mahindra Ltd.[2005 (190) ELT 301 (LB)]. The fact is that the concept of bonafide belief is not unknown in the taxation laws and the assessee has to be given benefit in the facts and circumstances of the case, where bonafide belief can be on variant account. We, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative on the decision in Commissioner of C. EX, Mumbai versus Kalvert Foods India Pvt. Ltd. [2011 (270) ELT 643 (S.C.)] dealt with the case involving clandestine removal, where the Managing Director had admitted the clandestine clearance and, therefore, it was held that the period of limitation would have to be computed from the date of their knowledge arrived at upon reads on the premises. It was a case of suppression of facts with the intention to evade the central excise duty as they did not account for the manufactured goods in the prescribed records. Hence, the said decision is distinguishable and is not applicable to the facts of the present case. Similarly, the decision of the Apex Court in Commissioner of CEX Visakhapatnam versus Mehta and Company [2011 (264) ELT 481(SC)] referred to by the learned Authorised Representative is distinguishable and, therefore, not applicable. In the said case, the specific allegations in the show cause notice were that the respondent manufactured excisable goods covered under different chapter headings at the site of the customer and removed the same without payment of duty of excise when the contract clause between the respondent and M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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