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M/s Lamicoat International Pvt. Ltd., Shri Lok Nath Prasad Gupta, Director, Shri Om Prakash Gupta, Director, Shri Dipankar Ghosh, Manager Versus Commissioner of Central Excise, Noida

2015 (9) TMI 679 - CESTAT NEW DELHI

Denial of CENVAT Credit - Clandestine removal of goods - Duty demand u/s 11D - Captive consumption - Demand of interest - Held that:- Every person who is liable to pay duty under this act or rules made thereunder has collected any amount in excess of duty assessed or determined is required to pay to the Central Government amount so collected. As per the show cause notice, the allegation of the Revenue is that as the activity of the appellant does not amount to manufacture therefore, the appellan .....

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goods under bond without payment of duty. This is a facility that is available to the manufacturer under the excise procedure and in such case appropriate duty on goods i.e. payable is nil, therefore, there is no bar for the manufacturer to remove inputs or capital goods for exports undergone. It is further seen that as per the CBEC Circular 283/117/96-CX dated 31.12.1996 it has clarified that MODVAT credit in RG 23A part 2 account against the export of inputs as such under bond can be utilized .....

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e demand on this account is set aside.

Definitely the appellant is required to pay duty on captively processed goods which are liable for duty. But we should not forget the fact that the final product which does not amount to manufacture has been cleared by the appellant on payment of duty. Therefore, the said payment of duty shall amount to payment of duty on captively consumed product i.e. polythene film. In these terms, the demand of ₹ 75,80,380/- is not sustainable. Accordin .....

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- Appeal Nos. E/450-453/2009-EX(DB) - Final Order Nos. A/52462-52465/2015-EX(DB) - Dated:- 21-7-2015 - Ashok Jindal, Member (J) And B. Ravichandran, Member (T),JJ. For the Appellant : Shri Amit Jain & Shri Vipul Aggarwal, Adv. For the Respondent : Shri Pramod kumar, DR ORDER Per: Ashok Jindal: The appellants are in appeals against the various demands confirmed against them and penalties imposed on them. The period involved is December 2002 to October 2007. 2. The facts of the case are that .....

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Adjudicating Authority held that duty already paid on laminated film and metalized film was not duty as no duty was payable. Appellant collected a sum of ₹ 8,45,11,283/- from the customer and that should be deposited in terms of Section 11D of the Central Excise Act 1944. Equivalent amount of penalty was also imposed on that account. It was also held that since metalized laminated films are not dutiable, therefore, credit taken on inputs is required to be reversed. As during the relevant p .....

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rted certain consignment of metalized film and since such export contain polyester polythene films which were intermediate product on which no duty was paid. Therefore, appellant is required to pay a sum of ₹ 15,68,167/-. It was also found that certain inputs have been clandestinely removed, therefore, appellant is required to pay duty toward them i.e. on laminated film duty of ₹ 14,70,682/- and credit was denied on laminated rolls and metalized polythene film of duty of ₹ 3,90 .....

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,70,682/- and ₹ 3,90,734/- were confirmed on account of clandestine removal of laminated films / metalized polyester film along with interest and various penalties were imposed on the main appellant and co-appellants. Aggrieved from the said order, the appellants are before us. 3. The Ld. Counsel for the appellant submits that the case of the Revenue is that as per the decision of the Hon'ble Apex Court in the case of Metlex Pvt. Ltd. (Supra), their activity does not amount to manufact .....

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to pay duty under the act and the appellant has collected the duty in excess of the duty payable than the appellant is required to credit the amount so collected to the Central Government. Admittedly in this case the final product of the appellant is not dutiable and appellant is not liable to pay duty, therefore, provision of section 11D are not applicable. He further submits that if this be presumed then the appellant is not entitled to take Cenvat Credit on the inputs and the same have been .....

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h has been exported as such. Therefore, they are not required to reverse Cenvat Credit. If demand is on polythene films manufactured and captively consumed, it is the submission of the Ld. Counsel that the appellant has paid duty on the final product. Therefore, the same amounts to payment of duty on polythene films and captively consumed. For the demand of ₹ 14,70,682/- and ₹ 3,90,784/- the Ld. Counsel for the appellants drew our attention to the impugned order wherein the Ld. Commi .....

