TMI Blog2001 (1) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter referred to as OYW scheme), the Revenue entertained a view that railways are not the owners of the wagons in question inasmuch as the entire cost of the wagons was realised by the Indian Railways from M/s. TISCO before placing the order upon the appellant and as such the ownership of the wagons did not vest in Indian Railways, but the same belonged to M/s. TISCO. 3. Based upon the above view entertained by the Revenue, the appellants were issued a show cause notice dated 1-5-1998 raising demand of duty of Rs. 2,10,83,104.35 in respect of 181 wagons by the appellants during the period 17-2-1996 to 12-10-1996 by availing the benefit of the exemption notifications in question. The notice also invoked the longer period of limitation by alleging that the fact that the wagons under consideration were manufactured and cleared under OYW scheme was not disclosed at any point of time to the department. The notice proposed imposition of penalty upon the appellants as also confirmation of interest. On adjudication, the said show cause notice culminated into the impugned order passed by the Commissioner of Central Excise, Patna confirming the demand of duty, as proposed in the notice a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant inasmuch as the duty liability on the said wagons was borne by Ministry of Railways, as per terms of the contract. As such there was no intention on the part of the appellant to evade duty, which factor is a must for invocation of longer period of limitation. In support of his above submissions ld. Advocate relies upon number of decisions of the Hon ble Supreme Court. 6. Shri Bagaria further submits that during the relevant period, the appellant did not avail the Modvat credit on the inputs used in or in relation to the manufacture of the said wagons because no duty was being paid on the final product. In case of the confirmation of demand of duty now, the appellants are entitled to the Modvat credit of duty paid on the inputs, which comes to about Rs. 1,57,79,865/-. The adjudicating authority has not accepted the above request of the appellant on the ground that the Modvat procedure was not followed by the appellant. By drawing our attention to the various decisions of the Tribunal as also of Hon ble Supreme Court, he submits that position of law is well settled that in case of subsequent demands of duties, the Modvat credit of duty paid on the inputs is available to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition was included and the full exemption from central excise duty was granted in respect of Railway wagons subject to following conditions : If, (i) intended for use by the Indian Railways or the Konkon Railway Corpn. Ltd.; and (ii) the ownership of the said goods vests in the Indian Railways or the Konkon Railway Corpn. Ltd. A reading of the above condition would show that before earning the exemption under the said notification the appellants have to satisfy both the conditions, i.e. use by the Indian Railways and the ownership of the wagons in the Indian Railways. The appellants have tried to show that the transaction of purchase of wagons manufactured by them was between the appellant and the Indian Railways and for all intents and purposes, it was the Indian Railways who bought the goods from them and made payments directly to the appellant and as such they should be considered as owner of the wagons. The Commissioner has observed that after the insertion of this condition, the matter became irrelevant as to whom it was handed over, it was to be seen that as to whom it ultimately belonged. We find that all the facts referred to by the appellant and st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich bears a note 181 BOXN wagons are against deposit of M/s. TISCO . The above factor makes it clear that the Indian Railways are acting as an agent on behalf of M/s. TISCO who have already deposited the money with Indian Railways for procurement of wagons and as such ownership vested with M/s. TISCO and not with Indian Railways. Inasmuch as the ownership does not vest in the Indian Railways, as found by us we hold that the second condition of the notification in question does not stand fulfilled. The benefit of the same has been rightly denied by the adjudicating authority. 10. As regards the limitation, we find that the demand has been raised vide a show cause notice issued on 1-5-1998 for the period 17-2-1996 to 12-10-1996. The appellants have strongly challenged the same as barred by limitation by submitting that both the appellants as well as the Ministry of Railways being Government of India, there could be no intention to evade payment of duty. We find that the Revenue s case for invocation of longer period is based upon the fact that the appellant did not disclose the clearance of the wagons to the Railways under OYW scheme. However, we find that in the order placed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Modvat credit of duty paid on the inputs used in or in relation to the manufacture of the wagons in question. The Commissioner would look into the said aspect and would adjust the Modvat credit accordingly, subject to verification of the documentary evidence of demand of duty on the inputs, their receipt in the appellants factory and their utilisation in the manufacture of the final product. 12. As regards the application of Sections 11AB and 11AC the appellants have relied upon the following decisions to strengthen their arguments that the said provision are not applicable in case the demands relates to the period prior to 28-9-1996, when the said sections came into force :- (i) 1998 (102) E.L.T. 705 (Tribunal) = 1998 (25) RLT 919 - Mercandy Prasad Radhakrishna Prasad (P) Ltd. v. C.C.E. Department s appeal against this decision was dismissed by the Hon ble Supreme Court as briefly reported in 1999 (107) E.L.T. A121. (ii) 2000 (38) RLT 875 - C.C.E. v. Bata India Ltd. (iii) 1999 (34) RLT 549 - Samtel India Ltd. v. C.C.E. (iv) 1999 (30 ) RLT 331 - Elgi Equipments Ltd. v. C.C.E. (v) 1999 (35) RLT 215 - Oscar Pharmaceuticals (P) Ltd. v. C.C.E. (v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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