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TMI Blog2001 (5) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ey did not use phosphogypsum in the manufacture of gypsum boards during that period. 3. IGL started availing the benefit of exemption from Central Excise duty, in or around June, 1992 by making use of phosphogypsum, in the manner specified in the exemption notification. IGL has been maintaining the accounts, as indicated in the notification and have been filling their RT-12 Returns, every month and returns indicating the quantity of phosphogypsum actually used. These returns were assessed regularly by the department. 4. For the production of gypsum boards, IGL uses a blend of natural gypsum and phosphogypsum. Natural gypsum is a naturally occurring mineral, which is mined and which is in the form of lumps and dry powder. Phosphogypsum is a waste generated by the phosphatic fertiliser plants. This material is sticky in nature. The industry generating this waste found it difficult to dispose off the huge stocks available with them. It is for this reason and to encourage the usage of the waste in the manufacture of other products, exemption/concession from the levy of Central Excise duty on the finished products, using such waste, in the prescribed percentage, has been pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Applicant that Modvat duty abatement could only be considered, on merits, at the time of final hearing. The Advocate for the Applicant accepted this and agreed to deposit the admitted liability of Rs. 1,38,73,970.44 quantified by them, less Rs. 30 lakhs already paid by them. The Commission accepted that the Applicant met the conditions of admission, laid down under the provisions of Section 32E of Central Excise Act, 1944, and accordingly allowed the Application to be proceeded with under Section 32F(1) of the Central Excise Act, and directed the Applicant, to deposit the admitted duty liability, within 30 days of receipt of the Order, less Rs. 30 lakh already deposited with the Department. The Commission further directed the jurisdictional Commissioner to take necessary steps to adjust the deposited amount of Rs. 30 lakhs, already deposited, towards duty under the appropriate head of account and report compliance to the Commission. 11. On 20-12-2000, the Applicant filed an Addendum Application with the objective to amend/add to the submissions made in their earlier Application. In this Application, the Applicant stated that while quantifying the admitted duty liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note 5/99) was not available to them as the usage of phosphogypsum was less than 25% by weight, as required under the said notification. They had pointed out that they had initially disclosed and accepted the duty liability of Rs. 1,26,60,457/- as payable by them. However, they had amended the Application, before the Commission and had now come up with the revised duty liability to the tune of Rs. 1,61,21,635/-. In other words, they had accepted the production figures and calculations computed by Revenue, as being the basis for arriving at their duty liability, as indicated in the show cause notice. However, they were only seeking abatement, on the following three factors : (a) Abatement of amount from a cum duty price in terms of Section 4(4)(d)(ii) of the Central Excise Act. (b) Abatement on account of 3.8% loss of production, as culls, which are never sold and are ultimately destroyed, with the permission of the department. (c) Abatement on account of eligible Modvat, on the inputs, which would have been consumed in the manufacturing of the quantities of the finished product, as accepted in the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.L.T. 30 (Bom.) in the case of Kirloskar Brothers Ltd. He also submitted a list of 16 judgments, which support his claim, including decision of the Apex Court, as reported in 1995 (77) E.L.T. 511 (S.C.), in the case of M/s. Formica India Division v. CCE. The citation of 16 judgments relied upon are as under :- 1. 1988 (34) E.L.T. 30 (Bom.) at 34 - Kirloskar Brothers Ltd. v. Union of India 2. 1988 (37) E.L.T. 81 at 85 para 12 - Haryana State Electricity Board v. CCE 3. 1993 (65) E.L.T. 300 at 304 para 4 to 7 - Jagraon Machine Tools v. CCE 4. 1996 (81) E.L.T. 563 (Tribunal) = 1994 (3) RLT 855 (T) - Chamundi Steel Re-rolling Mills v. CCE 5. 1993 (49) ECR 126 (T) - Byco International & Others v. CCE 6. 1994 (71) E.L.T. 1049 (T) - Saphire Steels (P) Ltd. v. CCE 7. 1994 (73) E.L.T. 660 (T) - Vivek Re-rolling Mills v. CCE 8. Order No. 105/92-B, dated 30-3-1992 - Technological Systems Ltd. 9. 1995 (78) E.L.T. 127 - Roche Products Ltd. v. CCE, Mumbai 10. 1995 (80) E.L.T. 368 - Apex Steels (P) Ltd. v. CCE, Chandigarh 11. 1996 (13) RLT 287 - PKPN Spinning Mills (P) Ltd. v. CC 12. 