TMI Blog2014 (7) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... nt : Ms Sabrina Cano, Superintendent (AR) JUDGEMENT Brief facts of the case are as follows. The appellants are engaged in the manufacture of Aerated Waters falling under Chapter Sub-Heading No. 2202.20 of the Central Excise Act, 1985. The unit is availing the facility of CENVAT credit by taking credit of duty paid on raw materials and capital goods and utilizing the same towards payment of central excise duty on finished products. During the course of verification of the records the department noticed that the appellants have cleared a total of 11,17,200 nos. of Glass Bottles and 33,400 number of crates both valued at ₹ 89,26,000/- in the month of November, 2001 to their sister concerns at Nashik, Wada and Ahmedabad under Shipment documents. They have not discharged the appropriate duty of ₹ 14, 28,160/- @ 16% on the value though they have taken and availed CENVAT credit on the above said quantities of inputs. As per the provisions of Sub Rule 1(C) of Rule 57 AB of erstwhile Central Excise Rules, 1944 and provisions of sub Rule (4) of Rule 3 of CENVAT Credit Rules, 2001/2002, when inputs or capital goods, on which CENVAT credit has been taken, are removed as su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were cleared from the factory premises of the appellant to their own unit in Nellore, were a part of the quantity of 586708 crates, procured during the period 1.4.2000 to 14.12.2003 and credit was availed. A Simple exercise of stock taking and asking the appellant to reconcile the entire receipt of crates post 1.4.2000, could have resulted whether the claim of the appellant was correct, i.e., as to 9992 crates were received prior to 1.4.2000 and no CENVAT credit was availed on the central excise duty paid on such crates. This exercise is not done by the lower authorities, despite the claim of the appellant that they had not availed the credit on the 9992 crates, which were cleared from the factory premises to their own unit in Nellore. The Revenue authorities could not controvert the said claim of the assessee. Learned SDRs claim that it was for the assessee to justify their claim of 9992 crates being non duty paid will not carry the case of the Revenue any further, as the assessee have been taking the very same plea before the lower authorities and has produced the evidences regarding the duty paid character of crates which were brought into their factory from 1.4.2000 to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the credit taken on such inputs/capital goods. Therefore when there was a mix up of inputs on which credit was taken and the ones on which credit was not taken, it was for the assessee to ensure to maintain records or at least come up with evidence to show that the goods cleared were actually the ones on which credit had not been taken. From the annexures given by the authorized signatory it is quite clear that the assessee did not do any exercise at all at the time of clearing the inputs as such and did not verify whether the same were the different ones on which credit had been taken or they were the ones on which credit was not taken. Obviously no verification had been done. That being the position and in view of the legal provision which requires an assessee to account for the goods on which credit had been taken and to show that these are used in relation to manufacture and in the event of non-use reverse the credit taken, failure to do so would attract the duty as well as the interest and penalty. This was countered vehemently by the learned counsel who relied upon a letter dated 28.11.2002 written by the appellant to the Superintendent in charge of the Range. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the goods, in the absence of fulfillment of such legal obligation duty has been correctly demanded from them. 3.3 The next ground advanced by the learned counsel in defence is limitation. He submits that show-cause notice was issued beyond the normal period and extended period has been invoked in this case. If the appellants were to pay duty and clear the goods, the receiver unit could have taken the credit. There is no dispute on this aspect. Therefore it is a revenue-neutral situation. When the situation is revenue-neutral, question of suppression of fact with intent to evade payment of duty does not arise and therefore the demand is not sustainable. To this learned AR submits that the appellants simply cleared it under their own dispatch documents, did not raise any central excise invoice and did not intimate the department and did not include the details in the returns filed with the department also. If the situation was totally revenue-neutral, the question arises as to why the appellants did not pay duty and clear under a proper invoice. Further she also raised the question as to why they did not raise a proper invoice as required under the Rule without debiting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es who do not bother about the legal provisions and who did not maintain proper accounts and who are not able to show that the legal obligation cast on them have been fulfilled is the question that arises in this case and obvious answer would be a categorical no . Therefore I am unable to agree with the learned counsel that extended period could not have been invoked in this case. 3.4 The third point that was raised by the learned counsel was that there was no provision in the law for recovery of the duty if it was not paid under Rule 3(4) at all. He submitted that sub-section to Rule 3(5) was added only in 2013 therefore there was no recovery mechanism for the duty not paid on inputs cleared as such prior to 2013. In the absence of recovery mechanism the amount cannot be recovered. The learned AR first of all submitted that this was not a point which was raised before the original authority or the Commissioner (Appeals) or even in the appeal memorandum filed before the Tribunal. No application for inclusion of additional grounds has been filed. Today when both the submissions regarding merit and limitation were not being responded favourably by the Bench, the learned counsel c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature and a study of the relevant provisions would clearly show that even without the invocation of Rule 3(4) (presently Rule 5), the amount was recoverable. Even though learned counsel sought time for making further submissions, the learned AR vehemently opposed it stating that on the one hand the learned counsel has submitted a totally new ground during the course of hearing and on the other hand when he finds that Bench was not very responsive to his submissions, he is seeking time. In any case I consider that the matter does not require any further consideration in view of the analysis of the relevant rules made by me above. Further I find that the very same issue of recovery of the amount payable on capital goods had come up before me for consideration. During the hearing it was found that there was a Larger Bench decision which had gone into the issue of actual amount payable when the capital goods are removed as such. If the stand taken by the learned counsel that in the absence of recovery mechanism no recovery could have been made is correct, the matter of amount payable as per the Rule on used capital goods cleared would not have come up before Larger Bench. The relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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