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2009 (9) TMI 851
CENVAT Credit - capital goods - equipment for co-generation plant - credit for the period 10/2000 to 12/2002 - sugar mill had become functional on 21-1-04 - Held that:- The co-generation plant became operational ahead of the sugar mill and during the period 1/2003 to 20-1-04, entire power generated was supplied to APTRANSCO. However, as per the PPA, SSAPL were to supply mutually agreed quantities of power to APTRANSCO and consume 0.20 MW to 3.2 MW captively.
The assessee set out to set up the sugar factory with a captive co-generation plant and procured capital goods for the purpose and took credit of duty paid on them. The assessee cannot be denied credit on the ground that co-generation plant produced non-dutiable electricity and electricity was the final product at the time of receipt of equipment required to set up the power plant. On erection of the entire facility, dutiable excisable goods were the final products manufactured using, inter alia, electricity produced by the co-generation plant.
It is immaterial that owing to delay in receiving certain approvals required, the sugar mill became fully operational in January, 2004 whereas the co-generation plant was operational a year earlier.
The appellants eligible for the impugned credit - appeal allowed - decided in favor of appellant.
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2009 (9) TMI 850
Issues Involved:
1. Demand of Rs. 3.7 crores - Cenvat credit availed and utilized by the appellant.
2. Demand of over Rs. 3.7 crores - Penalty under Rule 12/15 of the Cenvat Credit Rules, 2002/04 read with Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act.
3. Waiver of pre-deposit and stay of recovery in respect of outstanding dues.
4. Demand of Rs. 2.99 crores - Cenvat credit on input services.
5. Demand of over Rs. 59 lakhs - Wrongly utilized by the assessee for payment of service tax on output services.
6. Demand of Rs. 12,44,967/- and pre-deposit requirement.
Analysis:
1. Demand of Rs. 3.7 crores: The appellant was demanded an amount equivalent to the Cenvat credit availed and utilized. A major part of this amount was related to Cenvat credit on input services. The appellant had transferred accumulated/unutilized credit to a single register under Rule 11 of the Cenvat Credit Rules, 2004. The show-cause notice was issued beyond the normal period of limitation, invoking the extended period due to suppression of material facts. However, the Tribunal found that the allegation of suppression of fact was not substantiated, leading to a waiver of pre-deposit and stay of recovery in respect of this amount based on the ground of limitation.
2. Penalty under Rule 12/15: Apart from the demand, a penalty of over Rs. 3.7 crores was imposed on the appellant under Rule 12/15 of the Cenvat Credit Rules, 2002/04 read with Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act. The Tribunal did not examine this matter on merits in the judgment.
3. Waiver of Pre-deposit: The application sought waiver of pre-deposit and stay of recovery in respect of the outstanding dues. The Tribunal granted waiver and stay in relation to the demand of Rs. 2.99 crores based on the ground of limitation.
4. Demand of Rs. 2.99 crores: The demand was related to Cenvat credit on input services which remained unutilized and accumulated prior to a specific date. The appellant transferred the credit to a single register as per the transitional provision. The Tribunal found a prima facie case against this demand on the ground of limitation, leading to waiver of pre-deposit and stay of recovery.
5. Demand of over Rs. 59 lakhs: This demand was for wrongly utilizing the amount for payment of service tax on output services. The appellant argued that they should be deemed providers of the services based on Rule 2(r) of the Cenvat Credit Rules, 2004. The Tribunal found no effective rebuttal of the arguments and granted waiver and stay in respect of this demand.
6. Demand of Rs. 12,44,967/-: The appellant had already paid a portion of this demand. After considering submissions, the Tribunal did not find a prima facie case against this demand. The appellant was required to pre-deposit the balance amount, which was rounded off to Rs. 5 lakhs, within a specified period for waiver of pre-deposit and stay of recovery in respect of the balance of the adjudged dues. Compliance was to be reported by a specific date.
