TMI Blog2022 (5) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... rule provides for the case where the facility of payment has been extended by declaring certain process as the process of deemed manufacture for the purpose of utilization of the CENVAT Credit - From the Rule 4 (1A) and Rule 12AA (1), reproduced it is quite evident that these rules in respect of the duty payment on the job work done in respect of the specified goods. These rules do not create the liability to pay the central excise duty on the goods got processed from the job worker. These rules provide the option to pay the duty either to the job worker or to the person who gets the goods job worked. There is no aspect of the deemed manufacture described as per the said rules and the liability to pay the duty by the person getting the goods processed by the job worker is purely optional. The fact that appellant had taken the CENVAT Credit without payment of any duty has not been challenged by the appellant. Without any challenge to the said finding that appellant had availed the CENVAT Credit in respect of 3521.565 M.T. of molasses procured from Khandsari Sugar Factories in June and July 2012, without payment of any duty on the same, the entire arguments advanced by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d quantity of molasses as required under Rule 4(2) of the Rules read with Rule 8(1) of the Rules, in the capacity of procurer; that the said duty totalling Rs.27,53,349/ - was paid by the Appellant in the months of October 2012, December 2012 and February 2013. 2.4 A Show Cause Notice dated 02.07.2013 was issued to the Appellant and the same was decided by the Additional Commissioner Central Excise Customs, Kolhapur Order-in- Original, No. dated 17.01.2014 holding as follows: (a) Confirmed the demand of Central Excise duty amounting to Rs.27,20,409/- under the provisions of Section 11A(10) of the Central Excise Act, 1944 (hereinafter referred to as the Act), which was payable as per the provisions of Rule 4(2) of Central Excise Rules, 2002 (hereinafter referred to as the Rules) read with Rule 8(1) of the Rules, in the capacity of procurer. (b) Confirmed the demand of interest on the above said confirmed demand under the provisions of Section 11AA of the Act. (c) Confiscated molasses valued at Rs.55,68,687/ - under Rule 25 of the Rules and imposed a fine of Rs.6,00,000/- in lieu of confiscation, under Section 34 of the Act. (d) Imposed penalty of Rs.27,20,409/ - und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Appellant becomes the producer of molasses and is required to pay the duty on the said molasses. Once the procurer of molasses is treated as the (deemed) producer, as per the said provisions of Rule 4(2), the molasses has to be treated as the (deemed) final product of the procurer, so as to make him liable to pay duty on the same. In other words, by virtue of Rule 4(2) of the Rules, molasses is a final product of the Appellant for the purposes of Central Excise Duty. Accordingly, when the provisions of Rule 3(4) of the CCR are applied, the said molasses has to be treated as the final product of the Appellant and accordingly utilization of CENVAT Credit for payment of duty on the same prima-facie appears proper. By harmonious reading of Rule 4(2) of the Rules and Rule 3(4) of the CCR, it can also be said that by shifting the duty liability on the procurer of molasses, it becomes a case of captive consumption of molasses. Imposition of penalty under Rule, 25 of the Central Excise Rules, 2002 is also not correct. There is no suppression of facts and in absence of suppression of facts, mis-declaration etc. penalty cannot be confirmed under the said Provision as the duty was paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d molasses from such factory or otherwise for use in the manufacture of any commodity, whether or not excisable, is required to pay the duty on the said molasses. Thus, the contravention of the provisions of Rule 8 of the Rules, read with Rule 4(2) of the Rules, is clearly established from the admitted facts of the case, unless the payment of said duty by debit in CENVAT Credit Account is found legally correct, as claimed by the Appellant. 10. It is recorded in the impugned Order-in-Original that the Appellant had debited an amount of Rs.27,53,349/ - from their CENVAT Credit account during October 2012, December 2012 and February 2013 and the same was claimed by the Appellant as towards their duty liability of Rs.27,20.409/- on the 3521.565 M.T. of molasses procured by them in June and July 2012. The Respondent has held that the use of CENVAT Credit account for payment of duty on molasses procured from Khandsari Sugar Factory is not proper. The Appellant have argued that utilization of CENVAT Credit by them for payment of duty on the molasses procured by them from Khandsari Sugar Factory is correct as Rule 4.