TMI Blog2011 (4) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate, for the Appellant. Shri N. Anand, DR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral)]. Heard the learned Advocate for the appellants and the DR for the respondent. 2. This appeal has been heard pursuant to the order of remand dated 24-8-2010 passed in C.E.A. No. 89 of 2008 by the Hon ble High Court of Punjab and Haryana. 3. The appellants herein were engaged in the manufacture of goods namely, HDPE woven sack/bags, HDPE cover sheets, HDPE tape and HDPE fabrics classifiable under Tariff Heading No. 3923 and 3920 of the First Schedule to the Central Excise Tariff Act, 1985. In the course of the audit of the appellant s records in relation to the period from April 2002 to March 2002, it was observed that from 10-9-2001 to 22-11-2001, the appellants had received back 2616 rejected LDPE cap covers valued at Rs. 1,18,27,985/- involving duty of Rs. 18,92,478/- from their branch offices. Those goods were manufactured by the appellants. The process of the manufacture involved joining of ends of bought out LDPE film received from M/s. Essen Multipack Ltd., Rajkot by heat and press treatment and fixing of eyelets. At the time of receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AC, penalty had to be at the rate mentioned therein . Having observed as above, the Hon ble High Court has directed thus - In view of the above, there being patent error in the order of the Tribunal, the order to the extent of reducing penalty to Rs. 1 lakh is set aside. The matter is remanded to the Tribunal for fresh decision on merits on the issue of penalty in accordance with law . 6. The only issue, therefore, to be decided in this matter at this stage is relating to the penalty under Section 11AC. It is to be seen whether the penalty is justified in the facts and circumstances of the case or not. 7. Learned Advocate for the appellants submitted that the imposition of penalty was in relation to the issue pertaining to the admissibility of the cenvat credit in respect of inputs utilised in repairs of the rejected goods which were cleared at the same price. Drawing our attention to Rule 16 of Central Excise Rules, 2002, learned Advocate for the appellants submitted that the authorities below erred in applying the provisions of sub-rule (2) of Rule 16 when, in fact, the authority ought to have applied the provisions of sub-rule (1). On the other hand, the DR submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmity in the impugned order where the input credit was denied on the ground that the inputs are used only for repair purposes . 11. Undisputedly, the appellants did not challenge the order any further. Obviously, therefore, the said order on merits attained finality. 12. As regards the issue of suppression and bar of limitation, the adjudicating authority had clearly held thus - The noticee has tried to justify his credit on the ground that these invoices were used for repair of the rejected goods which cleared on payment of duty. I observe that in this regard, the noticee is trying to adopt two different standards for the same job. The duty demand in respect of the goods received during the period 10-2-2001 to 22-11-2001 was challenged by them on the ground that it was a repair work and the same job for subsequent period cannot be termed as manufacture in terms of sub-rule (2) of Rule 16, if the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the pay duty on cenvat credit taken and in any other cases he is required on the date of removal. In this case, the noticee has already paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , reconditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take Cenvat credit of the duty paid as if such goods are received as inputs under Cenvat Credit Rules, 2002 and utilise this credit according to the said rules. Apart from the fact that the rule nowhere provides that the concept of repairs having been included in this provision, it further specifically provides that the utilisation of such cenvat credit has necessarily to be in accordance with the Cenvat Credit Rules. The Cenvat Credit Rules nowhere permit utilisation of the credit when the final product is exempt from payment of duty or the process undertaken does not amount to manufacture. Besides, Rule 16(1) which is confined to the activity remaking, refining, reconditioning . It also use an expression for any other reason . However, the same has to be read without forgetting principle of ejurteim generis. 16. As far as sub-rule (2) of Rule 16 is concerned, it covers all the situations to which sub-rule (1) is not applicable. It provides that if the process to which the goods are subjected before being removed does not amount to manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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