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2009 (9) TMI 849
Issues Involved:
1. Liability of duty payment for bars and rods manufactured on job work basis.
2. Eligibility for exemption under Notification No. 50/2003-C.E.
3. Imposition of penalties on appellants.
Detailed Analysis:
1. Liability of Duty Payment for Bars and Rods Manufactured on Job Work Basis:
The primary issue is the identity of the manufacturer of bars and rods-whether it is KE or KVS. The adjudicating authority concluded that KE was liable to pay duty for bars and rods, even though KE did not have the facility to manufacture these products and had them manufactured by KVS on a job work basis. The adjudicating authority did not adequately analyze the agreement between KE and KVS, which is crucial to determine the nature of their relationship (principal-to-principal or otherwise) and the actual manufacturer of the products. The appellants argued that KVS, being the job worker, should be liable for duty, and since KVS is also entitled to exemption under Notification No. 50/2003-C.E., no duty is payable. The adjudicating authority failed to consider relevant judicial precedents (Pawan Biscuits Co. Pvt. Ltd. v. CCE, Patna and CCE, Baroda v. M.M. Khambhatwala) which emphasize the importance of the agreement and the nature of the relationship in determining the manufacturer.
2. Eligibility for Exemption under Notification No. 50/2003-C.E.:
The adjudicating authority denied KE the benefit of exemption under Notification No. 50/2003-C.E., arguing that KE had not commenced commercial production of bars and rods and was clearing these goods without payment of duty. The appellants contended that they were entitled to exemption as they were manufacturing other products eligible for the same notification, and merely listing bars and rods in their declaration should not disqualify them. The adjudicating authority did not consider the appellants' argument that bars and rods were manufactured by KVS and directly sold in the market, thus qualifying for exemption. This aspect requires a detailed examination of the notification's provisions and the actual manufacturing activities.
3. Imposition of Penalties on Appellants:
Penalties were imposed on KE, KVS, and individual appellants for allegedly conspiring to evade duty. The adjudicating authority concluded that KE and KVS designed a modus operandi to evade duty, despite KVS not being held liable for duty payment. The appellants argued that there was no misdeclaration or suppression of facts, and the penalties were unjustified. The authority did not provide a detailed analysis of the evidence supporting the penalties, particularly the nature of the agreement and the actual manufacturing process. The appellants also highlighted that the adjudicating authority did not consider the trade notices issued by the Pune Commissionerates, which could provide relevant guidance.
Conclusion:
The impugned order was set aside due to the lack of proper analysis and reasoning by the adjudicating authority. The matter was remanded for fresh consideration, emphasizing the need to analyze the agreement between KE and KVS, the nature of their relationship, and the actual manufacturing activities. The adjudicating authority was directed to dispose of the matter expeditiously, considering the observations made in the judgment and relevant legal precedents. The appeals were disposed of accordingly.
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2009 (9) TMI 848
Issues involved:
1. Dispensing with the condition of pre-deposit of duty amount and penalty.
2. Confirmation of demand against the appellant for the period Jan., 2001 to Sep., 2002.
3. Interpretation of time limitation under Section 11A of the Act and Rule 196 of the Central Excise Rules.
Detailed Analysis:
1. The appellant, a 100% EOU, sought to dispense with the condition of pre-deposit of duty amount of Rs. 14.38 Crores and penalty. The duty was confirmed due to alleged manipulation of records regarding duty-free procured raw materials. The adjudicating authority found that excess duty-free raw materials were procured and diverted illicitly. The appellant's request for stay was examined, and it was noted that the demand was beyond the extended period of limitation of five years.
2. The demand against the appellant for the period Jan., 2001 to Sep., 2002 was confirmed through a show cause notice issued on 5-2-2008. The Commissioner observed that the demand, raised under Section 11A, needed to be confirmed under Rule 192 read with Rule 196 of the Central Excise Rules, which do not specify a time limit. The Commissioner also stated that the demand would not be invalidated by incorrect citation of law provisions.
