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TMI Blog2014 (2) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... trol) Appellate Tribunal (for short CEGAT). With a view to appreciate the submissions made by the learned counsel appearing for the petitioner, a brief reference to the facts of the case will have to be made. 3. The case of the petitioner is that the petitioner is in the business of manufacturing cotton/man made coated fabrics in its plant at Bhor. The case of the petitioner is that the petitioner has been using as one of the inputs PVC resins and Polyurethene (PU) resins of all grades. According to the petitioner, at any one time, only one grade of resin is used. The petitioner has been permitted to maintain a common combined account for crediting and debiting Resin duty paid on all grades of resins in statutory form RG-23A. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture of LBSP cleared on payment of duty by overdrawing an amount of Rs. 8,09,583.55 from the amounts in RG-23A Part-II should not be recovered from the petitioner under Rule 9(2) of the said Rules of 1944. By the said notice, the petitioner was also called upon as to why the Petitioner should not be called upon to deposit a sum of Rs. 25,87,588.90 being the credit taken and utilized during the said period in respect of input of PU Resins other than Grade 5702 under Rule 57-I of the said Rules of 1944. Thus, the show cause notice related to total amount of Rs. 39,54,355.25. The notice also called upon the petitioner to show cause as to why penalty should not be imposed under Rule 173Q of the said Rules of 1944. The petitioner replied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said inputs were not actually used. He submitted that it is nobody's case that the said inputs cannot be used in manufacture of LBSP. He submitted that it is not the case that the inputs of various grades other than Grade 5702 cannot be used. He submitted that the provision of Rule 57F(3)(i) of the said Rules of 1944 could not have been applied. He pointed out that the CEGAT held that there is no bar on the availment of accumulated credit on inputs used in manufacture of one product if similar input has been used in manufacture of another product. He submitted that credit cannot be denied on the ground that PU Resin of a different grade has been used in manufacture of LBSP. He submitted that specified input has been used in manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 57G for availing credit on duty on inputs. In the said declaration against the final product of LBSP, following inputs have been mentioned :- "(1) PVC Resin (in different names, grades and numbers). (2) Thermo Plastic Polyurethane Resin (in different names, grades and numbers). (3) Kondicryl Resin (in different names, grades and numbers). (4) Stabiplast XK-16/14. (5) Mathyl Ethyl Kotong (M.K.). (6) Polues." 7. In this petition, we are concerned with the recovery of Rs. 25,87,588.90. It will be necessary to make a reference to the show cause notice. The allegation in the show cause notice is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r manufacture of LBSP." The Collector has referred to the statement of Shri V.R. Honatti, Production Manager of the petitioner who unequivocally stated that for manufacture of LBSP, they use PU resin Grade 5702. It is noted that Shri S.D. Ovalekar, Vice President (Operations) also supported the said statement. The Collector dealt with an argument that the words "intended to be used" in Rule 57G show that actual use of inputs is not necessary and only intention to use has to be reflected. This interpretation was rejected by the Collector. 9. The basis of the demand of Rs. 25,87,588-90 is in relation to the utilization of credit availed for PU resin other than Grade 5702 in payment of duty on LBSP, though such inputs have not been used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t every manufacturer intending to take credit of the duty paid on inputs under Rule 57A shall file a declaration indicating the description of final products manufactured in the factory and the inputs intended to be used in each of the said final products. The submission made before this Court as well as the authorities below is that as it is not disputed that the grades other than Grade 5702 can be used for production of LBSP, it can be said that the said inputs were intended to be used. Thus, in short, the submission is that the said inputs could have been used for manufacture of the final product. The argument is that the said inputs could have been possibly used. Mere possibility cannot be equated with intention to use. In fact, as poin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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