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Commissioner of Central Excise, Mumbai-IV Versus M/s. Dilip Chhabaria Designs Pvt Ltd.

2015 (4) TMI 387 - BOMBAY HIGH COURT

Clandestine removal of goods - Whether Tribunal was right in granting the benefit of duty exemption under Notification No. 3/2001C. E. Dated 1.3.2001 to assessee since it has not fulfilled the inbuilt condition no. 41 of the notfn. i.e. the assessee has not reversed the Cenvat Credit availed on certain inputs like glasses, paints etc. used in the manufacture of vehicles before availing the said exemption - Held that:- if the said goods or products, if manufactured out of chassis falling under He .....

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is a conditional exemption. This is a case of admitted Modvat Credit taken on glasses used in the manufacture of buses and tempo travelers. The Assessee did not reverse the Modvat Credit at the time of removal of goods or after removal. No efforts were made by the Assessee to reverse the same. In the circumstances, when there is an admitted position emerging from the record, we are of the view that the Tribunal erred in law in reversing such a conclusion in the order-in-original.

Ass .....

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tiated in law should not have been interfered with by the Tribunal. - Decided in favour of Revenue. - Central Excise Appeal No. 58 of 2005 - Dated:- 12-3-2015 - S. C. Dharmadhikari And Sunil P. Deshmukh,JJ. For the Appellant : Mr Jitendra B Mishra For the Respondents : Rajeev Waglay & Mr B G Tangsal ORDER (Per S.C.Dharmadhikari, J.) This Appeal by the Revenue has been admitted on 10th January, 2006 on the following substantial question of law: "Whether on the facts and the circumstances .....

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stoms, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai, Allowing the Appeal of the Respondent/Assessee and setting aside the order-in-original dated 10th December, 2003 passed by the Commissioner of Central Excise, Mumbai IV. The Respondent has manufacturing units at Andheri, Mumbai and at Silvasa. There is another unit in Mumbai itself and the Assessee is engaged in manufacture of motor vehicles and parts and accessories of motor vehicles falling under Chapter No. 87 of the .....

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duty on bus/tempo travelers manufactured by it availing exemption under Notification No. 3/2001C. E. Dated 1st March, 2001. However, the exemption was conditional upon the Assessee not taking credit of duty paid on chassis or other inputs used in the manufacture of such vehicles. In other words, such credit should not be taken. However, the Assessee availed Modvat Credit on glasses and paints during the year 2000-01. The Assessee was therefore liable to pay duty on buses, tempo travelers valued .....

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ns raised, but we are only concerned with the issue of availment or entitlement of exemption under Notification No. 3/2001C. E. 3. The Assessee's reply to the show cause notice revealed that it was not disputing that it took Modvat Credit on the glasses which were used in the manufacture of bodies of buses/tempo travelers and this violates condition No. 41 of the subject Notification. This credit was not reversed at the time of removal of goods or after removal. The Modvat lapsed on 1st Apri .....

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s challenged by the Assessee before the Tribunal and the Bench of the Tribunal held that the issue stands concluded by the Judgments of the Hon'ble Supreme Court in the case of Chandrapur Magnet Wires Pvt. Ltd. vs. Commissioner of Central Excise, Nagpur reported in 1996 (81) ELT 3 (SC) and Orisa Extrusion Ltd. vs. Commissioner of Central Excise reported in 1998 (83) ELT 308 so also decisions of the Tribunal. Thus, the conclusion was that the duty part of the credit in the RG23A Register was .....

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ue. 6. Mr. Mishra appearing for the Revenue in support of this Appeal submits that the show cause notice contains a specific allegation. That allegation has been completely missed by the Tribunal. The investigation revealing that the Assessee claimed exemption which was not unconditional, then, the Tribunal was obliged to consider not only the impact of the condition but the allegation in the show cause notice in its entirety and the response of the Assessee thereto. Mr. Mishra has invited our a .....

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r book at para 2 of the written submissions in support of the above arguments. 7. Mr. Mishra also submits that the language of the Exemption Notification being plain and clear, it being conditional, the Tribunal should have given effect to it. The Tribunal erred in reading into it certain requirements and which were not to be found in the document itself. There was no question of going into the contention as to whether the credit was merely availed and not taken. In such circumstances, all the d .....

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d in full after surrender of the licence w.e.f. 1st April, 2002. In the circumstances, the Tribunal's conclusion is supported by Mr. Waglay by relying upon Judgment of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Mumbai vs. Bombay Dyeing and Manufacturing Co. Ltd. reported in (2007) 8 SCC 177 and that of the High Court of Karnataka in the case of Commissioner of Central Excise and S. T. LTU, Bangalore vs. Bill Forge Pvt. Ltd. reported in 2012 (279) ELT 209 (Ka .....

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h has been produced before us by Mr. Mishra. 11. That Notification states that in exercise of powers conferred by subsection (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below or specified in column (3) of the said Table read with the concerned List appended hereto, as the case may be, and falling wi .....