3. Reference was made to a judgment by the Hon'ble Allahabad High Court in a case involving UP State Cement Corporation Limited, emphasizing that Section 11A of the Act sets a limitation rule for excise authorities. The judgment highlighted that this limitation applies to Rule 196 as well. Further, decisions from the Tribunal were cited to support the argument that demands raised after a certain period under Rule 196 should be considered time-barred. In light of the legal precedents and the declaration of law by the Allahabad High Court upheld by the Supreme Court, the Tribunal concluded that demands raised beyond five years under Rule 196 cannot be upheld. Consequently, the condition of pre-deposit was dispensed with, and the stay petition was unconditionally allowed.
This judgment highlights the importance of adherence to time limitations in confirming demands under the Central Excise Rules and the significance of legal precedents in determining the validity of demands raised beyond the statutory period.
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2009 (9) TMI 847
Issues Involved:
1. Utilization of inputs in the manufacture of the final product.
2. Invocation of extended period of limitation.
3. Imposition of separate penalties on partners and authorized signatory.
Summary:
1. Utilization of Inputs in the Manufacture of the Final Product:
The primary issue was whether the inputs such as Atatic Poly Propylene and Pentaerythritol were utilized in the manufacture of Cable Filling Compound. The appellants argued that the statutory documents and chemical test reports supported their claim of utilization. The Department's test reports were inconclusive, with the first report not identifying the polymer and the second report showing the absence of certain inputs. The expert's statement indicated that Pentaerythritol could lose its identity during the manufacturing process. The Tribunal found that the appellants' records, including stock registers and statutory returns, supported their claim of utilization. The Department failed to provide cogent evidence to disprove the appellants' claim.
2. Invocation of Extended Period of Limitation:
The second issue was whether the Department could invoke the extended period of limitation for the show cause notice dated 5-3-2002, covering the period from December 1997 to September 1999. The Tribunal noted that three earlier show cause notices had been issued for subsequent periods on the same grounds. The Tribunal held that the ongoing investigation did not justify the invocation of the extended period of limitation, as the facts and grounds were already known to the Department. Therefore, the invocation of the extended period was not sustainable.
3. Imposition of Separate Penalties on Partners and Authorized Signatory:
The third issue was whether separate penalties could be imposed on the partners and the authorized signatory when the partnership firm had already been penalized. The Tribunal held that once the duty liability could not be established, the question of imposition of penalty did not arise. Consequently, the penalties imposed on the partners and the authorized signatory were also set aside.
Conclusion:
The appeals were allowed, and the impugned order was set aside with consequential relief. The Tribunal found that the Department failed to establish non-utilization of the inputs and that the invocation of the extended period of limitation was not justified. The penalties imposed on the partners and the authorized signatory were also set aside.
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2009 (9) TMI 846
Issues:
1. Demand of duty and penalty imposed on the appellant.
2. Challenge to the exemption under Notification No. 30/04-C.E.
3. Interpretation of Notification provisions by the High Court.
4. Special Leave Petition (SLP) filed by the department against High Court's judgment.
5. Reference to the new entry (Sr. No. 10a) in the Notification.
6. Consideration of the High Court's judgment for waiver of pre-deposit and stay of recovery.
Analysis:
1. The judgment pertains to an adjudication of a show-cause notice demanding duty of over Rs.28.66 crores from the appellant for a specific period, along with an equal amount of penalty imposed by the Commissioner. Additionally, penalties were levied on two functionaries of the company. The appellant sought waiver of pre-deposit and stay of recovery for these amounts based on the demand of duty consequential to the denial of exemption under Notification No. 30/04-C.E.
2. The appellant had filed two Writ Petitions before the Bombay High Court challenging the vires of the above Notification. The High Court interpreted the provisions of the Notification and rejected the Revenue's argument regarding the exemption criteria. The High Court held that Polyester Tops manufactured from duty-paid 'tow' were exempted from excise duty under the new tax regime. The main issue raised in the present matter is considered covered by the High Court's judgment in Writ Petition No. 2931 of 2008.
