TMI Blog2015 (4) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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. Assessee admits taking of credit and contrary to the condition No. 41 of the Exemption Notification, which enables it to claim or remove the goods at nil duty. Knowing fully well, the Assessee could not have availed of the benefit of such exemption Notification. The activity or process in this case amounts to manufacture is undisputed. That the goods have been removed without payment of duty is the conclusion reached in the order-in-original. Such a conclusion, which was not perverse and neither vitiated 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 Jitend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 16,48,780/- was issued and for this alleged contravention of the Notification. The show cause notice dated 31st December, 2002/1st January, 2003 was adjudicated and the adjudicating authority concluded that the Assessee was not entitled to the benefit of the Exemption Notification. The findings in that regard are categoric. The findings deal with various contentions 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 April, 2002 on surrender of licence. No efforts were made to reverse the Modvat. 4. The case law relied upon by the Assessee was distinguished on facts. The order-in-original concludes that in the present case, the Assessee had taken the credit and did not reverse it despite several opportunities. In the circumstances, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 decisions relied upon by the Tribunal were distinguishable on facts. 8. Mr. Waglay appearing for the Assessee supports the conclusion of the Tribunal. He submits that the Tribunal's conclusion that credit should be taken is in consonance with the language of condition No. 41 and that of the Exemption Notification. Once the credit was merely availed of but not taken, then, this was not a intentional or deliberate act. Further, the credit was only to the tune of ₹ 36,246/-. That has lapsed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of chassis falling under heading No. 87.06 on which duty of excise has been paid and no credit of duty paid on such chassis and other inputs used in the manufacture of such vehicle has been taken under 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. 13. A perusal of this condition would reveal that if the said goods or products, if manufactured out of chassis falling under Heading No. 87.06 on which duty of excise has been paid and no credit of duty paid on such chassis and other inputs used in the manufacture of such vehicle has been taken under rule 57AB or rule 57AK of the Central Excise Rules, 1944, the exemption is admissible. 14. The show cause notice made a specific allegation that the Assessee removed excisable goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record, we are of the view that the Tribunal erred in law in reversing such a conclusion in the order-in-original. The Tribunal, in reversing this order, relied upon the cases and which have been brought to our notice. We must note them and in some details. 16. In the case of Commissioner of Central Excise and S. T. LTU, Bangalore (supra), the facts speak for themselves. There, the Assessee was engaged in the manufacture of accessories of motor vehicles falling under Chapter Sub Heading 8708 10 90 of the Central Excise Tariff. They availed Cenvat Credit of duty paid on the inputs, capital goods and the taxable 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 Education Cess for the month of July, 2007 and the interest liability calculated thereon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessment period was 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 fabric for home consumption along with interest at the rate prescribed under section 11AB of the Central Excise Act, 1944 read with Rule 8(3) of the Central Excise Rules, 2002. The Department refused permission to the Assessee to do so. However, the Assessee reversed the Cenvat Credit, which, according to the Department, contravened the provisions of the said Notification. The Department took the view that the Assessee was not entitled to claim nil rate of duty as according to it, the Assessee had 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances, however, there would be no order as to costs. 21. When we pronounced this order, Mr. Waglay, on instructions, states that Assessee is ready and willing to pay the amount of Modvat Credit and wrongly availed to the tune of ₹ 36,246/- with interest at 18% till the date of payment. Mr. Mishra, however, submits that the crucial and relevant date in this case is of removal of excisable goods. No such offer was ever made, the credit was never reversed nor there was any offer to pay the duty and on deferred basis. Therefore, such a concession should not be taken cognizance of. 22. In the light of the conclusion that we have reached, we see some force in the submission of Mr. Mishra and we decline to accede to the said request of Mr. Waglay. Then, Mr. Waglay submits that the penalty of ₹ 16,48,780/- imposed in the order-in-original and which has been set aside by the Tribunal should not be interfered with. Mr.Mishra submits that once there was a clandestine removal and with an intent to evade payment of duty by wrongful availment of Exemption Notification and the ingredients of section 11AC have been satisfied and attracted, therefore, the penalty shou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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