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M/s. Magadh Plas Pvt. Ltd. Versus CCE & S.T. Jaipur-I

2015 (11) TMI 1467 - CESTAT NEW DELHI

Job Work - claim of full exemption under notification no. 214/86CE whereas the principal manufacturer availing the area based exemption from duty under notification no. 50/03 - extended period of limitation - Held that:- M/s. Divya Pharmacy (principal) is not the manufacturer of dutiable and exempted final product but he is manufacturing exempted final products only. Therefore, in our prima facie view, the exemption notification no. 214/86CE would not be available.

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Thus, the department was aware of the fact that the goods manufactured by the appellant on job work basis for M/s. Diya Pharmacy would be used by M/s. Divya Pharmacy for manufacture of finished goods in respect of which they are availing fully duty exemption under notification no. 50/03CE. - even if, the appellant in their ER-1 Returns filed by them, were not separately mentioning the clearances of job work goods to M/s. Divya Pharmacy by availing full duty exemption under notification no. 214/8 .....

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hnical) And Shri S.K. Mohantry, Member (Judicial) For the Petitioner : Ms. Anjali Manish, Advocate For the Respondent : Shri Ranjan Khanna, DR ORDER Per: Rakesh Kumar The facts leading to filing of these appeals along with stay applications are, in brief, as under: 1.1 The appellant in their manufacturing unit located at Bhiwadi, District Alwar, Rajasthan manufacture plastic containers. They manufacture plastic containers on their own account and also on job work basis for some principal manufac .....

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received plastic containers for which they purchased duty paid plastic granules and sent the same to the appellant for manufacture of plastic containers on job work basis. M/s. Divya Pharmacy did not avail CENVAT Credit in respect of the plastic granules and appellant also did not avail the CENVAT Credit of duty paid on plastic granules. The appellant manufactured the plastic containers and returned the same to M/s. Divya Pharmacy without payment of duty by availing exemption under notification .....

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XM-001 and are registered in the manufacture of Ayurvedic Medicine falling under Chapter heading no. 3009 of Central Excise Tariff Act, 1985. 2. We wish to remove raw material (inputs)/semi process goods without availing CENVAT Credit to job worker namely, M/s. Magadh Plas PA Limited, G1-957, Phase-III, Industrial Area, Bhiwadi, Rajasthan in terms of notification no. 214/86, as amended dated 25/03/1986. (3) The nature of process / job work shall be over, the goods shall be returned to our factor .....

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s payable, the plastic containers manufactured by the appellant would not be eligible for exemption under notification no. 214/86CE. It is on this basis that show cause notice dated 1/4/2013 was issued to the appellant for demand of differential duty of ₹ 77,82,267/- from them for the period from 22/5/8 to 16/1/2013 along with interest thereon under section 11AB and also for imposition of penalty on them under section 11AC. Besides this, the show cause notice also sought imposition of pena .....

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r section 11AC (1) (a) of the Act and also imposed the penalty of ₹ 10 lakh on Shri Binay Prasad, Director of the appellant company under Rule 26 of the Central Excise Rule, 2002. Against this order of the Commissioner, these appeals have been filed along with stay application. 2. Heard both the sides in respect of the stay application. 3. Ms. Anjali Manish, Advocate, ld. Counsel for the appellant, pleaded that the appellant company is eligible for exemption under notification no. 214/86CE .....

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ara of the exemption notification no. 214/86CE, the goods specified in column (1) of the table to notification and manufactured in factory as a job work are fully exempted from duty if the goods are used, in the manufacture of the final product as specified in column 1 of the table on which either the duty of excise is leviable on whole or in part or the same are used by manufacturer of dutiable and exempted final products after discharging his obligation in respect of the said goods under Rule .....

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ssioner and Assistant Commissioner Central Excise Bhiwadi District, Alwar had intimated that M/s. Divya Pharmacy would be sending the inputs/semi-processed goods without availing CENVAT Credit to their job worker M/s. Magadh Plas PA Ltd. under notification no. 214/86CE and after the completion of the process, the goods would be returned to their factory for use in the manufacture of final product which are exempted from duty under notification no. 50/03CE; that, thus, the department was aware th .....

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fication no. 214/86CE; that in view of this, the appellant company cannot be accused of suppressing any relevant facts from the department and hence, longer limitation period under proviso to section 11A (1) is not invokable; that demand of duty for normal limitation period is only about ₹ 18.05 lakh and the CENVAT Credit available would be about ₹ 17.52 lakhs and thus even if the exemption under notification no. 214/86CE is denied, net duty payable by the appellant would be about &# .....

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Commissioner in the impugned order. He Pleaded that notification no. 214/86CE is not applicable inasmuch as neither the Principal manufacturer M/s. Divya Pharmacy has given the undertaking in proper format that the plastic containers received from the appellant would be used in the manufacture of final product which would be cleared on payment of duty nor the final product had been cleared on payment of duty as in respect of the final product manufactured by the principal manufacturer M/s. Divya .....

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ured by the Principal manufacturer- M/s. Divya Pharmacy, the goods cleared by the appellant would not be eligible for exemption under notification no. 214/86CE; that the appellant in ER-1 Returns filed by them have not disclosed the manufacture of plastic containers on job work basis and other clearances by availing exemption under notification no. 214/86CE and hence the appellant have suppressed the relevant facts from the department; that the goods cleared to M/s. Divya Pharmacy have been clea .....

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rds. 6. The appellant company located in Bhiwadi manufactured plastic containers on job work basis to M/s. Divya Pharmacy located in Haridwar. M/s. Divya were availing of full duty exemption under notification no. 50/03CE. There is no dispute that M/s. Divya were received duty paid granules and were sending the same to the appellant unit for manufacture of plastic containers and those plastic containers sent by the appellant were being used by M/s. Divya Pharmacy for packing of the Ayurvedic med .....

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formed that they would be sending the raw material without availing of CENVAT Credit to the appellant unit under notification no. 214/86CE and after processing, the goods would be returned to them for manufacture of their final product which is exempt from duty under notification no. 50/03CE. The point of dispute is as to whether the plastic containers manufactured by the appellant on job work basis are eligible for exemption under notification no. 214/86CE. 7. Notification no. 214/86CE exempts .....

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s manufactured as job work are used by the principal manufacturer in manufacture of dutiable and exempted final products and in respect of the exempted final products, he had discharged the obligation under Rule 6 of the CENVAT Credit Rules. The contention of the ld. Counsel for the appellant is that the exemption under this notification would be available, as the principal manufacturer by not taking CENVAT Credit in respect of the plastic granules has discharged his obligation in respect of the .....

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under bond or are cleared to 100% EOU, or as unit FTZ, EHTP, STP, etc. Besides this, this exemption is also available when the job work goods are used by the Principal manufacturer. Manufacture of dutiable final product and exempted final products and in respect of the exempted final products, he had discharged his obligation under Rule 6 of the CENVAT Credit Rule, 2002. In this case, M/s. Divya Pharmacy is not the manufacturer of dutiable and exempted final product but he is manufacturing exemp .....

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to remove the raw material without availing of CENVAT Credit to the appellant unit under notification no. 214/86CE; that the goods manufactured on job work basis would be returned to their factory for manufacture of final product which is exempted from duty under notification no. 50/03CE. Thus, the department was aware of the fact that the goods manufactured by the appellant on job work basis for M/s. Diya Pharmacy would be used by M/s. Divya Pharmacy for manufacture of finished goods in respect .....

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