3. The department filed a Special Leave Petition (SLP) with the Supreme Court against the High Court's judgment, and notice has been issued in this regard. The Counsel for the appellant was directed to file a counter-affidavit within eight weeks concerning the SLP.
4. A recent amendment to Notification No. 30/04-C.E. was highlighted by the Jt. CDR, introducing a new entry (Sr. No. 10a) effective from 10-7-2009. The Jt. CDR suggested that the High Court's decision might have been different had this provision been available during the earlier proceedings.
5. Despite the new amendment to the Notification, the Tribunal decided to consider the Notification as it stood during the relevant period, as interpreted by the High Court. The Tribunal found that the results favored the appellant, allowing them to claim the benefit of Sr. No. 10 of Notification No. 30/04 for the disputed period. Consequently, there was a waiver of pre-deposit and stay of recovery for the duty, penalty amounts, and fine.
6. The learned Counsel requested the appeals to be finally disposed of in light of the High Court's judgment, pending the outcome of the proceedings before the Supreme Court. The Tribunal decided in favor of the appellant based on the High Court's interpretation of the Notification provisions.
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2009 (9) TMI 845
Valuation - dealer’s commission and delivery charges - includibility - Held that: - Rule 7 provides that “where the goods are not sold at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold, the value shall be the normal transaction value of such “goods sold from such other place” - In the present case, Motor Spirit and HSD oil are also sold to customers at the time and place of removal. In these circumstances, provisions of Rule 7 are not attracted - In the present case, the assessees determined the value as per Rule 4 of the Valuation Rules which is therefore required to be accepted - appeal allowed - decided in favor of appellant.
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2009 (9) TMI 844
Issues involved: Appeal against confirmation of interest and penalty on Cenvat credit reversal for cancelled stocks and flood damaged goods.
Summary:
Issue 1: Cenvat credit reversal on cancelled stocks and flood damaged goods
The appellants availed Cenvat credit on inputs used in manufacturing excisable products, cleared without duty payment. Audit raised objections regarding reversal of Cenvat credit on cancelled stocks and flood damaged goods. Show cause notice proposed denial of Cenvat credit and imposition of penalty u/s 11AC of Central Excise Act, 1944.
Issue 2: Confirmation of interest and penalty
Assistant Commissioner confirmed show cause notice, citing non-payment of interest on reversed Cenvat credit as deliberate evasion of revenue. Commissioner (Appeals) upheld the decision, stating delay in credit reversal warranted interest and penalty.
Appellant's Arguments:
1. Reversal of Cenvat credit was to avoid litigation, not a legal requirement.
2. No duty payment obligation or grounds for invoking penal provisions.
3. Reversal not needed for stocks within factory premises, as per Cenvat Credit Rules.
4. Notification introducing credit reversal provision not retrospective.
Case Laws Relied Upon:
- Bharat Heavy Electricals Ltd.: Credit not deniable on written off inputs in factory.
- Audco India Ltd.: Credit valid on unutilized inputs within factory.
- Tecumseh Products India Pvt. Ltd.: No liability to reverse credit on written off items in factory.
Respondent's Argument:
Stores written off not considered inputs u/s 2A of Cenvat Credit Rules, requiring credit reversal. Appellants evaded duty by using credit without duty payment.
Decision:
After considering arguments and case laws, the Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal. Notification introducing credit reversal provision was not retrospective, and the appellant's case aligned with established precedents.
*(Pronounced in Court on 11-9-2009)*
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2009 (9) TMI 843
Issues Involved:
1. Clubbing of clearances by multiple firms.
2. Allegations of clandestine removal of goods.
3. Admissibility and reliability of evidence.
4. Capacity of the unit to produce the alleged quantity.
5. Procedure of receiving sale proceeds.
Detailed Analysis:
1. Clubbing of Clearances by Multiple Firms:
The Commissioner initially addressed the issue of clubbing clearances of seven firms controlled by two brothers. However, this demand was dropped, indicating that the Commissioner did not find sufficient evidence to support the clubbing of clearances by various units.