1996 (84) E.L.T. 60 - Dalmia Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the cum duty price, in terms of Section 4(4)(d)(ii) of the Central Excise Act, by the Applicant, is tenable or not. (iii) Whether the claim for abatement, on account of 3.8% loss of the production, as culls, which were never sold, as claimed by the Applicant, but were ultimately destroyed, with the permission of the department, is tenable or not. (iv) Whether the claim of abatement on account of eligible Modvat on the basis of inputs, which were consumed, in manufacturing the quantities of finished products, as accepted in the show cause notice, is admissible or not, and (v) The question of immunity to be granted as prayed for in the application. 21. Each of these issues will be dealt with sequentially hereinafter and the findings of the Commission, on each issue, given thereon. The areas are narrowed down to the foregoing, as the Applicants, in their Addendum Application, have accepted the full duty demand in the show cause notice as correct and have only sought relief by way of abatements from the duty demanded, on account of the aforementioned three counts i.e. issues (ii), (iii) & (iv). The first issue, which has arisen in this case, which is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for revision has been preferred after the expiry of the period specified for the filing of such appeal or application for revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding pending within the meaning of this clause." 24. The Applicant's Advocate, during the final hearing, stressed that in terms of Section 32E(1), the assessee may at any stage of "case" relating to him, make an application in such form and in such manner as may be prescribed containing a full and true disclosure of duty liability, which has not been disclosed before the Jurisdictional Central Excise Officer, the manner in which such duty has been derived, the additional amount of Excise Duty accepted to be payable, by him and such other particulars, as may be prescribed to have the "case" settled. 25. Further, he has stressed on the provisions of Section 32F of the Central Excise Act, which sets out the due procedure to be followed on receipt of the Application, by the Settlement Commission. In terms of Section 32F(1), the Settlement Commission, shall call for a report from the jurisdictional Commissioner of Central Excise and on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so put forth before the Commission that the expression "the case" would refer only to the show cause notice could be conclusively inferred by the provision of Section 32-I(2), in terms of which the Settlement Commission has been given exclusive jurisdiction to exercise the powers and perform the functions of any Central Excise Officer, under the Central Excise Act, in relation to the case. It was pointed out, that the Central Excise Officer, has to exercise his powers and perform his functions can do so only, with reference to the duty demanded, in the show cause notice and he cannot do so in respect of any issue/demand of duty, not covered by the show cause notice. It was stressed that Commission's jurisdiction, is co-terminus with that of the Central Excise Officer. 31. In this regard it was further stressed that recoveries of duties under the Central Excise Act, are done by the Central Excise Officer, by resorting to the provisions of Section 11A, of the Act. In terms of Section 11A(1), where any duty of excise, has not been levied or paid, or has been short levied, or short paid, the Central Excise Officer may within 6 months from the relevant date, as it stood at the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlement Commissioner is empowered to re-open the completed proceedings. 35. The expression "any other matter relating to the case not covered by the application" came up for interpretation before the SC in the case of CIT v. Paharpur Cooling Towers Pvt. Ltd. Reported in 1996 (219) ITR 618. The observations of the Apex Court are as follows : "The further words and any other material relating to the case not covered by the application show that the commission take into consideration any other material not covered by the application but it must be one relating to the case before it. It must be remembered that this Chapter XIX-A prescribes a procedure which is a departure from the normal procedure provided by the Act. Once an application is admitted an application can be made only in respect of a pending case - the commission takes over all the proceedings relating to that case which may be pending before any authority under the Act. But this power is confined to the case before the Commission, which means the case relating to the assessment year for which the application for settlement is filed and admitted for settlement - to wit, assessment year 1975-76 in this case". Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23-7-1999. The Applicants, have contended that their sale price, was a cum-duty-price and they should be granted abatement for the duty amount. 