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TMI Blog2013 (9) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... the exempted product on the ground that common inputs were being used in the manufacture of the dutiable as also the exempted products. The Commissioner vide his impugned order has accepted the assessee's contention that corrugated boxes were not being manufactured by them but was manufactured by M/s. Labh Packaging on job work basis. The paper Board for the said goods was being directly delivered to M/s. Labh Packaging and the final product corrugated boxes were also being cleared directly from their premises to the appellant's customers. No Modvat credit was ever availed by the appellant in respect of the above. Accordingly Commissioner dropped the demand of Rs. 3,33,657/-. 3. The adjudicating authority also accepted the appellant's plea that printed labels were being manufactured by them on their own behalf and also on job work basis. Accordingly he has held that the goods which were cleared under job work will not attract the provisions of Rule 57CC. He has accordingly, only confirmed the demand in respect of the printed labels and advertising material cleared by the appellant on their own behalf. 4. Revenue is aggrieved with the dropping of demand on two accounts and appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear from the statement of two of their customers, will have no bearing on the final outcome. 6. Learned DR submits that the impugned order has been passed in de novo proceedings when the matter was earlier remanded by Tribunal. The Tribunal's remand was on the limited issue that there was no machinery to recover the 8% amount under Rule 57CC, which has been introduced with retrospective effect vide Section 82 of Finance Act, 2005. As such Tribunal remanded the matter to the Original Adjudicating Authority to re-determine the amounts and order recovery as per the law. As such it is the contention of the Revenue that the Commissioner should not have gone to the merits of the case afresh and it was only for the limited purpose of re-determining the amounts. 7. Countering above argument learned advocate submits that the Tribunal's order cannot be read into a restricted manner. The matter was remanded for re-determining the amount as per the law, which means that the Commissioner was to re-adjudicate the matter. We fully agree with the above contention. Re-determining the amount does not mean only quantifying the amount without otherwise deciding the assessee's liability to the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed. Therefore and also in view of the fact that the CERA audit party had conducted audit of their records for the aforesaid period but did not raise any objection regarding non-maintenance records as required under rule 57CC, the entire demand relating to the period October, 1996 to July, 1998 has to be held to be barred by limitation under the provisions of Section 11A of the Central Excise Act, 1944. However, since I have decided the matter on merits as above and held that the job work clearances made during the entire period of demand are not liable to payment of amount @ 8% and that the assessee had themselves accepted their liability to pay the amount @ 8% on the clearances of printed labels and other items made on their own behalf during the entire period, I hold that the question of limitation is not relevant." 9. As is seen from the above there is a clear finding by the adjudicating authority that no suppression with intent to evade duty can be attributed to the appellant. However the Commissioner has not granted the benefit of limitation to the assessee on the sole ground that they have volunteered to pay the demand. We do not agree with the above reasoning of the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had not taken Modvat credit on other inputs such as white paper, corrugation gum and pasting gum. Since there is atleast one common input on which Modvat credit has been taken and no separate records have been maintained in terms of the provisions of Rule 57CC, it would naturally follow that an amount of 8% of the price charged for such sale mould be recoverable in terms of Rule 57CC. 2. The adjudicating authority has erred in not confirming the demand of Rs. 41,61,676/- by holding that the corresponding printed labels had been manufactured on job work basis inasmuch as Rule 57CC does not make any distinction between goods manufactured and cleared on assessee's own account and goods manufactured and cleared on job work basis. The said rule only stipulates that in the case of Modvat credit being taken on common inputs used in the manufacture of dutiable and exempted final products and separate records for such inputs not being maintained then the amount @ 8% has to be paid by the manufacturer. In the instant case, assuming that the manufacture has been undertaken on job work basis as observed by the adjudicating authority, the final products would be exempted under the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery under Rule 57CC. In this context, the CEGAT has ruled that the machinery to recover such amount had been introduced with retrospective effect. In this background, the CEGAT remanded the case back for the limited point of redetermination of the amount. However, the adjudicating authority has not restricted to the issue of re-determination of amount but has gone into new aspects and merits of the case. The merits of the case stand settled inasmuch as the CEGAT has not directed fresh adjudication on the grounds of merits of the case. Thus, the adjudicating authority has gone beyond the purview of the CEGAT's order. 