2. Allegations of Clandestine Removal of Goods:
The primary issue was the clandestine removal of ERW pipes by M/s. National Conduit Pipes. The Commissioner confirmed the demand of Rs. 17,79,094/- based on 62 invoices found at the Information Collection Centre (ICC) of the Punjab Government. The appellant's defense included claims that the invoices were misused by their drivers without their knowledge, and that the discrepancies in stock were minor. However, the Tribunal found these defenses unconvincing, particularly noting the identical nature of the affidavits from the drivers and the lack of crucial details in their statements.
3. Admissibility and Reliability of Evidence:
The appellants argued that the documents relied upon by the Department, including photocopies of invoices and documents recovered from third parties, were not admissible. The Tribunal, however, noted that the invoices were furnished by public authorities and were corroborated by other evidence, such as the identical nature of the invoices recovered from ICCs and those generated by the appellants' computers. The Tribunal dismissed the appellants' objections, emphasizing the corroborative evidence supporting the clandestine removal.
4. Capacity of the Unit to Produce the Alleged Quantity:
The appellants contended that their unit could not have produced the quantity alleged to have been clandestinely removed, based on an 8-hour shift capacity. The Tribunal rejected this argument, noting that the unit could operate beyond 8 hours and that the figures provided by the appellants were based on a limited operational timeframe. The Tribunal found the Department's assessment of the unit's capacity to be reasonable.
5. Procedure of Receiving Sale Proceeds:
The Tribunal highlighted the unusual and suspicious procedure followed by the appellants in receiving sale proceeds. The scrutiny of ledgers revealed that sales were accounted for through pay orders issued by a bank against cash deposits made by the appellants' accountant. This circuitous method of transaction further supported the allegations of clandestine activities.
Conclusion:
The Tribunal upheld the findings of the Commissioner, confirming the demand for duty and the imposition of penalties. The evidence presented by the Department, including corroborated invoices and the suspicious financial transactions, satisfied the preponderance of probability standard. The appeals were rejected, affirming the penalties imposed on the appellants for their involvement in the clandestine removal of goods.
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2009 (9) TMI 842
Revocation of CHA licence - misconduct of employees - Case was booked against the importer for importing ozone depleting substances with intent to clear the same without filing proper declarations of the same at the rime of filing of the bill of entries - Held that: - there are no allegations and findings of the enquiry officer against the CHA as regards the violation of the provisions of CHALR. It is seen that the errors or commissions or omissions are committed by one Mr. Nageshwara Rao, clearing executive of the appellant but was not instructed by the appellant to do such an act.
The Commissioner of Customs can revoke the licence of the Custom House Agent and order for forfeiture of the security only if there is a failure on the part of custom house agent to comply with any of the provisions of the conditions of the bond, provisions of this regulations and any mis-conduct on his part - in the present case, there are no findings that the appellant had failed to comply with any of the regulations or has had engaged in misconduct on his part which renders him unfit to transact any business. In the absence of any such findings, it is held that the appellant is punishable with the revocation of the licences under the provisions of Regulation 19(8) of CHALR.
Appeal allowed - decided in favor of appellant.
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2009 (9) TMI 841
The Appellate Tribunal CESTAT NEW DELHI addressed a case where the respondent collected Rs. 10,681 as T.C. Cess for Textile goods but did not deposit it with the Excise Department. The respondent is contesting the levy before the Textile Appellate Tribunal. The matter was sent back to the Adjudicating Authority to monitor the outcome of the proceeding before the Textile Tribunal and determine if the sum should be paid to the Excise Department. The decision was made in open court.
