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2015 (9) TMI 679 - AT - Central ExciseDenial of CENVAT Credit - Clandestine removal of goods - Duty demand u/s 11D - Captive consumption - Demand of interest - Held that:- Every person who is liable to pay duty under this act or rules made thereunder has collected any amount in excess of duty assessed or determined is required to pay to the Central Government amount so collected. As per the show cause notice, the allegation of the Revenue is that as the activity of the appellant does not amount to manufacture therefore, the appellant is not liable to pay duty. Therefore, the provisions of section 11D of the Act are not applicable to the facts of this case. Although the appellant has paid to the Central Government what amount is collected from the customers as duty, therefore, the demand under section 11D of the Act is not sustainable. Consequently, interest is also not payable. As per the CBEC Circular No. 345/2/2000 TRU dated 29.08.2000 which explains that in the exact procedure that the manufacturer can export goods under bond without payment of duty. This is a facility that is available to the manufacturer under the excise procedure and in such case appropriate duty on goods i.e. payable is nil, therefore, there is no bar for the manufacturer to remove inputs or capital goods for exports undergone. It is further seen that as per the CBEC Circular 283/117/96-CX dated 31.12.1996 it has clarified that MODVAT credit in RG 23A part 2 account against the export of inputs as such under bond can be utilized in the same manner as it is utilized for final product under the proviso of Rule 57(F)(4). Therefore, it falls from that such input should be allowed to be exported under bond without any reversal of credit. Admittedly, in this case as per the Revenue, the appellant has exported the inputs as such. Therefore, as per the CBEC Circular cited here in above, the appellant is entitled to avail Cenvat Credit thereon. Therefore, the question of reversal of the same does not arise. With these terms, the demand on this account is set aside. Definitely the appellant is required to pay duty on captively processed goods which are liable for duty. But we should not forget the fact that the final product which does not amount to manufacture has been cleared by the appellant on payment of duty. Therefore, the said payment of duty shall amount to payment of duty on captively consumed product i.e. polythene film. In these terms, the demand of ₹ 75,80,380/- is not sustainable. Accordingly same is set aside. - appellant used the raw material purchased clandestinely in the production of finished goods. When an input has been procured clandestinely, definitely Cenvat Credit on the said input has not been availed by the appellant. Therefore, the question of reversal of same does not arise when there is no credit taken. In these terms, the demand of ₹ 14,70,682/- and ₹ 3,90,734/- are also not sustainable. Therefore, demand is set aside. - Decided in favour of assessee.
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