12. The Committee, therefore, under the provisions of Section 35E(1) of the Central Excise Act, 1944 directs the CCE, Ahmedabad-II to apply in CESTAT for correct determination of the following points arising out of the aforesaid Order-in-original. (i) Whether the adjudicating authority is justified in not confirming the demand of amount of Rs. 44,95,333/- under the provisions of Section 11(A) of Central Excise Act, 1944 read with Rule 57CC of Central Excise Act, 1944 along with interest under Section 11AB of Central Excise Act, 1944 read with Rule 6 of Cenvat Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or paper board labels both of which are exempted. It is in the case of advertising material or paper or paper board labels that the dispute has arisen initially when the investigation was being conducted. In the statement dated 5-3-2001, Shri G.R. Thakore, partner had stated that no statutory records including Form IV register were maintained. At the same time, he also submitted that the private records were maintained for receipt and input used in the exempted final product for the period from 1998 to 2000. Subsequently, in his statement dated 21-4-2001, Shri Thakore stated that private registers were maintained in the form of summary job work register and such register for the period 1996-1998 would be produced within a week's time. It was also stated that most of the exempted products were manufactured by utilizing the materials supplied to them by principals and only in rare cases, negligible quantity of input was purchased by them. Subsequently, in his statement dated 5-10-2001, Shri Thakore admitted that the production of printing ink was not shown in the RG-1 register. When the Range Supdt. had written a letter to the assessee, the assessee had replied on 24-11-2000 to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of purchase invoices and month-wise printed labels statement for each year from 1996-1997 to 1997-2000. 19. In the statement of job work clearance for the year 1996-1997, the appellants have shown the quantity of required material and quantity supplied by the parties. It is noticed that in majority of the cases, the printing ink was not supplied by the party. In some of the cases, paper was also not supplied. Oil was also included as one of the materials and it is also noticed that this was also not supplied by majority of the parties. Further, it was also noticed that the oil and printing ink in substantial quantities were utilised from their own stock. In the same year, the total quantity of paper and paper board purchase was 12742.6 kgs and 195 kgs of oil on which Modvat Credit was taken. The total quantity used from their own stock during the year was 14964 kgs of paper and paper board, 692 kgs of printing ink and 195 kgs of oil. Thus, it can be seen that even according to the statement submitted by the appellant themselves, the quantity used from the own stock in respect of paper and paper board and printing ink was more than what was required for manufacture on job w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t so even impliedly." On the other hand, the statement of two parties and analysis of statement submitted by the parties themselves show that there is no proper accountal as required under the law in respect of inputs used in exempted goods as well as for manufacturing goods on job work basis and the claim of maintenance of any type of record has not been established by the assessee and claim of job work is also doubtful in view of the statement of the two parties. Further, it is also to be noted that admittedly, the appellant had also cleared paper labels, in their own name. However, all the statements submitted by them relate to only job work and there is no evidence to show that they had not taken Modvat Credit in respect of paper used in the manufacture of label on their own account. The reversal of Cenvat Credit is also only relating to the printing ink and the ground taken is that they had never taken Modvat Credit on paper used in the label manufactured on their own account. The Commissioner has taken a view that in respect of goods which they manufactured on job work basis, they would not be required to pay 8%/10% of the value since he had taken a stand that when the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mis-declaration. In this case, by not showing manufacture of printing ink and captive consumption of the same, in the RT-12 return, the assessee has clearly suppressed the facts which were statutorily required to be declared by them. When the printing ink manufactured by them even if it was exempted, there was requirement to declare the same. No evidence has been produced that such declaration has been made. Similarly, failure to maintain statutory records also amounts to suppression of facts. Further, failure to indicate correct quantity of printing ink used in the manufacture of exempted goods and dutiable goods, would clearly amount to mis-declaration with intent to evade payment of duty. Another point which was raised in defence is the fact that the records of the company were audited by the audit and therefore there cannot be any suppression. In fact, the endorsement made by the Audit party shows that the Assistant Audit Officer had indicated that he had test-checked the Central Excise revenue records in August 1998. Similarly, the Supdtt. incharge of internal audit parties of the department also have remarked that they have done test audit. The meaning of the test check and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee as held by the Member (Technical) or no penalty is imposable as held by the learned Member (Judicial). 21. [Per : M.V. Ravindran, Member (J)]. - This Difference of Opinion is listed before me as per orders of Hon'ble President for deciding the points of difference arose between the Bench while deciding the Appeal Nos. E/1491 & 283/2006. 