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2014 (10) TMI 680 - AT - Central ExciseManufacture - whether conversion of HR Coils into CR Sheets/Strips amounts to manufacture or not - Held that:- Heading 72.08 and 72.09 of the Central Excise Tariff are based on the HSN heading 72.08 and 72.09 respectively and similarly heading 72.11 of the Central Excise Tariff is based on the same heading - 7211 of the HSN. Explanatory Notes to HSN heading 72.09 readwith Explanatory Notes Part IV B to Chapter 72 make a clear distinction between the cold rolled products and hot rolled products. According to the HSN Explanatory Notes to 72.09, the Cold rolled products of this heading because of their special properties - better surface finish, better aptitude to cold forming, stricter tolerance higher mechanical strength and generally reduced thickness are in general used for purposes different from those of their hot rolled counter parts and that cold rolled products are used in particular in the manufacture of automobile bodies, metal furniture, domestic appliances and for producing angles, shapes, sections by a cold process and that they are easy to coat by tin plating, electro plating, varnishing, enameling and coating by plastic etc. Thus it is clear that not only the cold rolled products and hot rolled products have different characteristics, but they have different uses and different commercial identity. Therefore, we hold that cold rolling of HR Coils results in emergence of a new product with distinct and different commercial identity, characteristics and uses and therefore this process would amount to manufacture. In view of this, we uphold the Commissioner’s finding on this point. Shortage of 1145.35 M.T. of HR Coils - Held that:- from the correspondence between the appellant and M/s HSC it is also seen that in December 2000, the appellant had asked M/s HSC to return the quantity without any job work and according to the appellant, the coils in respect of which the Cenvat credit had been taken, have been sold on payment of duty under the invoices issued under Rule 57AB. The Commissioner while confirming the demand on the entire quantity of 1145.35 M.T. of HR Coils had not considered, the appellant s plea that out of 1145.35 M.T. of HR Coils, 1106.34 M.T. of HR Coils had been sold as such under invoices issued under Rule 57AB and the balance quantity had been taken up by them for processing into CR Sheets/Strips. When the appellant have produced the invoices issued under Rule 57AB regarding sale of the HR Coils on payment of duty, this claim has to be examined which could be done by ascertaining as to whether the Cenvat credit availed in respect of the 1106.34 M.T. of HR Coils out of 1145.35 M.T. of Coil received from SAIL had been reversed. If duty on 1106.34 M.T. of HR Coils equal to the Cenvat credit availed had been paid, the same cannot be demanded again. This aspect has not been examined in the impugned order. Similarly, the Appellant s claim that about 39 M.T. of HR Coils had been taken up for processing had also not been examined. In view of this, the demand of duty on 1145.35 M.T. Cenvat credit availed HR Coils would have to be set aside and the matter would have to be remanded to Commissioner for denovo adjudication. Suppression of production - clandestine removal of goods - Held that:- The appellant’s contention that the difference regarding quantity of the CR Sheets produced recorded in the two registers may due to calculation mistake is a vague explanation and on this point we agree with the Commissioner’s finding that the difference of 18.87 M.T. had been clandestinely removed without payment of duty. Therefore, the duty demand on this quantity also has to be upheld. Duty demand on clandestine removal of 800.263 M.T. of CR Sheets (570.833 M.T. + 18.870 M.T. + 22.22 M.T. + 66.64 M.T. + 121.7 M.T.) and duty demand of 4.296 of HR/CR Scrap, alongwith interest on this duty under Section 11AB and penalty on the Appellant company under Section 11AC equal to the duty demand, is upheld. However, the duty demand on 42.425 M.T. of Silicon Electrical Steel and Cenvat credit demand on alleged shortage of 1145.335 M.T. of HR Coils is set aside and the matter is remanded to the Commissioner for denovo adjudication after considering the explanation given by the appellant - Decided partly in favour of assessee.
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