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2009 (9) TMI 840
Issues Involved:
1. Whether Modvat credit claimed under Rule 57Q can be shifted and allowed under Rule 57A if the initial claim fails.
2. Whether the Commissioner (Appeals) was justified in allowing the Modvat credit for the items in question.
Issue-wise Detailed Analysis:
1. Shifting of Modvat Credit from Rule 57Q to Rule 57A:
The appeal raised the question of whether Modvat credit claimed under Rule 57Q (for capital goods) can be shifted to Rule 57A (for inputs) if the initial claim fails. The Commissioner (Appeals) did not address this issue directly but assumed such a shift was permissible. The Tribunal noted that both rules relate to entitlement of credit, albeit under different conditions. The Tribunal emphasized that in the absence of a specific or implied bar, it is permissible to grant the benefit under one rule if the assessee is legally entitled to it, even if initially claimed under another rule. This principle is supported by various rulings, including the Supreme Court's decision in Share Medical Care v. UOI, which held that an applicant is not prohibited from claiming benefit under a different notification at a later stage. Thus, the Tribunal concluded that the respondents are entitled to claim the benefit under Rule 57A even if they fail to establish their claim under Rule 57Q.
2. Justification of Modvat Credit Allowance by Commissioner (Appeals):
The Commissioner (Appeals) allowed Modvat credit for various items by classifying them either as inputs under Rule 57A or as capital goods under Rule 57Q. The Tribunal reviewed the analysis and findings of the Commissioner (Appeals) for each category of items:
- Group I (Steel Items): The Commissioner (Appeals) allowed credit as inputs, noting their use in workshops for manufacturing and repairing capital goods. However, the Tribunal found that the analysis was based on submissions without reference to evidence of actual use.
- Group II (Railway Items): Credit was allowed as capital goods, assuming their use in the internal railway system for transporting raw materials and products. The Tribunal noted the lack of detailed evidence supporting this use.
- Group III (Nuts, Bolts, etc.): Credit was allowed as capital goods, with the Commissioner (Appeals) stating these items are parts of machines. The Tribunal again pointed out the absence of specific evidence.
- Group IV (Paints, Varnishes, etc.): Credit was allowed as inputs, with the Commissioner (Appeals) noting their use for marking products. The Tribunal observed that the decision was based on assumptions rather than concrete evidence.
- Group V (Welding Items): Credit was allowed as inputs, with the Commissioner (Appeals) noting their use in workshops and manufacturing processes. The Tribunal highlighted the need for evidence of actual use.
- Group VI (Electrical Items): Credit was allowed for items used for lighting and controlling quality parameters. The Tribunal emphasized the necessity of evidence to support these claims.
- Group VII (Oil Tanks, Structures): Credit was allowed as capital goods, with the Commissioner (Appeals) noting their use for storage and installation of machines. The Tribunal stressed the importance of verifying these claims with evidence.
The Tribunal concluded that the Commissioner (Appeals) did not adequately analyze the evidence to justify the findings. The decision was based on submissions rather than verified records of actual use, which is necessary to determine the entitlement of Modvat credit. Therefore, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for a fresh decision after a thorough review of the evidence.
Conclusion:
The Tribunal allowed the appeal partly, set aside the impugned order, and remanded the matter to the Commissioner (Appeals) for a fresh decision, emphasizing the need for a detailed analysis of the evidence to justify the allowance of Modvat credit under the relevant rules. The appeal was disposed of with these directions.
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2009 (9) TMI 839
Cenvat credit of SAD discharged on imports using the DEPB credit - Held that: - The credit availed pertains to SAD levied in terms of sub-section (5) of Section 3 of the Customs Tariff Act. Therefore, as per the above provision in the Notification, the respondents cannot be denied the Cenvat credit equivalent to the DEPB credit debited towards SAD levied under sub-section (5) of Section 3 of the Customs Tariff Act - the provisions of the Notification and the clarification issued by the CBEC - appeal dismissed - decided against Revenue.
