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2016 (7) TMI 798 - CESTAT ALLAHABAD

2016 (7) TMI 798 - CESTAT ALLAHABAD - TMI - Cenvat / Modvat Credit - Manufacturing of dutiable and exempted goods - maintenance of separate records - it was observed by the Central Excise Officers that they availed modvat credit in respect of inputs namely 'cullet' and 'other waste of glass' falling under Tariff Item No. 7001.10 and used the same in the manufacture of final products which were chargeable to duty and other final products which were not chargeable to duty. They did not maintain se .....

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ate of Chartered Accountant which was based on the data and facts contained in the SCN dated 23/9/98 which, after verification, had been accepted by the Revenue in the subsequent order of adjudication. Thus, we hold that there was nothing much left for the Id. Commissioner to examine the same and except arithmetical accuracy of the amount reversed and interest if any, paid. Accordingly, we allow the appeal on merits. - Decided in favor of assessee. - Ex. Appeal No. 4101/12 - Final Order No. 7019 .....

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f the Finance Act, 2010 read with Rule 57CC of the erstwhile Central Excise Rules, 1944. 2.1 The brief facts are that the Appellant M/s Pallwal Glass Works having Central Excise Registration No. 2/SKB/92 dated 01.07.1992 was engaged in the manufacture of Glass and Glassware falling under Central Excise Tariff Heading Nos. 7007.90, 7008.10 and 7015.00 of the CETA, 1985. The Appellant was availing MODVAT credit facility and taking MODVAT credit in respect of various inputs including cullet and oth .....

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nly Plot No. 429 (and not Plot No. 428) was mortgaged as a collateral security, It is submitted that the other Plot No. 428 was mortgaged not as security to the loan given by UPFC but for getting free and proper approach to Plot No. 429. It is submitted that the Appellant had out of the said loan amount of ₹ 75 lakhs had paid up about ₹ 30 lakhs of the loan (principal plus interest) and thereafter due to financial crunch defaulted in payment of instalment to the UPFC for reasons beyo .....

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trained the O.P. concerned from transferring or alienating the property in question to any person except to the petitioner and the Collector-Firozabad was directed to proceed in accordance with law, ignoring any direction of the State Government. The decision to be taken by Collector in respect of sale in question, shall be subject to further orders in the writ petition. In spite of letter dated 28/2/2003 by the MD of UPFC, requesting him not to confirm the sale and return the Recovery Certifica .....

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. 2.7 Or scrutiny of the RT-12 returns filed for the period from December, 1977 to March, 1998 by the Applicants, it was observed by the Central Excise Officers that they availed modvat credit in respect of inputs namely 'cullet' and 'other waste of glass' falling under Tariff Item No. 7001.10 and used the same in the manufacture of final products which were chargeable to duty and other final products which were not chargeable to duty. They did not maintain separate accounts in r .....

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roduct manufactured and then applying the said ratio to the quantity of exempted final product manufactured. The quantity of cullet and other waste and scrap of glass' so consumed in the manufacture of final products which were chargeable to duty and other final products which were not chargeable to duty, as calculated, is shown in the following chart: Chart - A Month Amount of Modvat credit avalled Rs. Total wt. Of cullet consumed MT Total wt. Of final products mfd. MT Ratio of Cullet & .....

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203.073 375.595 157.737 24.528 2.8 After determining the quantity of cullet and other waste and crap of glass' gone into production of the exempted goods and dutiable goods, the amount of modvat credit taken was calculated on prorata basis on the said quantity and the month as shown in the following chart 'B' and the same was reversed. Chart -B Month Total credit availed Quantity of inputs used Amount of credit atttributable to Total MT Dutiable goods MT Exempted goods MT Ratio Exemp .....

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of the inputs used in the manufacture of Exempted goods, as laid down in sub rule (9) of Rule 57CC of the Central Excise Rules, 1944, the manufacturer shall pay an amount equal to eight percent of the price of the final products which were not chargeable to duty at the time of their clearance from the factory, as per sub-rule (1) of rule 57CC. The Assistant Commissioner of Central Excise, Agra issued Show cause Notice under C No. V(3) DMD/67/98 dated 23.09.98 wherein it was alleged that in view .....

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ged that the Applicant cleared exempted goods valuing ₹ 96,32,854/- during the said period and exempted goods valuing ₹ 20,45,749/- were in balance. The amount @ 8% on the total value (Rs. 1,16,78,603/-) of the said exempted goods worked out to ₹ 9,34,288/-) which was payable by the Appellant. Instead, they reversed an amount of ₹ 5,473/- only. Hence they were liable to reverse the balance amount of ₹ 9,28,815/- or pay the said amount in cash. 2.10 The Deputy Commis .....

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t of ₹ 5,473/already reversed through RG23A from ₹ 9,34,288/-), the amount calculated at the rate of 8% of the exempted goods manufactured), and ordered payment of the said amount from the RG 23 A Pt. II Account or through cash. He also imposed a Penalty of ₹ 1,00,000/- under Rule 173 Q of the Central Excise Rules, 1944. 2.11 Applicant, after rejection of his appeal by the Id. Commissioner of Central Excise (Appeals), Kanpur has preferred an Appeal before this Tribunal, New Del .....

