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LSR Speciality Oil Pvt Ltd, Arokia Samy, Ramesh Babu Versus Commissioner of Central Excise, Belapur

2015 (9) TMI 983 - CESTAT MUMBAI

Reversal of CENVAT Credit - Re-classification of goods - Penalty u/s 11AC - Held that:- It is not under dispute that the polymer imported are classifiable under Chapter 39 and the duty is being paid accordingly. Further, the process being undertaken in the factory is only repacking of the goods in smaller container and putting labels. Thus there is no change in the characteristic of the imported goods or the use of the imported goods and thus the process will not amount to manufacture. One has t .....

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aring the goods no description is mentioned and the classification of the goods mentioned is 38. It is not possible from the above description for any human being that the inputs have been cleared as such and the classification of the input have been changed. We do not see any reason for the appellant to change the classification. To our mind, the classification has been changed only to ensure that they are in a position to take higher credit and pay lower duty. In our view, there is clear cut s .....

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in favour of assessee. - Appeal No. E/86273 to 86275/13 - Mum - Final Order No. A/2822-2824/2015-WZB/EB - Dated:- 19-8-2015 - P K Jain, Member (T) And S. S. Garg, Member (J), JJ. For the Appellant : Shri R.C. Sekhar, Adv For the Respondent : Shri V.K. Agarwal, Addl. Comm. (AR) ORDER Per P. K. Jain The brief facts of the case are that the appellants are engaged in the manufacture of lubricants and chemical additives. The appellant has entered into toll agreement with M/s. Indian Additives Ltd. (I .....

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er Chapter 27 as lubricating oil on payment of appropriate duty. There is no dispute as far as use of polymer in the manufacture of the lubricating oil and payment of duty of such lubricating oil is concerned. In the second stream, a part of the polymer imported is cleaned, repacked, relabelled and thereafter sold as chemical additives for lubricating oil. The polymer when imported is classified under Chapter 39. However, the same polymer after repacking and relabeling is cleared under Chapter 3 .....

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as the input cleared as such and the appellant was required to reverse the Cenvat credit availed at the time of importation. It was also observed that the Cenvat credit availed at the time of importation is much higher than the duty paid at the time of clearance as chemical additives for lubricating oil. 2. Revenue issued demand notice for the period February 2007 to October 2011 to reverse the credit as per Rule 3(5) of CENVAT Credit Rules, 2004, as the process undertaken by them does not amoun .....

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tion is that the imported goods are classifiable under Chapter 39 and the process of cleaning, repacking and relabeling does not amount to manufacture and thus there is no manufacture of chemical additives for lubricating oil and the goods are being cleared as such and is to be considered as the input cleared as such and the appellant was required to reverse the Cenvat Credit availed at the time of clearance as chemical additives for lubricating oil. 2. Revenue issued demand notice for the perio .....

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availed at the time of importation and duty paid at the time of clearance. The case was adjudicated by the Commissioner who confirmed the demand, imposed penalty under Section 11AC and also imposed penalty of ₹ 2 lakhs each on appellant no. 2 & 3. Aggrieved by the said order, the appellant is before us. 3.1 The ld. counsel for the appellant submitted that having collected excise duty revenue cannot deny the Cenvat Credit. It was further submitted that the appellant has collected duty .....

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dia P. Ltd. 2014 (299) ELT 49 b) Foam Techniques Mfg. (I) P. Ltd. 2015 (317) ELT 266 c) CCE vs. Creative Enterprises 2009 (235) ELT 785- Affirmed by Supreme Court 2009 (243) ELT A 120 d) CCE vs. MP Telelinks Ltd. 2004 (178) ELT 167 e) CCE vs. Ajinkya Enterprises 2013 (294) ELT 203 f) Ashok Enterprises 2008 (21) ELT 586 g) Super Forgings & Steels Ltd. 2007 (217) ELT 559 h) Steumpp Schedule & Somappa Ltd. 2005 (191) ELT 1085 3.2 The second submission of the ld. counsel was that the quantif .....

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d period of limitation cannot be invoked in view of the following decisions: i) Moser Baer India Ltd. 2014 (36) STR 815 j) Swastik Engineering 2010 (255) ELT 261 k) Jammu & Kashmir Cements Ltd. 2014 (314) ELT 334 l) Jindal Stainless Steelway Ltd. 2014 (310) ELT 194 m) Essar Steel India Ltd. 2015 (317) ELT 713 It was also submitted that the return filed by the assessee is required to be scrutinised by the officer as per the requirement of CBEC Manual therefore at this stage it cannot be said .....

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under Chapter 39 and the activities of repacking and relabeling will not amount to manufacture. It was also submitted that there was no question of changing the classification of the goods by them. Ld. AR further submitted that it was only during audit in the factory that it was realised that the appellant did only repacking and relabeling which does not amount to manufacture and change in classification of the appellant is incorrect. It was also submitted that after the said objection, the app .....

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falling under Chapter 38 and from the return filed, no body can make out that the appellant was clearing the inputs as such and thus there was a suppression of fact and the extended period of limitation is correctly invoked and the appellant are liable to pay penalty under Section 11AC. It was further submitted that both the officials were looking after day today work and there was no reason for them to change the classification of the goods while clearing these. Penalty has therefore been corre .....

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he goods have been cleared as such. The importer is required to reverse/repay the Cenvat credit taken at the time of importation. However, this was not done. It is also not in dispute in the present case that the Cenvat Credit taken at the time of importation was much higher than the duty paid on the repacked goods and cleared as chemical additives for lubricating oil. 6. We also note that the revenue is not denying the credit taken by the appellant. All that revenue is asking the appellant is t .....

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er the self assessment procedure. In the monthly return they have described goods under Chapter 38 and paid duty. It is only during physical verification and audit of the factory that the correct facts has come out. The catena of the case laws submitted by the appellant are not relevant in the present facts of the case as revenue has not proposed to deny the Cenvat Credit but what revenue is demanding is the differential amount. Hence the case law quoted are not relevant to the facts of present .....

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goods what revenue has done is that computed average duty liability for per unit each financial year and subtract duty paid per unit during the financial year. To us this is most reasonable method in the existing circumstances namely where one to one correlation is not available. 8. As far as the contention of the ld. counsel about the limitation is concerned, we have gone through ER1 filed, in the ER1 filed for the month January 2008, in column no.5, the appellant has indicated as under:- Credi .....

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