22. Following Difference of Opinion are indicated :- (i) Whether the Member (Technical) is correct in observing that Revenue has challenged the finding of limitation arrived at by the adjudicating authority or whether the observation of learned Member (Judicial) is right in holding that Revenue has not challenged the finding of the Commissioner regarding limitation. (ii) Whether the demand for duty invoking extended period is required to be upheld as held by Member (Technical) or to be set aside as held by learned Member (Judicial)? (iii) Whether the appeal filed by the assessee against confirmation of demand of Rs. 18,93,141/- is to be allowed as held by learned Member (Judicial) or to be rejected as held by Member (Technical). (iv) Whether the penalty under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SDR, on the other hand, would read the findings of ld. Member (Technical). It is his submission that the adjudicating authority has not considered various evidences which were there in the Show Cause Notice as regards consumption of duty paid input for manufacturing of final product. It is his submission that the printing inks were manufactured and captively consumed and they were also utilizing the said ink for manufacture of advertising material and paper and paper board labels. It is his submission that various statements recorded of partner, indicates that no statutory record as required in Form IV was maintained. It is his submission that the purchasers of goods from the appellants were contacted and they have given statements and they had supplied raw materials to the appellant. Coming to points raised by ld. Counsel as regards limitation, he would submit that the Committee of Chief Commissioners had directed the CC Ahmedabad for seeking redressal of not confirming of amount of Rs. 44,95,333/- (Rupees Forty Four Lakhs, Ninety Five Thousand, Three Hundred & Thirty Three only) under the provisions of Section 11A of Central Excise Act, 1944 along with interest under Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CERA audit party had conducted audit of their records for the aforesaid period but did not raise any objection regarding non-maintenance of records as required under Rule 57CC, the entire demand relating to the period October, 1996 to July, 1998 has to be held to be barred by limitation under the provisions of Section 11A of the Central Excise Act, 1944. However, since I have decided the matter on merits as above and held that the job work clearances made during the entire period of demand are not liable to payment of amount @ 8% and that the assessee had themselves accepted their liability to pay the amount @ 8% on the clearances of printed labels and other items made on their own behalf during the entire period, I hold that the question of limitation is not relevant." 29. It can be seen from the above reproduced paragraph [which has been reproduced by ld. Member (Judicial) in her order], that the adjudicating authority has not come to the conclusion that suppression can be only something which was otherwise done, i.e. assessee had maintained some kind of records and though the said that records would not satisfy Rule 57CC, it can be established from the records that job work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the grounds of appeal, and to the point which should include how Revenue is aggrieved by the findings of the adjudicating authority, dropping of the demand by holding that there is no suppression, mis-statement etc. 31. It was for the Committee of Chief Commissioners to give clear cut directions to ld. Commissioner by giving reasons for not accepting the findings of Commissioner on the question of limitation. The provisions of Section 35E of Central Excise Act, 1944, categorically provides that Commissioner of Central Excise has to direct the authority to apply to appellate Tribunal for determination of such points arising out of decision or order as specified in the review by Committee of Chief Commissioners in its order. On plain reading of the order of the Committee of Chief Commissioners, we find that they are not challenging finding of ld. Commissioner on the point of limitation on which ld. Commissioner has recorded categorical finding in favour of the assessee. I am of the considered view that the Committee of Chief Commissioners has to reach a conclusion on its own feet finding for holding that order is not legal or proper; has been dealt with by co-ordinate Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, mis-statement, fraud or collusion for setting aside the demand for the extended period of limitation, for all the purposes, the same findings having not been challenged by Revenue in their appeal, will apply for the entire period of the demand which is from October 1996 to March 2000, while the Show Cause Notice is issued in November 2001. 33. In summing up, the Difference of Opinion is answered as under : (i) The Revenue has not challenged the findings of the Commissioner as regards limitation in their grounds of appeal as held by ld. Member (Judicial) is right. (ii) The demand of duty by invoking extended period has to be set aside as held by ld. Member (Judicial). (iii) The appeal filed by the assessee against confirmation of demand for extended period is to be allowed. (iv) Since the entire appeal is allowed, the question of imposition of penalty under Section 11AC does not arise as held by ld. Member (Judicial). 34. In view of the above, I am in agreement with the order passed by ld. Member (Judicial). Registry is directed to place the file before the Bench for further action. 35. [Per : Archana Wadhwa, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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