TMI Blog2013 (3) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 58/2003. Both the conditions require certain overt acts on the part of the manufacturer. The manufacturer not having taken these steps; not having supplied the documents, cannot be said to have been carrying any bona fide belief that it was protected under Notification No. 58 of 2003. Regarding Cenvat Credit - if the Department holds that the manufacturer is required to pay duty at a certain rate, it cannot in the same breath contend that the manufacturer would not be entitled to avail CENVAT credit on the inputs used in manufacturing such goods. - To that extent decided in favor of assessee. While deciding the issue in favor of revenue, an option given to assessee to pay duty with interest within the stipulated time on which the manufacturer would avail of the option of 25% of the penalty. - Tax Appeal No. 2435 of 2009 with Tax Appeal No. 446 of 2011 - - - Dated:- 2-2-2012 - Akil Kureshi and Sonia Gokani, JJ. Shri Darshan M. Parikh, for the Department. Shri Hardik P. Modh, for the Assessee. [Order per : Akil Kureshi, J. (Oral)]. - Tax Appeal No. 2435 of 2009 has been filed by the Department against one Prem Fabricators. Whereas, Tax Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 repelled the opposition of the manufacturer and passed the following order :- 2. In view of the above discussion and findings in foregoing paras, I pass the following order : ORDER (i) I confirm and demand the Central Excise duty of Rs. 89,80,600 (Rupees eighty nine lakhs eighty thousand six hundred only) under proviso to Section 11A(1) of the Central Excise Act, 1944. (ii) I order that the duty as confirmed at (i) above shall be recovered along with interest at appropriate rate under Section 11AB of Central Excise Act, 1944. (iii) I impose a penalty of Rs. 89,80,600/- (rupees eighty nine lakhs eighty thousand six hundred only) on M/s. Prem Fabricators, Ahmedabad under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. (iv) However, as penalty under Section 11AC of the Central Excise Act, 1944 has been imposed, I refrain from imposing a separate penalty on them under Rule 25 of the Central Excise Rules, 2002. 6. In his order-in-original, the Commissioner noted that the manufacturer did not fulfil two essential conditions of Notification No. 58/2003-C.E. and that therefore, was not entitled to any exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the following questions for our consideration, which we adopt as substantial questions of law for deciding the Department s Appeal. (A) Whether the CESTAT was right in waiving the penalty imposed under Section 11AC of the Central Excise Act, 1944 contrary to the judgment of Hon ble Supreme Court in cases of Union of India v. Dharamendra Textile Processors, reported in 2008 (231) E.L.T. 3 and Union of India v. Rajasthan Spinning Weaving Mills, reported in 2009 (238) E.L.T. 3 (S.C.) ? (B) Whether in law the CESTAT was entitled to come to a different conclusion regarding imposition of penalty, having accepted the finding regarding the wilful mis-statement by the assessee with intent to evade payment of duty? (C) Whether CESTAT was right in permitting CENVAT credit to the assessee? 9. On 27th October 2010, Division Bench of this Court had issued notice for final disposal, pursuant to which, learned counsel Shri Modh appeared for the manufacturer and opposed the appeal of the Department. 10. Against the same judgment of the Tribunal, the manufacturer also has approached us in Tax Appeal No. 446 of 2011. Such appeal is directed against the Tribunal s order con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11A and Section 11AC use the same expressions : ...by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty... . In other words, the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under Section 11A(1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessee it was also submitted that Section 11A and 11AC not only operate in different fields but the two provisions are also separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, in the Terms Conditions, the CWC has clearly mentioned that rate shall be quoted by the contractor for supplying at site and is inclusive of all necessary applicable taxes. Further, it is also stated that no water and electricity will be supplied by the department to the contractor/supplier. 11. The second work order, issued on the same date 18-10-2006, which is made for supply of trusses. In this order also, the appellants have been requested to start the supply immediately and ensure completion of supply as per programme mentioned in Terms Conditions. In this case also, the description of the items of works starts with the words Supplying at site, steel work in built up square and rectangular closed hollow sections structures . In this case also, in Terms Conditions, it has been stated that all materials will be received at site as per specifications and in sound condition. 12. When we look at the work orders and ARE-1 and invoices, they are in harmony with each other. Nowhere, the work order or contract speaks of fabrication at site. The order is for supply and not for fabrication at site. The certificate issued by the CWC is also carefully worded and certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Range concerned within a period of one month from the date of removal of such goods from the place of manufacture or production. 19. So far as this finding of the Commissioner is concerned, there is no dispute raised even by the manufacturer. Tribunal also came to a clear finding that the manufacturer did not fulfil these two conditions. Question, therefore, arises is whether the manufacturer can be said to be under bona fide belief that it was covered under Notification No. 58/2003-C.E. and was therefore not required to pay any excise duty. 20. To our mind, no such case emerges. The Commissioner had in terms come to the conclusion that the manufacturer had cleared the goods without payment of duty with clear intention to evade the excise duty. The Tribunal, without elaborating on this issue, granted benefit of doubt holding that the manufacturer had a bona fide belief that it was eligible for exemption under Notification No. 58/2003-C.E. 21. To our mind, the Tribunal missed two vital aspects of the matter in coming to such a conclusion. Firstly, the Tribunal gave no specific reasons why it formed the opinion that the manufacturer had bona fide belief of being covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer pays entire duty with interest within 30 days from the date of receipt of this order and also deposits within the same time 25% of the penalty, the penalty shall stand reduced to 25% of that imposed by the Commissioner. At this stage, counsel for the manufacturer submitted that large amount of CENVAT credit would be available to the manufacturer for payment of such duty. Though, we would not like to link the issue of availability of CENVAT credit for payment of such duty, we are of the opinion that if there is any CENVAT credit admittedly available to the manufacturer, benefit thereof cannot be denied for such purpose. In peculiar facts of this case, therefore, the manufacturer shall indicate to the Commissioner concerned the total amount of CENVAT credit available for payment of duty in question alongwith necessary documents in support thereof within a week from today. Upon receipt of such communication, the Commissioner, on prima facie consideration of such material, is of the opinion that such amount or any part thereof of CENVAT credit is available for payment of the duty in question, he would communicate the same to the manufacturer within ten days thereafter. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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