TMI Blog2012 (9) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... see. - E/2604-2607 of 2009 - 1165-1172/2012-EX(BR) - Dated:- 25-7-2012 - Ajit Bharihoke, Rakesh Kumar, JJ. For Appellant: Shri A R Madhav Rao, Adv. For Respondent: Shri R K Verma, AR Per: Rakesh Kumar: The facts leading to these appeals and stay applications are, in brief, as under:- 1.1 M/s. Indian Wood Products co. Ltd. (hereinafter referred to as "IWPCL") having their factory at Rampur Road, Izatnagar, Bareilly and Head Office at Calcutta, manufacture Indian katha (catechu) falling under sub-heading no. 14029040 of the Central Excise Tariff from Khair wood. Besides this, they also imported gambier on payment of customs duty and additional customs duty which is got processed by them through M/s. Bareilly Chemicals Pvt. Ltd. (hereinafter referred to as "BCPL"). In course of processing of gambier, gambier extract which is a catechu like substance and waste liquid containing tannin is obtained. While liquid waste is discarded, catechu like substance (gambier 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judication proceedings the main appellant, M/s. IWPCL pleaded that the imported gambier was got processed by them on job work by M/s. Bareilly Chemicals Pvt. Ltd. (BCPL) in terms of the agreement with them and that transactions between M/s. IWPCL and M/s.BCPL are on principal to principal basis and hence, the duty in respect of the gambier extract, if any chargeable, should be recovered from M/s.BCPL and not from them, as it is M/s. BCPL who are the manufacturer. But this plea was not accepted. 1.3 Against this order of the Commissioner, four appeals nos. E/2004 to 2007/09 along with stay applications have been filed. 1.4 A Misc. application no.E/Misc/374/10 has been filed for hearing of the stay application, which is now dismissed as infructuous as the stay applications have now been taken up for hearing. 1.5 Two more show cause notices - show cause notice dated 4.9.2009 for demand of duty amounting to Rs.3,48,79,994/- for the period from September, 2008 to June, 2009 and show 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 adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of catechu like substance from imported gambier is treated as process of manufacture and the catechu like substance rich in catechin (gambier extract) is treated as excisable product, not exempt from duty, since the process has been carried out by M/s.BCPL on job work basis for M/s. IWPCL, it is M/s.BCPL who would be liable to pay duty and duty cannot be demanded from M/s. IWPCL, that M/s. BCPL were not functioning under the scheme of notification no.214/86-CE and as such, there was no undertaking given by the appellant, M/s. IWPCL to pay duty on gambier extract manufactured by BCPL on job work basis, that transactions between the appellant, M/s. IWPCL and the job worker, M/s. BCPL are on principal to principal basis, which is clear from M/s. IWPCL's agreement with M/s. BCPL, that even if the appellant are held to be liable to pay duty on the gambier extract obtained from imported gambier, they would be eligible for cenvat credit of additional customs duty and Special Additional Customs 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 ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for cenvat credit of Additional Customs Duty and Special Additional Customs duty paid on imported gambier, that the extended period under proviso to Section 11 A(1) has been correctly invoked, and that in view of this, this is not a case for waiver from the requirement of pre-deposit 5. We have carefully considered the submissions from both the sides and perused the records. 6. The un-disputed facts are that the appellants- M/s. IWPCL in their own factory manufacture Indian catechu from Khair wood and Cashew husk. They import gambier on payment of basis customs duty and applicable additional customs and special additional customs duty. There is no dispute that the imported gambier is not processed by M/s. IWPCL but is sent by them to their job worker, M/s. BCPL for processing on job work basis and while processing the imported gambier on job work basis for M/s. IWPCL, M/s. BCPL are not functioning under Notification no.214/86-CE. In the course of processing of imported gambier, 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 thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted gambier can not be denied, as it is not the allegation that the gambier had been imported illicitly without payment of duty. The reasons given by the Commissioner for denying cenvat credit duty having been evaded by M/s. IWPCL on gambier extract by. suppression of facts and non-maintenance of account of inputs under Rule 9 of the Cenvat Credit Rules, 2004, prima facie, appear to be incorrect, as firstly under Rule 9(1) (b) of Cenvat Credit Rules, cenvat credit of central excise duty or additional customs duty paid on any indigenously manufactured or imported goods under supplementary invoice is to be denied to the buyer of the goods who uses the goods as inputs or capital goods only if the duty had become recoverable from the manufacturer or importer on account of non-levy or short levy by the reason of fraud, collusion, willful-mi statement, etc. Secondly, when the appellant, have produced bills of entry showing payment of Additional Customs duty and Special Additional Customs Duty on imported gambier, cenvat credit cannot be disallowed just because the records prescribed under Rule 9(5) and 9(6) of Cenvat Credit Rules had not been maintained, as when M/s. IWPCL were not payi ..... 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