41. The Commissioner (Investigation), in his report to the Commission, has taken up the stand, that the Applicant, has followed the practice of maintaining whole sale prices, inclusive of excise duty and as and when the excise duty is levied, price remains constant, but the assessable value is reduced, by the amount of duty payable (calculated on a cum-duty-price). Therefore, he is of the view, that the invoices are issued showing either an amount, or zero, as duty paid. Thus he has taken up the stand, that the price, in the invoice, can be taken as cum-duty-price and duty leviable, calculated and deducted accordingly. However, he has drawn the bench's attention, to the provision of Section 12A and Section 11D(1)of the Central Excise Act. 42. The representative of Revenue, during the final hearing, on 27-2-2001, has stated before the Commission that with regard to the Commissioner (Investigation)'s reference to Section 11D(1) and section 12A, of the Central Excise Act, Revenue does not agree with him. 43. The Applicants h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the figure of 96-97. Further, in this regard, it may be clarified that while working out the resultant production of Gypsum board from the raw materials for charging duty, a production/process loss of 3.8% has already been allowed to M/s. IGL keeping in view the input-output norms furnished by the party under Section 14 to the department in the course of investigation. In view of the fact that production/process loss of 3.8% has also been allowed, there is no ground for allowing any further abatement on account of culls as claimed by the party, to arrive at reduced resultant quantity and duty." This position has also been accepted by the applicant in his submission dated 19-3-2001 in view of the above position there is, in view of the Commission, no justification for allowing any further abatement on this count. 46. The fourth issue, before the Commission, is the question of allowing abatement on account of eligible Modvat on inputs, which have been consumed in manufacturing the quantities of finished products, as accepted in the show cause notice. This issue of Modvat abatement has arisen due to the fact that the Applicant, during the relevant period, of show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per, copper sulphate, starch and foaming agent. Therefore he has concluded that the claim for abatement of Modvat of Rs. 14,07,470/- by the Applicants, is reasonable and should be accepted. 48. The DGAE, in Annexure A, to his letter dated 15-3-2001 before the commission has observed as under : Modvat claims of Rs. 14,07,470 : The officers of this Directorate have examined the calculation arrived at by the Settlement Commission on the basis of documents furnished by M/s. India Gypsum Ltd. It appears that it is based on raw material consumption register and all the material appearing for claim are covered by various duty paying documents. Therefore, the claim of Rs. 14,07,470/- appears to be arithmetically correct. The applicant had relied upon a list of 16 judgments referred in para 18 herein above. He has specifically relied upon the judgment of Bombay High Court 1988 (34) E.L.T. 30 (Bom.) in the case of Kirloskar Brothers Ltd. The sum and substance of para 8 of excerpts therefrom are reproduced hereunder : "We are told that the petitioners had paid excise duty on the compressors fitted in the air conditioners. This fact has not been disputed by Shri Desai, however, stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 57-I, read with Section 11AB of the Act. The provision of Section 11AB were inserted in the Central Excise Act with effect from 28-9-1996 by Section 76 of the Finance Act (No. II) of 1996. We are of the view, that having regard to the facts and circumstances of the case, simple interest @ 10% p.a. should be charged on the amount of wrongly availed exemption, from the appropriate date of, wrong availment till the date of payment of duty. 50. In view of our findings as stated above, the case is ordered to be Settled, in accordance with the provisions of sub-section (7) of Section 32F, by accepting an amount of Rs. 1,61,21,635/- as total duty payable after allowing the permissible deductions as held hereinabove by the Commission. 51. In addition to the total duty liability as stated herein above simple interest @ 10% p.a., from the month of availing inadmissible exemption under Notification No. 60/91-C.E., dated 25-7-1991 will be payable, till the date of payment. We clarify that the interest amount shall be worked out by the Applicants for the inadmissible concession availed of from 13-3-1999 to 23-7-1999 and intimated to the Commission, within 2 weeks of receipt of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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