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le to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (5) of the said Table and importantly subject to the relevant conditions specified in the Annexure to this Notification and referred to in the corresponding entry in column (6) of the said Table. 12. As far as the Assessee is concerned, it is undisputed before us that the Assessee manufactures motor vehicles, principally designed for the transport of more than .....

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der rule 57AB or rule 57AK of the Central excise Rules, 1944; Provided that this exemption is not applicable to a manufacturer of said vehicles (a) who is manufacturing such vehicle on a chassis supplied by a chassis manufacturer, the ownership of which remains vested in the chassis manufacturer or the sale of the vehicle so manufactured is made by such chassis manufacturer on his account; and (b) who is manufacturing chassis and using such chassis for further manufacture of such vehicle." .....

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y which was undertaken by the Assessee amounted to manufacture. The excisable goods could not have been cleared and removed without payment of duty. However, the Assessee relied upon the Exemption Notification referred to above. The Assessee was aware of the fact that this is a conditional exemption. The Assessee was aware of the language of the Notification as also the condition. In the circumstances, when the credit was taken, the Assessee was not entitled to the benefit of the Exemption Notif .....

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8377; 16,48,780/was more than the Modvat benefit of ₹ 36,246/and no prudent businessman would make such a mistake intentionally. Copies of invoices were annexed and relied upon. But committing of the mistake does not mean that it is irreversible. It can be corrected even afterwards. In the present case, even though the Modvat was taken in RG23A, it was never utilized. In the present case, the excise licence itself was surrendered on 1st April, 2002, the Modvat credit taken by the Appellant .....

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001C. E. which is a conditional exemption. This is a case of admitted Modvat Credit taken on glasses used in the manufacture of buses and tempo travelers. The Assessee did not reverse the Modvat Credit at the time of removal of goods or after removal. No efforts were made by the Assessee to reverse the same. In the circumstances, when there is an admitted position emerging from the record, we are of the view that the Tribunal erred in law in reversing such a conclusion in the order-in-original. .....

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le services used in the manufacture of final product. During the scrutiny of the ER1 return for the month of June, 2007, it was observed that the Assessee had taken excess credit of ₹ 98,77,446/- on capital goods. This was pointed out to the Assessee. The Assessee, by letter dated 12th September, 2007 admitted the wrong committed by them and informed the Revenue that they have reversed the same in September, 2007. They have over drawn only an amount of ₹ 11,691/- in payment of Educat .....

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the other account, namely, input credit and service tax credit. The availment of excess credit has not resulted in any over drawal in the credit account. Therefore, no interest is payable on such wrongly availed credit. In view of the reversal of the credit and interest paid for the overdrawn, they requested for dropping of further proceedings. The assessing authority held that the mistake is an intentional one, made with an intention of avoiding payment of duty and therefore they are liable to .....

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nce, even the direction to pay interest was set aside. That is how the Revenue was aggrieved and carried the matter in Appeal. 17. The High Court of Karnataka summarized the legal principles and concluded that in such cases and when the provision is attracted, where the Cenvat Credit has been taken or utilized wrongly or has been erroneously refunded, imposition of penalty or interest was not justifiable. We do not find that the conclusions reached in paras 19 and 20 and with the backdrop of onl .....

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s 13th March, 2002 to 15th September, 2002. The Assessee opted for exemption under Notification No. 14/2002 under which grey fabrics, not subjected to any process, were chargeable to nil rate of duty subject to condition that the said fabrics were made from textile yarn on which appropriate duty of excise stood paid and no credit for duty paid on inputs had been taken under the Cenvat Credit Rules, 2002. The Assessee opted to pay duty on yarn on deferred basis at the time of clearance of grey fa .....

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failed to pay duty on yarn at the spindle stage and had also taken credit for the duty paid on inputs under the Cenvat Credit Rules, 2002. That is how the demand was raised. The Commissioner (Appeals) allowed the Assessee's Appeal and his order was upheld by the Tribunal. The Revenue approached the Hon'ble Supreme Court. In dismissing the Appeal, the Hon'ble Supreme Court held that the Notification does not prescribe the mode of payment. Exemption is given to the final product, name .....

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of grey fabric on which exemption was claimed. Therefore, payment was made before the stage of exemption. Similarly, on payment of duty on the yarn, the Assessee got the credit which was never utilized. Before utilization, the entry had been reversed which amounted to not taking credit. Both conditions of the Notification were satisfied and the Tribunals conclusion was upheld. 19. In the case at hand, however, the undisputed position is otherwise. The Assessee admits taking of credit and contrar .....

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ered with by the Tribunal. The Tribunal's reasoning and relying upon these decisions, which we have noted above, is erroneous to say the least. We do not see as to how such Judgments and decisions rendered by the Hon'ble Supreme Court, other High Courts or the Tribunal could have been relied upon. The reversal of the order passed by the Commissioner being vitiated as above, we have no alternative but to allow this Appeal. 20. The Appeal is accordingly allowed. The substantial question of .....

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