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2013 (5) TMI 796 - AT - Central ExciseDuty demand - Invocation of extended period of limitation - whether the job workers/processors of fabric were having the knowledge of over-invoicing of the grey fabrics supplied to them by merchant manufacturer or not - Held that:- From the records and during the course of arguments, except from the statement of Dyeing Master, nowhere it is coming out that it was in the knowledge of the processors that the grey fabric is over-valued and invoices issued for grey fabrics, are fake. The dyeing master has nowhere having the knowledge of the valuation of the goods/invoices as he was concerned only with the processing of fabric. Therefore, as it held that was not in the knowledge of the processors that the grey fabric is over-invoiced therefore, the allegation of suppression against the processor is not sustainable. Accordingly, extended period of limitation is also not invokable. Demand of ₹ 12,52,453/- is not sustainable against the processors as they have cleared the goods to M/s. Pristine Exports under bond and CT-3 certificate. It was also not in processor’s knowledge that their goods shall be diverted in the local market although M/s. Pristine Exports. For violation of bond, M/s. Pristine Exports has paid duty thereon. Therefore as duty has already been paid by M/s. Pristine Exports, the same is not sustainable against the appellant/processors. As duty demand is not sustainable, therefore, penalty is also not imposable on the appellants as the allegation of suppression against the processors have already been set aside. Provisions of Rule 13 shall apply to the person who has taken the credit. Admittedly in this case the merchant exporters have not taken the credit but deemed credit has been taken by the processing units. Therefore, provisions of Rule 13 are not applicable to the merchant exports in this case. Penalty is imposable on a producer or manufacturer or registered person of warehouse or a registered dealer. Admittedly, in this case the learned Commissioner has not hold the merchant exporter as producer as manufacturer or registered person of warehouse or a registered dealer. As in the case of C.C.E., Delhi v. Balaji Trading Co. & Ors. - [2013 (1) TMI 502 - DELHI HIGH COURT ] the Hon’ble High Court of Delhi held that the respondents were neither producers nor registered person of a warehouse. That the respondents are not also not registered dealer. That being the case, no penalty is imposable on the said respondent. Therefore, following the decision of Balaji Trading Co. & Ors. (supra), we set aside the penalty imposed on the merchant exporter under Rule 25 of the Central Excise Rules, 2002. - Decided in favour of assessee.
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