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2015 (12) TMI 658 - CESTAT NEW DELHI

2015 (12) TMI 658 - CESTAT NEW DELHI - TMI - Valuation - Clearances of yarn for captive consumption within the factory - Bar of limitation - Penalty u/s 11AC - Held that:- Even if it is held that the yarn sold to independent buyers was that which had been manufactured by the appellant in their factory and accordingly in terms of the Larger Bench judgment of the Tribunal in the case of Ispat Industries Limited Vs. CCE (2007 (2) TMI 5 - CESTAT, MUMBAI), it is held that the yarn cleared for captive .....

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30/06/2000 clarified that in the cases where the goods manufactured by an assessee are cleared for captive use as well as are sold to independent buyers, in respect of the goods cleared for the captive use, the value would be determined under Rule 8 of the Central Excise Valuation Rules, 2000

Extended period of limitation - entire duty demand for the period from September, 2000 to March, 2003 raised vide show cause notice dated 4/10/2005 is time barred. The impugned order confirming t .....

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Rakesh Kumar The appellant in their factory have two sections. In one section, they manufacture spun yarn and in the other section, they manufacture hosiery products. The spun yarn manufactured is entirely used for captive consumption. The hosiery unit besides using spun yarn manufactured within the factory also purchased yarn from outside. The period of dispute in this case is from September, 2000 to March, 2003. During this period, the appellant were paying duty on clearances of spun yarn for .....

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rtment is that in respect of receipt of capital goods the appellant had taken capital goods CENVAT Credit of the entire amount on excise duty at a time, while in terms of the provisions of the CENVAT Credit Rules, 1944, at the time of receipt of the capital goods, the assessee was entitled to avail the CENVAT Credit of only 50 % of the Central Excise Duty and the balance CENVAT Credit could be taken only in the next financial year. Since by the time, this irregularity was detected, the appellant .....

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for imposition of penalty on the appellant company under section 11AC of Central Excise Act, 1944, (b) recovery of interest on wrongly taken CENVAT Credit of ₹ 2,89,788/- in respect of the capital goods and also for imposition of penalty on this count. 3. Show cause notice was adjudicated by the Commissioner vide order-in-original dated 29/3/2006 by which - (a) duty demand of ₹ 47,61,675/- was confirmed against the appellant along with interest thereon under section 11AB and penalty .....

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#8377; 47,61,675/- confirmed against the appellant along with interest and equivalent penalty; that the entire quantity of the yarn manufactured in the appellant company was being cleared for captive consumption to their hosiery unit within the same factory; that the appellant during the period of dispute were also purchasing yarn from outside for manufacture of knitted fabrics, that there was common storage of the yarn manufactured within the factory for captive use and the yarn purchased from .....

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000, were under bonafide belief that when a manufacturer clears part of the goods manufactured by him for captive use and sells the remaining quantity to independent buyers, in respect of the goods cleared for captive use, the duty would be required to be paid on the value determined under Rule 8 of the Central Excise Violation Rules, i.e., 115% per cent of the cost of production; that there were conflicting judgments of the Tribunal on this issue and for this reason, this matter had been referr .....

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captive use would be valued at the price at which the goods had been sold to independent buyers; that when in view of the Boards Circular dated 30/6/2000 and conflicting judgments on this issue, there were scope for doubt as to how the goods cleared for captive consumption are to be valued, when part of the goods are also sold to independent buyers, the allegation of deliberate violation of the provisions of Central Excise Act, 1944 or of the Rules made thereunder would not sustain and hence, .....

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the learned DR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that while yarn manufactured in the spinning section was being cleared 100 per cent to the hosiery section, about 60 % of such yarn was being sold and in these circumstances when major portion of the yarn manufactured was being sold to independent buyers, the goods cleared for captive use must be valued at the sale price to independent buyers. He pleaded that the appellant have suppressed the .....

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rest demand is upheld. 10. As regards the main point of dispute, in this case regarding duty demand of ₹ 47,61,675/- in respect of the clearances of yarn manufactured by the appellant for captive use within the factory during period from September, 2000 to March, 2003, the show cause notice for duty demand had been issued on 4/10/2005 and the same would survive only if the circumstances exist for invoking the longer limitation period of five years under proviso to section 11A(1). The appel .....

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yarn was being sold from Hosiery section to independent buyers. The appellants contention is that there was common storage in the hosiery section of the yarn manufactured within the factory and the yarn purchased from outside and, therefore, it cannot be said as to whether the yarn which was sold was that which had been manufactured within the factory. Be that as it may, we are of the view that even if it is held that the yarn sold to independent buyers was that which had been manufactured by .....

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