TMI Blog2012 (10) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... e bonded store room if any of the “Induction Furnace Unit”. The assessees have also produced evidence to show that on earlier occasions also they were issuing more than or equal to 200 MTs on a single date. Their claim that when they issued the goods for captive consumption on 31-8-1997, they were under a bona fide belief that they were entitled to the benefit of exemption merits acceptance. - demand is barred by limitation – in favor of assessee - E/416/2004 - 1127/2011 - Dated:- 7-10-2011 - Ms. Jyoti Balasundaram, Dr. Chittaranjan Satapathy, Shri M. Veeraiyan, JJ. REPRESENTED BY : Shri T.H. Rao, SDR, for the Appellant. S/Shri R. Raghavan and M. Kannan, Advocates, for the Respondent. [Order per : Jyoti Balasundaram, Vice-President]. The issue in dispute in these appeal is as to whether exemption for captive consumption under Notification No. 67/95-C.E., dated 16-3-1995 is available to 291.3 MTs of ingots cleared by the assessees on 31-8-1997 but used in the manufacture of final products viz. CTD bars after opting out for compounded levy scheme from 1-9-1997. 2. We have heard both sides. We agree with the assessees that the demand raised in the show-cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11AB is not sustainable in the absence of suppression of facts. Hence, the penalty imposed under Section 11AC and order for the recovery of interest under Section 11AB is not maintainable in law. In the absence of intention to evade payment of duty, penalty imposed under Rule 173Q is also not sustainable. 4. From the above, it is seen that the lower appellate authority s decision is based on his finding that the impugned goods were cleared on 31-8-1997 and that the same were removed from the induction furnace unit area to rolling mill area. He has also observed that the goods lying in the yard at the rolling mill area has to be treated as work in progress or partially processed goods . He has also observed that the department verified RG-1 Register and found it in order. 5. I am constrained to observe that the above findings of the lower appellate authority on which his decision is founded are not borne out from the facts of the case. Firstly, there is no basis for his finding that the department verified RG-1 Register and found the same to be in order. On the contrary, it is clearly stated in para-8 of the show cause notice that the impugned goods comprising of 216 MTs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997. As such, all assessees were aware of the change in the scheme of levy of excise duty on the impugned goods at least one month in advance. The Notification No. 50/97 dated 1-8-1997 made it very clear that the Ingots manufactured or produced prior to first day of September, 1997 but cleared on or after that date from an induction furnace, shall have a different duty rate of Rs. 600/- per MT. The Notification No. 30/97 dated 1-8-1997 also made it clear that such Ingots manufactured or produced prior to 1-9-1997 but cleared on or after that date would not be covered under the compounded levy scheme. In view of the fact that the compounded levy scheme as well as the Notifications were issued on 1-8-1997 and the new scheme was brought into force on 1-9-1997, after one month, all assessees had knowledge that they are required to pay duty of Rs. 600/- per MT on Ingots manufactured or produced prior to 1-9-1997 if it is cleared on or after that date. As such, it was within the full knowledge of the respondent-assessees that they have to pay duty @ Rs. 600/- per MT on Ingots manufactured prior to 1-9-1997 but cleared on or after that date. The impugned goods were manufactured prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consequently, as provided under the Notification No. 50/97 cited above, the impugned goods have to discharge duty liability at the special rate made applicable to Ingots manufactured before 31-8-1997 but cleared on or after 1-9-1997. 10. The claim of the respondents for non-application of the extended period is not at all tenable considering the facts of this case and the legal provisions in force. As stated above, the entry in the RG-1 Register showing higher clearance of 291.13 MTs on 31-8-1997 including the clearance which took place on subsequent dates accompanied by non-payment of duty at the special rate made applicable to the impugned 216 MTs ingots cleared on or after 1-9-1997 clearly brings out the intention of the respondents to evade payment of duty. 11. The Courts and Tribunals have held that where there is disclosure of the entire facts by the assessee then the extended period of limitation would not be applicable. There is no evidence produced by the respondents in this case, that they have disclosed to the proper officer having jurisdiction over their factory that they have indicated a higher clearance figure for 31-8-1997, though the actual clearance has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the 291.13 MTs on 11-8-1998, in-a letter addressed to the respondents which is almost a show cause notice issued in the absence of all the details not forth-coming from the respondents. Only afterwards the respondents have furnished further records and details and while issuing the proper show cause notice on 22-3-2001, the department has fairly allowed them the benefit of duty exemption on a quantity of about 75 MTs consumed on 31-8-1997 and that only a reduced duty amount of Rs. 1,29,600/- has been demanded within the available extended period of five years of limitation on clearances actually made on 1-9-1997, 2-9-1997, and 3-9-1997. 