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TMI Blog2001 (2) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... the whole demand when on the contrary the Tribunal themselves held that the party intentionally adopted the modus operandi of clearing the goods under Rule 57F(1)(ii) to evade payment of duty. II. Whether the Tribunal was correct in allowing credit in respect of foundry chemicals, Hydraulic Jacks, Transformers, under Rule 57A of Central Excise Rules, when the items are not inputs in terms of Rule 57A of the Central Excise Rules, 1944. 2.The respondent M/s. Bharat Heavy Electricals Ltd., Piplani, Bhopal, (hereinafter referred to as "BHEL") is the manufacturer of items falling under Chapters 84 and 85 of Central Excise Tariff Act, 1985. BHEL procured inputs and cleared them on payment of duty under Rule 57F(1)(ii) for job work i.e. for fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Authorities (ii) the duty paying document does not contain payment particulars or not preauthenticated or not in the name of party (iii) some items on which Modvat credit under Rule 57A was taken were actually not inputs used in or in relation to manufacture of final product. The extended period as provided under proviso to Section 11A was also invoked to adjudicate the matter. Six show cause notices were issued. The said notices were adjudicated by the Commissioner, Central Excise, Bhopal vide order dated 27-2-99 as under : (1) In respect of show cause notice dated 2-6-88, Higher Notional Credit of Rs. 8,10,535.73 paise was disallowed under Rule 57-I of the Rules. Modvat credit of Rs. 2,21,132.00 was allowed but Modvat credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion that the demands were not hit by limitation and that extended period as provided under Section 11A of the Central Excise Act came to rescue of the department. The benefit of the Higher Notional Credit was not available to the BHEL. It ordered the adjustment of the duty paid at the time of clearing the goods under the provisions of Rule 57F(1)(ii) from the total credit of Higher Notional Credit taken by the BHEL and differential duty was directed to be paid on recomputation. The penalty u/s 11AC of the Act was quashed as Section 11AC was enacted w.e.f. 28-9-96 prospectively and demands were pertaining to period from August 1987 to December 1991. In the facts and circumstances of the case penalty of Rs. 1 crore was reduced to Rs. 10 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Tribunal was correct in allowing adjustment of duty paid under Rule 57F(1)(ii) from the whole demand in view of the conduct of BHEL. The Tribunal has found that BHEL did not follow the correct procedure and took unintended benefit by taking higher notional credit. But, the fact remains that at the time of clearing the goods under the provisions of Rule 57F(1)(ii), BHEL had paid duty on the inputs. The orders were passed by the Revenue on the ground that they are not entitled to adjustment on such duty paid. The direction of the Tribunal cannot be said to be unfair to the Revenue that BHEL be given adjustment of the duty paid from the total credit on the Higher Notional Credit taken by them. As a matter of fact it is a case where only diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the instant case BHEL was claiming Modvat credit of duty paid on foundry chemicals which are used for the purpose of making sand moulds. The duty being utilized for payment of excise duty on the final product. The BHEL manufactures various excisable goods including mechanical and electrical appliances falling under Chapters 84 and 85 of the Central Excise Tariff Act, 1985. Sand mould is formed when sand is rammed against a pattern, whether the sand is confined within a box or not, and where a hollow is created for pouring molten metal, sand mould is an exempted item by the Government. It is not the case of Revenue that sand mould is a marketable item. Sand mould operation consists merely of temporary use of sand, along with chemicals and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression "in relation to manufacture of final product". 9.The Apex Court in case of Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, Bihar and Others, 1965 (16) STC 259 had also taken the view that locomotives and motor vehicles used to transport ore from the mines to the factory to enable ore being converted into copper products, can be said to be used in the manufacture of copper products. 10.In case of Collector of Central Excise v. Eastend Paper Industries Ltd., 1989 (43) E.L.T. 201 (S.C.) it was held by the Apex Court that anything that enters into and forms part of process of manufacture or is required to make the article marketable must be deemed to be raw material or component part of the end product and must ..... X X X X Extracts X X X X X X X X Extracts X X X X
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