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TMI Blog2012 (9) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... ier extract) which is rich in catechin, is sent back to the IWPCL. A part of the gambier extract is dried and sold as powder and remaining quantity is blended with Indian catechu. Indian catechu (katha) covered by subheading no. 14049050 is fully exempt from excise duty under notification no.76/86-CE dated 10.02.86. With effect from 1.3.2003, notification no.76/86-CE dated 10.02.86 was amended by notification no.16/03-CE dated 1.3.2003 by which the entry against serial no.6 of the table to the notification "katha (catechu)" was substituted by "katha (catechu) excluding Gambier". The department was of the view that since katha being manufactured by IWPCL is fully exempt from duty, they are liable to pay duty on Gambier extract, the catechin like substance, obtained by processing of imported Gambier, which is either sold as such or is used for blending with Indian catechu. It is on this basis that two show cause notices were issued to IWPCL-- show cause notice dated 30.05.2008 for demand of duty to the tune of Rs. 19,78,93,746/- in respect of clearances of gambier extract either for captive consumption or for sale as such during the period from May, 2003 to November, 2007 and show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notice dated 16.06.2010 for duty demand amounting to Rs.3,51,96,410/- for the period July, 2009 to March. 2010 along with interest and also for imposing penalty were issued, which were adjudicated by the Commissioner of Central Excise, Meerut-II by a common order-in-original no. 16/COMMR/Meerut-II/2010/11 dated 11.1.11 by which - (a) duty demands of Rs.19,78,488/- and Rs. 1,21,20,705/- were confirmed along with interest on this duty under Section 11 AB, (b) penalty of Rs.2,40,99,193/- was imposed on M/s. IWPCL under Rule 25 of the Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944; and (c) while penalty of Rs.10 Lakh each was imposed on Shri K.K.Mohta and Shri K.K.Damani, penalty of Rs.5 Lakh was also imposed on Shri N.H. Agarwal under Rule 26 of the Central Excise Rules, 2002. Against this order of the Commissioner, appeals nos.E/1051 to 1054 of 2011 along with stay applications have been filed. 2. Heard both the sides in respect of stay applications. 3. Shri A.R. Madhav Rao, Advocate, ld. Counsel for the appellant, pleaded that the main appellant, M/s. IWPCL manufacture blended Indian katha obtained by blending Indian katha manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Duty paid on the imported gambier and the quantum of cenvat credit available is more than the duty, if any, payable, that the duty demands are highly inflated, as while the value of gambier extract obtained by the processing of imported gambier is about Rs.93/- per kg., the duty has been demanded by taking its value as Rs.293/- per kg., that the show cause notice dated 30.05.2008 demanding duty for the period May, 2003 to November, 2007 period has been issued by invoking extended period of limitation under proviso to Section 11 (1), that extended period under proviso to Section 11 A(1) is not available to the department, as nothing has been concealed by the appellant, that the appellant are in the business of manufacture and sale of katha since 1920 and on 5.5.2000, the officers of DGCEI had visited the appellant's factory and drawn samples of various products including Gambier extract for testing and thereafter inquiry had also been conducted, that the appellant vide letter dated 14.3.2001 had provided the required information to the department with the figures of clearances of finished products as well as raw materials purchased, that in view of this, neither extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a catechu like substance rich in catechin (gambier extract) and a waste product-cutch (tannin) is obtained. Gambier extract is sent back by M/s.BCPL to M/s.IWPCL. The appellant have produced their agreement with M/s.BCPL and there is no dispute that this agreement was extended from time to time. On perusal of this agreement, it is seen that there is nothing in this agreement from which it could be said that the transactions between M/s.IWPCL and M/s.BCPL were not on principal to principal basis as there is nothing in this agreement nor is there any independent evidence indicating that M/s. BCPL was under the control of the appellant, in any manner. It is settled law that when a principal manufacturer gets his goods manufactured from a job worker on job work basis and the transaction between them are on principal to principal basis, it is the job worker who would be liable to pay duty not the principal manufacturer. Therefore, we are of the prima facie view that duty demands against M/s. IWPCL are not sustainable and accordingly, there would be no question of imposition of any penalty on them or on their Chairman, Executive Director or Manager. 7. We also find that while in the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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