TMI Blog2010 (3) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory rules, by giving proper opportunity, within a period of three months from the date of furnishing of such bank guarantee and the consequential release of the goods seized, as stated above, however, subject to further right of appeal, if any, available to the petitioner against the said order. - iii) The adjudicating authority shall, without being influenced or untrammeled by the contents of this order, independently decide the issue involved in the matter on merit including the plea of the petitioner that the petitioner company is not liable for any action under the CENVAT Credit Rules. - 2564 of 2010 and 1 of 2010 - - - Dated:- 19-3-2010 - M/s.Tejas Networks Ltd., Rep. by its A.Narayanachar, Office Manager, Abhisekhapakkam Revenue Village, RS No.150/2, Abhisekhapakkam Road, Thavalakuppam Junction, Puducherry 605 007. Versus 1. The Commissioner of Central Excise, No.1, Goubert Avenue , Puducherry - 605 001. 2. Assistant Commissioner of Central Excise (Prev.), No.1, Goubert Avenue , Puducherry - 605 001. 3. Supdt. of Central Excise, Office of the Asst. Commissioner of Central Excise Division, Puducherry. CORAM: The Hon Ble Mr.Justice P.Jyoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the company had availed credit on the components which could not be considered as inputs for the manufacture in or in relation to the final products and the said inputs were received only for the purpose of selling to the suppliers and therefore, the credit taken is not appropriate. 5. It is stated that the total excise duty paid by the petitioner company between April, 2009 and December, 2009 is Rs.9.17 crores and the petitioner being one of the biggest duty payer, requested the officials of the respondents to release the goods and the petitioner is willing to freeze the credit to the extent of input credit availed on material worth Rs.5,97,71,601/- and in spite of it, the respondent officials have not heeded to the said request. In those circumstances, it is stated that the components would be badly affected causing hardship to the end customers, if the petitioner is made to wait till the adjudication process is completed. 6. The Mahazar is challenged on various grounds including that the seizure is contrary to Rule 24 of the Central Excise Rules, 2002 since such seizure is possible only in respect of goods which are liable to excise duty, that the seizure was effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the CENVAT Credit Rules provide for the recovery of wrong credit and imposition of penalty and is independent of Central Excise Rules, 2002 and therefore, the stand of the petitioner that the seizure can only be effected under section 24 of the Central Excise Rules is not correct. 9. It is stated that a show-cause notice would be issued and adjudication process would be commenced and it is only after completion of the said process the goods will be confiscated along with the recovery of wrong credit. It is stated that the petitioner unit at Bangalore which was having the facility of manufacturing PCB assembly was closed and the stocks were transferred to the petitioner unit at Puducherry and the Puducherry unit availed the credit on the same. It is stated that the Puducherry unit procures assembled PCB boards and it does not have the facility of assembling PCB boards from bare PCB and that part of Cenvated components and bare-board PCBs. received from Bangalore unit lying in the Puducherry unit were sold to its suppliers of assembled PCBs. and therefore, the components were received only for the purpose of trading. 10. It is stated that as per section 14 of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any purpose whatsoever. Explanation 2. Input include goods used in the manufacture of capital goods which are further used in the factor of the manufacturer but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. while defining the term, input, more particularly, the words input used in relation to the manufacture of final products, the Supreme Court in MARUTI SUZIKI LTD. v. CCE [(2009) 9 SCC 193], in the context of generation of electricity, has clearly held that to the extent of clearance of excess electricity outside the factory either to joint ventures or vendors or grids, the same is not admissible for CENVAT credit, in the following lines: As stated, the definition is in three parts, namely, specific part, inclusive part and place of use. All the three parts are required to be satisfied before an input becomes an eligible input. It may be noted from the CENVAT Credit Rules of 2004 vis-`-vis the CENVAT Credit Rules of 2002 that the word for in the inclusive par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned Mahazar, while it is the case of the petitioner company that the petitioner company in its unit at Puducherry is receiving the components for the purpose of manufacturing multiplexes by using other local components like, cable assembly and chassis, it is the specific case of the respondent department which is stated to have been concluded based on certain verification of intelligence that from the petitioner unit at Bangalore which has since been closed, certain components in respect of which CENVAT credit was availed, were transferred to the petitioner unit at Puducherry for the purpose of transferring them to third parties to effect manufacturing process, since, as per the statement of officials of the petitioner, there is no manufacturing facility available in the petitioner unit at Puducherry and therefore, the conduct of the petitioner should be treated as trade activity which is in violation of the CENVAT Credit Rules, and it is for the said violation, seizure has been effected as a preliminary measure to be followed by a proper adjudication. It is stated by the respondents in the counter affidavit that during the time of adjudication process, sufficient opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. With regard to averments made in para-(xvi) of the Affidavit under Counter, that the department have no objection to release the seized components subject to their execution of Bank Guarantee as prescribed, to safeguard the revenue in this case. Regarding the petitioners prayer that the goods can be released on their undertaking that they will keep CENVAT credit to the extent of Rs.5,97,71,601/- as unutilized, cannot be accepted since there is no guarantee to safeguard the revenue interest if the disputed amount itself is given as security. 17. It is the case of the senior counsel for the petitioner that the petitioner is one of the largest excise tax payer, which fact is not actually disputed by the respondent department, and the petitioner is having a continuous account and therefore, the CENVAT credit of the petitioner which is available with the respondent, could be directed not to be utilized by the petitioner to the extent of the value of goods seized viz.,Rs.5,97,71,601/- subject to which the goods can be released. On the other hand, it is the vehement opposition by Mr.Udhakumar, learned counsel appearing for the respondents that such undertaking is not going to be in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-rule(1), sub-rule(2), sub-rule(3) or sub-rule(4) shall be issued by the Central Excise Officer following the principles of natural justice. 19. In the absence of any power of seizure pending confiscation proceedings under the CENVAT Credit Rules, 2004, the respondent department has effected seizure under the impugned Mahazar in accordance with the powers under Rule 24 of the Central Excise Rules, 2002 which is as follows: Rule 24. Power to detain or seize goods. If a Central Excise Officer, has reason to believe that any goods, which are liable to excise duty but no duty has been paid thereon or the said goods were removed with the intention of evading the duty payable thereon, the Central Excise Officer may detain or seize such goods. and that is also the admitted case as seen in the impugned order itself wherein it is expressly sated that by virtue of the powers under Rule 15 of the CENVAT Credit Rules,2004 read with Central Excise Act,1944, the impugned Mahazar has been issued by effecting seizure. 20. Section 34 of the Central Excise Act, 1944 empowers, after adjudication, the adjudicating officer to give an option to the owner to pay fine in lieu of confiscation. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is held in Birla Yamaha v. Collector of Central Excise, Mirat, 1996 (12) RLT 626 1996 (83) ELT 396 that when there is a credit available in the Modvat account that can be utilized to pay the duty in pursuance of the demand and pre-deposit of duty which can also be made by debiting in RG 23A Part II, subject to the final orders of the Appellate Authority. We are in respectful agreement with the said principle and therefore hold that payment of amount by a debit entry in RG 23A Part II is in compliance and also amounts to payment by cash. 23. That decision was taken for the purpose of deciding that there was no willful disobedience of the order passed by the Division Bench and not in the context of deciding the question as to whether such retention of Modvat credit is a sufficient security and therefore, the judgment relied upon by the learned senior counsel for the petitioner for substantiating his contention that the petitioner can be directed to keep CENVAT credit unutilized by taking it as a sufficient security pending adjudication proceedings is not helpful. 24. On the prima facie case made out against the petitioner, in the opinion of the department, seizure has been ef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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