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o the department. Thereafter, a show cause notice was issued on 10.02.2005 for the said period. Further, also another investigation was conducted on 16.10.2005 for which show cause notice was issued on 11.08.2005 and further a search took place on 19.11.2007 and thereafter, a show cause notice dated 30.11.2007 was issued by invoking extended period of limitation the demand in question on account of clandestinely removed goods. As earlier show cause notice were issued to the appellant, therefore, .....

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ubmission. 7. Although the Ld. Counsel for the appellant argued that there activity amounts to manufacture but we are not going into the said issue whether the activity undertaken by the appellant amounts to manufacture or not to decide the issue in hand. From the facts of the case the following issue emerges: i. Whether the amount of ₹ 8,45,11,283/- charged and collected by M/s. LIPL as 'Central excise duty' from their buyers on the clearances of metalized polyester film and Lamin .....

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erms of Section 11AC ibid. iii. Whether Excise duty amounting to ₹ 75,80,380,/- involved on the Polyethylene film manufactured and consumed captively for processing of lamination without payment of duty, is demandable from M/s. LIPL in terms of Section 11A(i) ibid, along with due interest thereon under section 11AB ibid and whether M/s. LIPL is liable to pay penalty in this regard in terms of Section 11AC ibid. iv. Whether Cenvat Credit amounting to ₹ 14,70,682/- involved in the lami .....

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lm cleared clandestinely is demandable from M/s. LIPL under Rule 14 of Cenvat Credit Rules 2004 read with Section 11A(i) ibid alongwith due interest thereon under section 11AB ibid and whether M/s. LIPL is liable to pay penalty in this regard in terms of Section 11AC ibid. vi. Whether penalty under rule 13/15 of Cenvat Credit rules 2002 and under Rule 25 of the Central Excise Rules 2002 read with section 11AC of the Central Excise Act 1944 is imposable upon M/s. LIPL for contravention of various .....

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d these metalized / laminated films on payment of duty. That fact has been recorded by the Adjudicating Authority in the impugned order in para 65.14 where he has recorded that "ln defense it is pointed out that they have not collected any amount from their customers instead they have collected duty of excise and deposited the same to the Government Account." Further, in para 65.15 it is recorded by the Ld. Commissioner that "I find that amount collected by M/s. LIPL against the a .....

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hich have been recovered from the customers. Therefore, the question of demanding the amount under section 11D of the Act does not arise. Further, we find that during the relevant period section 11D was as under: "Section 11D. Duties of excise collected from the buyer to be deposited with the Central Government-1) Notwithstanding anything to the contrary contained in any order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereun .....

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to pay duty under this act or rules made thereunder has collected any amount in excess of duty assessed or determined is required to pay to the Central Government amount so collected. As per the show cause notice, the allegation of the Revenue is that as the activity of the appellant does not amount to manufacture therefore, the appellant is not liable to pay duty. Therefore, the provisions of section 11D of the Act are not applicable to the facts of this case. Although the appellant has paid t .....

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thout payment of duty. This is a facility that is available to the manufacturer under the excise procedure and in such case appropriate duty on goods i.e. payable is nil, therefore, there is no bar for the manufacturer to remove inputs or capital goods for exports undergone. It is further seen that as per the CBEC Circular 283/117/96-CX dated 31.12.1996 it has clarified that MODVAT credit in RG 23A part 2 account against the export of inputs as such under bond can be utilized in the same manner .....

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ount is set aside. iii. Issue no. 3 is whether demand on polythene film manufactured and captively consumed can be confirmed against the appellant or not. Definitely the appellant is required to pay duty on captively processed goods which are liable for duty. But we should not forget the fact that the final product which does not amount to manufacture has been cleared by the appellant on payment of duty. Therefore, the said payment of duty shall amount to payment of duty on captively consumed pr .....

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