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recovery of the said dues. 2.13 Though the matter was still under dispute and Applicant's appeal challenging the impugned Order of the Id. Assistant Commissioner, was still pending before CESTAT, the Applicant had no alternative but to make the payment in cash, in lieu of the order of reversal of Modvat credit (or deposit in cash) Penalty imposed, to ward of immense pressure of the department and also to protect themselves from any further coercive action by the Department. 3.1 The Id.Counse .....

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with the 31st day of March, 2000 (both days inclusive) is pending on the date on which the Finance Bill, 2010 receives the assent of the President, then, notwithstanding anything contained in sub-rules (1) and (2) of rule 57C and sub-rule (1) and sub-rule (9) of rule 57CC, a manufacturer availing credit of specified duty in respect of any inputs, other than inputs used as fuel, and manufacturing final products which are chargeable to duty and also other final products which are not so chargeable .....

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Excise Rules, 1944 as amended by subsection (1) is laid down in sub-section (2) and (3) of Section 69 of the Finance Act, 2010 which reads as under: "(2) Where a person opts to pay the amount in accordance with the provisions of the Central Excise Rules, 1944, as amended by sub-section (1), he shall pay the amount along with interest specified thereunder and make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from a Chartered Accountan .....

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amount paid within a period of two months from the date of receipt of the application and in case the amount so paid is found to be less than the amount payable, he shall call upon the applicant to pay the differential amount along with interest, which shall be paid within a period of ten days from the date of receipt of the communication from the Commissioner in this regard." 3.3 In nutshell, the following procedure has to be adopted by the manufacturer/person that opts to pay the amount .....

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within a period of six months from the date on which the Finance Bill, 2010 receives the assent of the President; Submit documentary evidence to prove the payment; (iv) Submit a Certificate from the Chartered Accountant or Cost Accountant certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of the final products, which are exempted from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty. 3.4 In this regard, an .....

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ubmits that he has already paid the amount in accordance with the provisions of the Central Excise Rules, 1944 as amended by sub-section (1) of Section 69 of the Finance Act, 2010, as is shown in para 3.3, infra. 3.6 Applicant submits that during the relevant period he was availing Modvat credit in respect of inputs used in or in relation to the manufacture of final products. During the period from December, 1997 to March 1998, he used cullet and other waste and scrap of glass' in the manufa .....

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y/not chargeable to duty on prorata basis according to the weight of dutiable and non-dutiable final products manufactured. The amount so calculated was paid by making a debit entry in the RG23 Pt. Il account as under: Sl No. Month Amount Calculated on prorate basis Rs. Debit Entry in RG23A Part II 1. December, 1997 1,086.00 1258 dated 31.03.1998 2. January, 1998 2,226.00 215 dated 18.05.1998 3. February, 1998 1,600.00 386 dated 24.06.1998 4. March, 1998 561.00 494 dated 20.07.1998 TOTAL 5,473.0 .....

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2010 and since the amount and interest as envisaged under Rule 57CC read with Rule 57CCC, have already been paid to settle the issue finally, and as such further relief, consequential in nature, more particularly the grant of refund of the amount paid during pendency of the dispute in appeal stage. 4.2 Vide the impugned order-in-original, the Id.Commissioner rejected the application filed under Sub-section 2 of Section 69 of the Finance Act, 2010 read with Rule 57CCC of CER, 1944, observing tha .....

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notice issued by the Central Excise Department dated 23/9/98 and the figures mentioned therein are relied upon, in absence of books of accounts, which are not in the possession of the appellant as the same have been resumed by some other Government Department. The books could the books could not be examined for verification. The Id. Commissioner observed that he does not intend to rely upon the said Certificate of Chartered Accountant having been issued without verification of books of accounts, .....

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n 10 years old, were not available in the Divisional/Range Office. Accordingly, it was held that the appellant have failed to substantiate the correctness of the amount mentioned in the application and had also failed to produce the relevant records, even on demand by the Central Excise Department. With these observations, the application was held not maintainable and hence, rejected. 5. Being aggrieved, the appellant is before this Tribunal. 6. The learned Counsel, Shri Abhishek Jaju, appearing .....

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der the facts and circumstances, the Id. Commissioner have accepted the applicability of the amendment brought into force by Finance Act 2010 in the facts of the appellant's case, but have denied the benefit on flimsy ground. Further, the Id. Counsel urges that the revenue having relied upon the figures as mentioned in the returns filed with it, by the appellant, which is the basis of the earlier show cause notice, cannot reject the representation under Section 69(2) of the Finance Act, 2010 .....

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show cause notice dated 23/9/98, without any ostensible reason and the same is not permissible as it is further urged that the data in the show cause notice being accepted by the appellant and also relied upon by the Revenue as is evident vide order of adjudication dated 28/2/2000 passed by the Deputy Commissioner, Agra. The Id. Commissioner has erred in not relying on the same although the same have been relied upon by the appellant in the representation under Section 69 (2) of the Finance Act .....

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a dispute was pending between the appellant and the Revenue on the date when the Finance Act, 2010, was assented to by the Honourable President of India. Thus, the very basis of the contention of revenue to knock out the application submitted by the appellant under Rule 57CCC is unfounded. Further, the Honourable High Court was of the view that the appellant is entitled to take benefit under Section 69 (2) of the Finance Act, 2010 read with Rule 57CCC as on the re4evant date that is 8/5/2010. Di .....

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