13. In view of my findings as above, I hold that the impugned order in appeal based on incorrect findings and contrary to the facts cannot be sustained. I set aside the same and restore the order in original. The department s appeal is allowed. The cross-objection filed by the respondents is dismissed. Sd/- (Dr. Chittaranjan Satapathy) Technical Member The following Difference of Opinion is placed before the Hon ble President for resolution by a third Member :- Whether the demand raised against the assessees in the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise Rules, 1944. (h) Commissioner (Appeals) has set aside the said order of the original authority. 16. While hearing the appeal, there was difference of opinion, which was formulated as follows :- Whether the demand raised against the assessees in the show-cause notice, dated 22-3-2001 is barred by limitation, as held by the learned Vice-President or Whether the extended period of limitation is available to the department, as held by the learned Technical Member. 17. Learned SDR supporting the opinion that the extended period of limitation is available, made the following submissions :- (a) The respondents has no installed capacity to use the entire quantity of MS Ingots on a single day and they could at the maximum utilize 75 MTs only. Their previous records also show use of MS Ingots only to that extent. (b) Referring to Explanation to Rule 9(2) of the Central Excise Rules, he submits that the removal for captive consumption should have been immediately before use only. The respondents have, in their letter dated 28-6-1999, which was with reference to letter dated 11-6-1999 of the Superintendent of Central Excise, has submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be removed only on the said date. (e) Since audit was aware of the relevant details as seen from communication dated 11-8-1998 issued in pursuance of audit objection, the show-cause notice issued in 2001 should be held to be time-barred. In this regard, he also relies on the decision of the Hon ble Supreme Court in the case of Commissioner of Central Excise, Vadodara-II v. Sotex reported in 2007 (209) E.L.T. 9 (S.C.) wherein it has been held that when the Revenue already had knowledge of all the relevant facts, extended period cannot be invoked. 19. In his rejoinder, learned SDR submits that the respondents gave the relevant bills only on 28-6-1999 and, therefore, the show-cause notice has been rightly issued invoking the extended period of limitation. 20. I have carefully considered the submissions of both sides on the point of difference arising out of the order proposed by the Hon ble Vice-President and that of the Hon ble Technical Member. 21. I find that the Compounded Levy Scheme became operative from 1-9-1997 in pursuance of Notification No. 30/97-C.E. (N.T.), dated 1-8-1997. The dispute relates to 216.00 MTs of MS Ingots , which according to the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the factory day to cover removal of goods consumed within the factory in a continuous process; (ii) the 13[Commissioner] may having regard to the nature of the goods manufactured or frequency of removals permit an assessee or a class of assessees not to enter the rate and/or the amount of duty on the 14[invoices] 15[***] under which such goods are removed from the factory; 16[(iii) * * * *] 17[(iv) in respect of removal of any goods after 6 O clock in the afternoon on the day preceding the date appointed for the presentation of the annual or any Supplementary Budget of the Central Government to Parliament 18[or for the introduction in the House of the People of any Finance Bill or any Bill for the imposition or increase of any duty], the provisions of sub-rule (1) of rule 224, shall apply; 1[(v) * * * *]; (vi) where any correction, other than one relating to the date or the time of removal of the goods or to the description of the goods (including the variety of goods, the number and description of packages and the identification marks thereon), becomes necessary in any 2[invoice] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-1997, 2-9-1997 and 3-9-1997. The letter dated 28-6-1999 does not refer to removal on the said dates but only refers to quantity taken for production . Undisputedly, the assessee was manufacturing MS Ingots in the Induction Furnace Unit and other products in the Roll Mill Area . There is no indication about actual date of removal from the bonded store room if any of the Induction Furnace Unit . The assessees have also produced evidence to show that on earlier occasions also they were issuing more than or equal to 200 MTs on a single date. 23. All the above facts and circumstances indicate that their claim that when they issued the goods for captive consumption on 31-8-1997, they were under a bona fide belief that they were entitled to the benefit of exemption merits acceptance. Therefore, extended period of limitation cannot be invoked. 24. In view of the above, I prefer to concur with the opinion of the Hon ble Vice-President. 25. The file is returned to regular Bench for final decision in view of the foregoing findings. Sd/- (M. Veeraiyan) Technical Member MAJORITY ORDER 26. The appeal of the Revenue is rejected. (Pronounced in court on 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
