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2016 (7) TMI 296 - CESTAT NEW DELHI

2016 (7) TMI 296 - CESTAT NEW DELHI - TMI - Demand of duty u/s 3A under compounded levy scheme - production. Ingots and billets of non-alloy steel - whether the goods is classifiable under Heading No. 7206.90 or 7224.90 of the CETA. - Held that:- When the Chemical Examinerís report on the various elements contained in the respondent's sample is compared with the specifications, for non-alloy steel as specified in Note 1 (f) of Chapter 72, the conclusion is that the respondentís items would fall .....

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ent is non-alloy steel products whereas what has been declared by them is otherwise. Under the circumstances, we are inclined to take the view that this is nothing but deliberate withholding of information which will make this a fit case to invoke extended time limit under the proviso to section 11A of the Act for demand of duty. - Alowance of Modvat Credit - the allowability will need to be evaluated with reference to the Modvat Rules prevailing in at the relevant time. - For this limited p .....

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peal filed by the Revenue is challenging the order dated 23/03/2006 passed by the Commissioner in which he dropped the demands made in the show cause notice dated 27/6/2002. This case is related to classification dispute i.e., whether the impugned goods is classifiable under Heading No. 7206.90 or 7224.90 of the CETA. Further, whether the respondents are required to discharge duty on impugned goods under Section 3A of the Act during the period 1/4/1998 to 31/3/2000 and whether the duty demand an .....

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acity Determination Rules, 1997 (hereinafter referred to as IFACD Rules, 1997) were also prescribed for determining the capacity of production. The dispute in the case is whether the goods manufactured by the party were ingots of alloy steel falling under Heading No. 7224.90 of the CETA or ingots of non-alloy steel falling under Heading No. 7206.90. The allegation was that the goods were the latter and hence required to pay duty under Section 3A. 3. The respondent had two divisions in their fact .....

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vision. They filed classification declaration, availed Modvat Credit and filed monthly RT-12 Returns during the period 1/4/1998 to 31/3/2000 and discharged duty under normal procedure in respect of all products (i.e., goods produced in Induction Furnace Division as well as Rolling Mill Division). The instant proceeding has been initiated for charging duty on Ingots only under Section 3A of the Act. 4. Central Excise Officers during their visit to the factory of the respondent on 13/1/2000, bes .....

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dicating Authority over-ruled the objections raised by the respondent to the test report and concluded that the same will be applicable w.e.f. 13/1/2000, i.e., the date of drawl of the sample and it will have no effect prior to that date. He further proceeded to quantified the liability to pay duty under section 3A on or after 31/1/2000. In terms of the formula for determination of annual capacity of the induction furnace, prescribed under the relevant rules, he fixed the duty liability as ͅ .....

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ged this order on the ground that the respondent have been manufacturing MS-ingots only during the entire period from 1998 to 3/1/2000, since they have not changed the manufacturing process. They have further contended that as confirmed by the chemical examiner and further established by statements in the investigation, since the respondent has manufactured only non-alloy steel, the entire demand should be upheld. 7. In the cross-objection filed by the respondent, they have reiterated that test .....

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appellant. Ld. DR explained at length the case in detail. He argued that the Commissioner in the impugned order should have confirmed the full duty demanded in the show cause notice since the Chemical Examiner s report has established the mis-declaration on the part of the respondent. Further, he argued that on account of the deliberate mis-statement and withholding of material information on the part of the respondent , the Commissioner was wrong in holding that the demand is hit by time bar. L .....

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d to take CENVAT Credit of the duty payable at the ingot stage for use on the duty paid on the rolled products. 9. The respondent in their classification declarations as well as the periodical RT-12 Returns have declared their goods as alloy steel ingots. The Revenue authorities have never disputed this until the visit of the Central Excise Officers to the respondents factory on 13/1/2000 and sample of the product was drawn and tested by the chemical examiner. The chemical examiner in his repor .....

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reported by the Joint Director (retired) CRCL New Delhi on 3.2.2003 as per which party no. 1 s sample contained Manganese -0.386%, Chromium-0.012%, Copper 0.064%, Nickel -0.018% and Carbon 0.209% only. The test for A1, B, Co, Pb, Mo, Si, Ti, W and V is reported to be negative. It is observed that the percentage content of elements as reported in the test report is less than the percentage content of elements prescribed in Chapter Note 1(f) of Chapter 72 of CETA for other alloy steel:. CRCL is au .....

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port on the various elements contained in the respondents sample is compared with the specifications, for non-alloy steel as specified in Note 1 (f) of Chapter 72, the conclusion is that the respondent s items would fall for classification under other alloy steel under 7206.90. Consequently, respondent stands covered by the Compounded Levy Scheme and is required to discharge duty as per this scheme, as alleged by the Revenue. 12. In response to the challenge against the test report before the A .....

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e this demand to the date of induction of the Compounded Levy Scheme in 1998 on the ground that the respondent has brought nothing on record to show that they have changed their manufacturing process during the period 1998 to 2000. Further, the respondent had supplied the goods such as MS-Rounds, MS-Channels, etc., but have not produced evidence of products of MS-ingots. We are of the view that on the above grounds, there is no justification to pre-date demand to 1998. Allegation in the show cau .....

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unted by the Revenue against the impugned order is on the finding of the Original Authority that there is no deliberate mis-statement and hence, the extended period of 5 years cannot be invoked under Section 11A to fasten the demand. There is no dispute that the respondents have declared their product as those made out of alloy steel. They have consistently filed monthly returns during the period 1/4/1998 to 31/3/2000 declaring their product as alloy steel ingots and discharged the duty under .....

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