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2015 (11) TMI 44 - CESTAT CHENNAI

2015 (11) TMI 44 - CESTAT CHENNAI - TMI - MODVAT Credit - Rule 57Q - Capital goods - Held that:- Tribunal had directed in its order to compute the irregular MODVAT credit availed. This implies that the MODVAT credit relating to input as well as capital goods is to be ascertained in accordance with law for right application of law. - adjudicating authority is directed to afford reasonable opportunity of hearing to the appellant within three months from the receipt of this order for segregation of .....

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gh sub-rule (5), were incorporated after 23.6.1996. This being the cut-off date there shall be no penalty for the period prior to that date is leviable in the course of re-adjudication under Rule 57I and Rule 57U respectively. If any other penal provision is attracted, appellant is entitled to reasonable opportunity of defense before imposition if any.

When neither there was any plea in this regard before the Tribunal nor there was decision by the Apex Court on that aspect. Therefore .....

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761/2014 - Final Order Nos. 41389-41410 / 2015 - Dated:- 21-9-2015 - Shri D.N. Panda, Judicial Member And Shri R. Periasami, Technical Member For the Petitioner : Shri S. Manickam, Advocate For the Respondent : Shri B. Balamurugan, AC (AR) ORDER Per D.N. Panda This batch of appeals came up before the Bench on 18.9.2015. Those were heard in length. Due to paucity of time order could not be recorded for which matter was adjourned to 21.9.2015. For the common cause of action involved in all these a .....

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(SC) upholding order of Tribunal reported as 2003 (161) ELT 589 (Tri. Chennai). These two appeals also relate to the period July 1994 to January 1996 covered by denovo orders No. 8/2014 and the period August 1996 to January 1997 covered by the Order No. 9/2014. Elaborate argument having been made by both sides on these two appeals, those are taken up first to deal in detail for appreciation of common cause in all the appeals and result thereof applied to other 20 appeals having arisen out of si .....

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ting up sugar plant thereat. While the manufactured machines were exported, certain other equipments purchased from outsiders were also exported without using the same in manufacture nor even unpacking or unwrapping the said goods. The appellant availed MODVAT credit on those bought out items exported under Rule 57Q of Central Excise Rule, 1944 declaring that as capital goods (para 4 of the judgment). On such fact, Revenue denied that MODVAT credit on such goods to the appellant on the ground th .....

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e notice dated 1.1.95 and 17.1.95 disposed by common Order-in-Original No 47/95 dated 26.5.95 on different issue without the issue of availing of MODVAT credit on the goods exported without use thereof in manufacture, involved therein. 3.3 Apex Court held in para 19 of the reported judgment that the Tribunal had rightly come to the conclusion that the appellant was not entitled to MODVAT credit as prayer for. In para 21 of the judgment, the modality how MODVAT credit is allowed was dealt. In par .....

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. The Court came to the conclusion that the appellant did not use the purchased machinery in its premises or in its factory and thereby rule relating to MODVAT credit was not complied with. It was also held that the appellant had not even tested or unwrapped the bought out items and the appellant had only acted as a trader or as an exporter in relation to the machinery purchased by it. (Para 25 of the judgment). 3.4 At this juncture, it may be proper to state that CBE&C when directed the Dep .....

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ut by the learned adjudicating authority vide two re-adjudication orders No. 8/2014 and 9/2014 both dated 29.4.2014. Those two orders have been appealed before Tribunal by appellant in these two Appeals registered as Nos. E/41740 & 41741/2014. ARGUMENTS OF APPELLLANT 5.1 Arguing on behalf of appellant, learned counsel Shri S. Manickam submits that the goods which were bought out were recorded in the statutory record. Some of such goods were inputs and some were capital goods and necessary de .....

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ere concerned, the appellant also recorded the respective MODVAT credit of the excise duty paid thereon in terms of Rule 57Q of the Rules read with Rule 57S in its statutory record. 5.2 Learned counsel explained that under the earlier MODVAT scheme, input is specifically dealt by Rule 57F as to its manner of its utilization. Rule 57F (i) and (ii) dealt with export of the inputs purchased without being used and such export was allowed under bond. In such an event, Rule 57F (iii) applies. Removal .....

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by Rule 57I of the Rules. Respective MODVAT credit on the input so exported if not utilized is reversible and in the event that is utilized, that shall be recoverable. 5.3 It was further submitted on behalf of the appellant that so far as capital goods are concerned, the appellant satisfying the requirement of Rule 57Q has recorded the receipt of such goods in its statutory record under Rule 57S. Relevant MODVAT credit taken thereon is verifiable from the statutory record maintained. Law prescri .....