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2009 (9) TMI 838
Reversal of MODVAT/CENVAT credit - applicability of Rule 6(3) of CCR, 2002 - job worked goods being exempted from duty - Held that: - Once there is nexus of the job worked goods with the finished goods produced by the principal manufacturer, denial of CENVAT credit to the job worker for use of input in the intermediate goods exempt from duty in terms of the above Notification would be unjust if the principal manufacturer has not claimed CENVAT credit in respect of inputs of job worker used in the job worked goods of principal manufacturer.
However, it is required on the part of the learned Commissioner (Appeals) to conduct an enquiry and examine the record of the principal manufacturer M/s. DSM Anti-Infectives India Pvt. Ltd. and find out whether the job worked goods were properly accounted for at both the ends and whether such job worked goods had undergone the process of manufacture of final product and whether the final output has undergone suffering of excise duty and whether the principal manufacturer has claimed Cenvat credit on the inputs of job worker since job worker was exempt from payment of duty.
Appeal allowed by way of remand.
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2009 (9) TMI 837
Issues involved: Challenge to demand on the ground of limitation u/s 11A of the Central Excise Act.
The Appellant filed an Appeal against the demand on the ground of limitation, contending that a show cause notice was issued on 9-1-06 for the period from December, 2004 to March, 2005, and another notice on 17-1-08 for the period from April, 2004 to November, 2004, invoking the extended period of limitation. The Appellant relied on the decision in Nizam Sugar Factory v. CCE to argue that subsequent notices for the same ground are not sustainable (Para 2).
The Revenue's contention was that the Appellant had not disclosed all facts and produced records for the relevant period, leading to another notice for the earlier period by invoking the extended period of limitation. They cited the decision in Madras Petro-Chem. Ltd. v. CCE to support their argument that extended limitation applies when information is withheld consciously. They also referred to the case of Saraswati Air Products Ltd. v. CCE to assert the Department's right to issue notices for extended periods (Para 3).
The Tribunal found that the show cause notices alleged suppression of facts with intent to evade payment, with one notice for the period from December, 2004 to March, 2005, and another for the period from April, 2004 to November, 2004. The Tribunal held that the demand under the second notice was not sustainable based on the decision in Nizam Sugar Factory case, as there was no suppression of facts by the Appellant (Para 4).
Based on the Supreme Court decision, the impugned Order was set aside, and the Appeal was allowed, entitling the Appellant to consequential benefits as per the law (Para 5).
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2009 (9) TMI 836
Issues: Misdeclaration of imported goods, invocation of Customs Act sections, confiscation of goods, under-declaration of value, imposition of fine and penalty.
In this case, the appellant challenged an order related to the misdeclaration of imported goods, where the goods were confiscated with an option for redemption. The appellant argued that there was no intention to misdeclare the goods and that they were declared as per the invoice from the foreign supplier. However, the JCDR supported the impugned order, pointing out discrepancies in weight and description of the goods. The JCDR argued that the goods were liable for confiscation under Section 111(m) of the Customs Act, and that the value of the goods had been under-declared. The Tribunal found that the goods had indeed been misdeclared in terms of description, weight, and value. Despite the appellant's argument regarding the invoice, the Tribunal noted that the goods were not rejected or returned to the supplier, but instead cleared after payment of customs duty, fine, and penalty. The Tribunal considered misdeclaration a serious offense under customs law and upheld the order confiscating the goods and enhancing their value, as well as the imposed fine and penalty, deeming them reasonable. Consequently, the appeal was rejected, and the impugned order was sustained.
This judgment highlights the importance of accurate declaration of imported goods, the seriousness of misdeclaration under customs law, and the consequences of such actions, including confiscation, fines, and penalties. It also emphasizes the discretion of the adjudicating authority in determining the appropriate penalties based on the circumstances of each case.
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2009 (9) TMI 835
Issues involved: Appeal against order of Commissioner (Appeals) regarding eligibility of Cenvat credit on capital goods u/s Rule 6(4) of Cenvat Credit Rules, 2004.
