TMI Blog2007 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ia engaged in the manufacture of Reverse Osmosis, Membrane Loaded Water Treatment System, Filtration, Desalination Plants which were cleared by them both on payment of duty as well as under exemption at nil rate of duty for supply to Ministry of Defence under exemption Notification No. 64/95, dated 16-3-1995. It is the contention of the appellants that majority of the inputs which are used in the manufacture of goods cleared to Ministry of Defence without payment of duty were imported by the appellants without payment of customs duty based on the certificate issued by the Ministry of Defence and therefore the question of availing credit does not arise. During the course of visit by the Central Excise Officers, it was found that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give an opportunity of hearing to the appellants to establish that they have not taken credit on the inputs used in the manufacture of exempted final products and that where the credit was so taken, it was reversed at the time of issue for use in the manufacture of exempted final products with the help of documents. 2. The above matter was re-adjudicated by the Commissioner, where the appellants produced all the issue slips relating to the inputs on which the credit was taken to establish that they have used the inputs in the manufacture of dutiable final products only and where such inputs were not used in the manufacture of dutiable final products, the credit so taken was thereafter reversed. The Commissioner, however, has expressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11AC of the Act. Another penalty of ₹ 5 lakhs was m posed on Shri Kamlesh Kumar Goel, Managing Director. 3. The learned Advocate for the appellants submits that the Commissioner has clearly held that challans (issue slips) produced by them contained cross-reference to RG-23A Part-I and hence one view can be that they have established co-relation between the inputs arid issue slips and consequently between the issue slips and final products. In view of this, once co-relation has been established, the Commissioner cannot reject their claim or the ground that the records with regard to purchase/receipt of inputs used lit the manufacture of exempted final goods were not produced as there was no such direction from the CESTAT n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement was the same. In view of this, it was submitted that once the issue slips establish that the inputs on which the credit has been taken which have been used in the manufacture of dutiable products only, they cannot be asked to pay duty on exempted products.@8%. 4. The learned SDR, however, submits that there were grave discrepancies in the issue slips and since the appellants have failed to produce the exact requirement of inputs in each of the models of the exempted products, it cannot be established whether the entire inputs used in the exempted products were the one on which no credit has been taken or that part of the inputs meant for dutiable products have been diverted for use in the exempted products. Since the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have stated that serial numbers submitted earlier related to issue slips in respect of inputs meant for exempted products only and not for the dutiable finished products. The Commissioner has expressed his doubt but has not come out with any evidence to show that the issue slips now produced were not in existence earlier and have been concocted subsequently. There is neither any allegation in the show cause notice nor any evidence to show that the inputs meant for dutiable final products have been used in the manufacture of exempted final products without reversing the credit. in fact from the RT-12 returns/copy of invoices and RG-23A Part-I and Part-II register, the samples of which were shown to us, we find that these records show that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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