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utory record. None of the authorities below at any time recognized so, for right application of law in that regard under Rule 57I and 57S. If segregation is made, then, right law can be applied distinctly under Rule 57F and 57I for the inputs recorded and law relating to capital goods credit under Rule 57Q, 57S and Rule 57U of the MODVAT Rules shall be applied. Therefore, for quantification of MODVAT credit taken on both types of goods is necessary following the law under concerned Rule and util .....

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of any deliberate suppression and intention to cause evasion, part of the period in the proceeding covered by denovo order No. 8/2014 is time barred. This aspect needs thorough examination which was not done. There was mis-conception of fact and law by the authorities below. He fairly submitted that the Apex Court judgment has not dealt with the time bar aspect. But plea in that regard was before the Apex Court. 5.5 Learned counsel further specifically argued that learned adjudicating Commissio .....

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e to the direction of CBE&C, a cross objection was filed by appellant. Therefore, time bar being a matter of fact on record, there should not be any dispute by Revenue thereon. However, unfortunately, that did not receive the attention of the Apex Court while disposing the civil appeals aforesaid. He therefore prayed that if the matter goes back to learned Adjudicating Authority history of the declarations can be examined and the time bar aspect shall be appreciated by him as that was done i .....

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at the material period, it is settled principle that there cannot be penalty against the appellant when there was no provision in that regard at the material period. 5.6 The appellant further submitted that if at all MODVAT credit on input and capital goods is alleged to have been wrongly availed the statutory record maintained for the said goods shall prove the extent thereof showing whether credit was merely availed or availed and utilized without having any credit over and above the same on r .....

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me Court in the case of Sirpur Paper Mills Ltd. Vs. Collector of Central Excise, Hyderabad 1998 (97) ELT 3 (SC) to submit so. ARGUMENTS OF REVENUE 6.1 Revenue on the other hand submits that when the appellant successively failed before Tribunal and also before the Apex Court, there is no further scope for the appellant to argue before Tribunal on any aspect of the matter. Hon ble Supreme Court having dismissed the civil appeal of the assessee holding that there cannot be interference to the deci .....

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nded duty from appellant with consequence of law spelt ordered. It was also submitted that the assessee has utilized the MODVAT credit wrongly availed for which they are to be penalized and interest is to be recovered from them including the MODVAT credit recoverable. 7. Heard both sides and perused the records. FINDINGS AND CONCLUSION OF TRIBUNAL 7.1 We are in full agreement with Revenue on the point that the matter has reached its finality by the decision of the Apex Court as reported in 2013 .....

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lar MODVAT credit availed. This implies that the MODVAT credit relating to input as well as capital goods is to be ascertained in accordance with law for right application of law. We are not able to see from record whether the goods are capital goods or input since the appellant is held to be trader of the bought out items by the Apex Court in para 25 of the reported judgment. 7.2 CBE&C while permitting filing of appeal had observed that the appellant was a merchant exporter as is apparent f .....

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while passing final order as reported above was to apply Rule 57A, 57F and 57I and Rule 57Q, 57S as well as 57U of the Central Excise Rules, 1944 to the given case, it would be fair for Revenue to segregate the credit recorded under Rule 57F and Rule 57S of the Central Excise Rules, 1944 respectively for the material period to apply law relating to the recovery under Rule 57I and 57U as well as applicability of penal provision if any under Rule 57I and 57S of Central Excise Rules, 1944. Therefor .....

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in two different Rules i.e., Rule 57I and Rule 57S of the Central Excise Rules, 1944. 7.3 It was brought to the notice of the Bench by the learned counsel that there was sufficient amount of input and capital goods credit in the statutory record of the appellant and there was no utilization of credit availed in respect of bought out items exported. This being a matter of record, such plea shall be examined by the adjudicating authority to ascertain the quantum of the credit utilized by the appel .....

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rior to that date is leviable in the course of re-adjudication under Rule 57I and Rule 57U respectively. If any other penal provision is attracted, appellant is entitled to reasonable opportunity of defense before imposition if any. After hearing the assessee extensively on the above aspects as directed above, appropriate reasoned and speaking order shall be passed by the learned adjudicating authority. 7.5 So far as time-bar is concerned, we understand the difficulties expressed by the appellan .....

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. 7.6 Appellant lastly pleaded that it is entitled to rebate. But such plea fails when the inputs were not used in manufacture but were exported as traded goods and even unpacking the same but dispatched as was received from suppliers. Appellant also pleaded that the appellant being found to be merchant exporter by the CBE&C in its review direction, the authority below in the course of readjudication may consider the benefit available to appellant in that regard. We do not consider any such .....

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iming to be capital goods. If claimed that shall be dealt in accordance with law. 7.8 We make it clear that our decision on the re-adjudicated order No. 8/2014 and 9/2014 dated 29.4.2014 appealed is within the four of the Apex Court judgment. We hope that the appellant shall cooperate with the adjudicating authority producing the statutory record and copies of declaration for his verification and segregate the goods supported by declarations verifiable from statutory record as directed herein be .....

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