(2) of the Rules states that the duty leviable on such molasses will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapters 61, 62 or 63 of First Schedule to the Excise Tariff Act, includes a person who liable to pay duty of excise leviable on such goods under subrule (1A) of rule 4 of the Central Excise Rules, 2002; As the procurer of Molasses, i.e. the person liable to pay duty in the present case, is not included in the above exceptions. I am unable to accept the said contention of the Appellant as it is contrary to the statutory provisions explained above. I have noticed that the above definition has been specifically inserted to treat procurers of certain items (i.e. the person who is liable to pay duty) as the manufacturer/ producer only in respect of those two items, as mentioned in the above definition. The intent of the legislature is very clear and no other category of procurer has been made eligible to pay duty by utilization of CENVAT Credit. This categorically proves that the procurer of Molasses is not to be treated as the manufacturer / producer of Molasses. In view of the above statutory provisions of the CER, I conclude that the Duty is not permitted to be paid by the procurer of such molasses by utilization of CENVAT Credit. Accordingly, I hold that the Appellant have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e molasses are produced in a khandsari sugar factory, the person who procures such molasses, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty leviable on such molasses, in the same manner as if such molasses have been produced by the procurer. Rule 12AA. Job work in article of jewellery. - (1) Notwithstanding anything contained in these rules, every person (not being an export-oriented unit or a unit located in special economic zone) who gets article of 'jewellery falling under heading 7113' the words and figures jewellery or other articles of precious metals falling under heading 7113 or 7114 as the case may be of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Tariff Act), produced or manufactured on his behalf, on job work basis, (hereinafter referred to as the said person ) shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee : Provided that the job worker may, at his option, agree to obtain regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad wrongly availed CENVAT Credit totaling Rs.27,20,409/ - during June and July 2012 without payment of any duty on the said 3521.565 MT of molasses. Thus, firstly it is a case of non-payment of duty when the same was due after procurement of the said 3521.565 M.T. of molasses in June and July, 2012. Secondly, the same is further compounded by taking CENVAT Credit fraudulently of the same amount even though no duty had been paid till then of the said amount of Rs. 27,20,409/-, of which CENVAT Credit had been taken by the Appellant. This, clearly establishes double violation by the Appellant, viz.: (i) Non-payment of duty, on 3521.565 M.T. of molasses procured from Khandsari Sugar Factories in June and July 2012. (ii) Taking CENVAT Credit of.-Rs.27,20,409/- fraudulently in June and July 2012 in respect of the said 3521.565 M.T. of molasses without any duty having been paid on the said molasses. From the above factual position it is clear that when the Appellant had debited their CENVAT Credit account in October, 2012, December 2012 and February 2013 by an amount of Rs.27,56,349/-, the said debit was primarily of the CENVAT Credit of Rs.27,20,409/ - which had been taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the issue of imposition of Penalty, I find that the principle of sell-assessment is in vogue in the Central Excise regime, under which the Appellant have been operating. This requires the submission of self-assessed Returns and the entire responsibility of compliance with the statutory provisions is of the Appellant. In other words, it is the responsibility of the Appellant to assess their Duty liability correctly and pay the Duty correctly. Further, the Appellant cannot escape from the consequences of their actions, even if they take the plea of ignorance, as it is settled law that ignorance of law is never an acceptable defence and it does not grant any immunity, and more so in the current regime of self-assessment of Central Excise revenue administration, which casts the entire responsibility for the correct payment of Duty and for the compliance with the law, on the manufacturer. Here, I find that the Appellant have not only contravened the provisions of Rule 4(2) and Rule 8 of the Rules but also have attempted to cover that up by first taking CENVAT Credit of Rs.27,20,409/- fraudulently in June July 2012, even though they were well aware. that no duty payment of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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