Summary:
The appellants, engaged in manufacturing cotton and blended yarn, availed exemption under Notification No. 30/04-C.E. from 1-12-04. They received capital goods in March 2005 and took Cenvat credit, which was disallowed by the Department citing Rule 6(4) of the Cenvat Credit Rules, 2004. The original authority confirmed the demand, upheld by the Commissioner (Appeals).
The advocate argued that the appellants intended to avail benefits under Notification No. 29/04 as well, and relied on various tribunal and Supreme Court decisions to support their case. The Department contended that eligibility for credit on capital goods is determined at the date of receipt, and since the appellants had availed full exemption under Notification No. 30/04, they were not eligible for the credit.
The Tribunal held that eligibility for credit on capital goods cannot depend on future intentions of the assessee. The relevant date for determining eligibility is the date of receipt of capital goods. The Tribunal distinguished the case from the Supreme Court decision cited by the advocate, stating that it involved a different scenario. The appeal was rejected concerning the demand of duty and interest, but the penalty was set aside due to the case involving interpretation of the law rather than misstatement or suppression of facts.
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2009 (9) TMI 834
Issues:
1. Application of Circular No. 692/8/2003-CX post passing of Order-in-Original.
2. Valuation of goods using CAS-4 standard.
3. Retrospective application of Circular dated 13-2-2003.
4. Lack of hearing of Departmental representative by lower appellate authority.
Analysis:
1. The judgment revolves around the application of Circular No. 692/8/2003-CX, issued post passing the Order-in-Original. Both parties agree that the original authority did not have the benefit of this circular. The lower appellate authority allowed relief to the respondents based on the valuation of goods using CAS-4 standard, leading to the Department's appeal.
2. The Department argued that the lower appellate authority did not hear the Departmental representative or verify if the submissions conform to the CAS-4 standard. It was contended that the circular issued on 13-2-2003 cannot be applied retrospectively. The respondent's advocate cited a Supreme Court ruling allowing CAS-4 standard application to pending cases related to past periods.
3. The Tribunal, considering the Supreme Court decision in the Cadbury India Ltd. case, acknowledged the permissibility of adopting CAS-4 standard for periods preceding the circular's issuance. However, due to the lack of verification of submissions before the original authority, the impugned order was set aside. The matter was remanded to the original authority for a fresh decision in line with the Circular dated 13-2-03.
4. The judgment highlights the importance of proper verification of submissions and adherence to relevant standards even in retrospective application scenarios. The decision to remand the matter emphasizes the need for a fair and thorough consideration of all aspects, ensuring compliance with applicable circulars and standards in tax matters.
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2009 (9) TMI 833
Time limitation - demand was raised u/r 12 of the CCR, 2002 read with Section 11AB of the CEA, 1944 - Held that: - Although Rule 12 and Section 11AB do not prescribe any period of limitation for issue of demand for recovery of interest, the very same issue stands settled in favor of the assessee by the Tribunal’s decision in Collector of Customs, Madras v. T.V.S. Whirlpool Ltd. [1996 (4) TMI 232 - CEGAT, MADRAS] holding that even when no time limit is prescribed for demand/recovery of interest under the CA, 1962, time limit of six months or five years as the case may be, as provided u/s 28 of the CA, 1962 is applicable to such cases.
The demand for recovery of interest is barred by limitation as it has been raised only in 2005 without any allegation that the assessees were guilty of fraud, suppression, mis-statement of facts etc. with intention to evade payment of duty.
Appeal allowed - decided in favor of appellant.
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2009 (9) TMI 832
Valuation - includibility - whether the Hydraulic testing, repair and maintenance charges of cylinders and rental charges of Chlorine tankers received from parties shall form part of the assessable value? - Held that: - testing, repair and maintenance is not a regular activity carried out prior to clearance. Once such peculiar fact surfaces, testing repair and maintenance charges shall not form part of assessable value of the chlorine cleared through cylinders - appeal dismissed - decided against Revenue.
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