TMI Blog2017 (11) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... oods), 2001 on goods procured in accordance with this procedure. That, however, is intended to provide legal sanctity for payment of duty by the buyer of goods cleared without payment of duty. This has been duly acknowledged in the order of the lower authority for confirmation of the demand on goods cleared as such, i.e., bought out. For the goods that were not so cleared but were used in manufacture of goods other than that intended in the exemption notification or used otherwise, the first appellate authority has considered the payment of duty on clearance at a value inclusive of the inputs to be sufficient compliance. The specific provision in the Rules supra for clearance as bought out items does not cover other clearances. All manufactured goods, to the extent that they are not exempted, are required to be cleared on payment of duty. The exemption availed on the goods procured by the appellant enabled the manufacturer to clear the goods without payment of duty but which, nevertheless, requires the recipient to discharge the burden of duty liability in the event of non-utilisation of the goods for the intended purpose. The liability to discharge duty on the goods manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Authorised Representative for Revenue on the ground that the lower authorities had failed to examine the substantial evidence but appeared to have been swayed by the submission of respondent that duty liability had been discharged on the value of such exempt raw-materials that was included in the assessable value of ineligible finished goods. It was contended that the respondent frustrated the intent of the notifications and the purpose for which exemption had been accorded to the raw materials; thereby, the authorities were in error. A further contention is that the quantum of duty leviable had not been scrutinised. On behalf of Revenue, it was submitted that reliance was erroneously placed on the statement of the respondent that it had maintained all the records to substantiate the procurement of the goods that were not available for inspection. 4. Learned Authorised Representative, reading the statements recorded from different persons, summarily submitted as under: (i) appellant has not maintained proper records of the inputs received; (ii) statutory records required to be maintained were not furnished to the audit party; (iii) the respondent did not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is contended that while the adjudicating authority, in that matter disputed in appeal no. E/2572/2006, adverts to the production of all details by the assesse, paragraphs 9 and 10 of the adjudication order demonstrates otherwise. So far as appeal no. E/1255/2007 is concerned, Learned Authorised Representative submits that the impugned order erred by failing to bring on record the documents purportedly verified by him to his satisfaction for concluding that the averments of the respondent were based on evidence. 9. In view of the above submissions, it is the prayer of Revenue that the matter may be sent back for proper examination of the quantum of the procurements effected by the respondent against CT-2 certificate and quantum of the goods used for the notified purpose with levy of appropriate duty on the goods that had not been used for approved purpose. 10. In reply to these submission of Revenue, it was contended on behalf of the respondent that rule 196(2) which lays down the procedure for the purpose of Chapter X had not been contravened and hence did not give cause for penalising them or subjecting them to adjudication. According to Learned Counsel, the raw materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, thereby, is barred from raising any grounds that were not before the lower authorities. Before proceeding to record our findings, we must necessarily peruse the exemption notification that has given rise to these disputes. The relevant extract of notification no. 5/1998-CE dated 2nd June 1998 is: In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below or column (3) of the said Table read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading No. or sub-heading No. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said Schedule), specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon which is specified in the said Schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table, subject to the relevant conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority confirmed demand of ₹ 13,43,674 under section 11A of Central Excise Act, 1944, along with the interest thereon, and imposed a penalty of like amount under section 11 AC of Central Excise Act, 1944. In impugned order-in-appeal no. PI/65/06 dated 20th February 2006, Commissioner of Central Excise (Appeals), Pune-I restricted the demand to ₹ 39,146 on inputs cleared as bought out items while dropping the demand of ₹ 12,55,467 pertaining to clearance as spares and ₹ 49,877 used for manufacture of dutiable pumps. Aggrieved by this, Revenue has sought the restoration of the original demand in appeal no. E/2650/2006. 17. At the Pimpri plant, assessee was issued with show cause notices demanding duty of ₹ 32,36,085 for the period from December 1998 to December 2002 and ₹ 26,456 for February 2003. The adjudicating authority restricted the demand to the clearances of inputs as bought out item and confirmed recovery of ₹ 30,776, along with interest thereon, while imposing penalty of like amount imposed under section 11AC of Central Excise Act, 1944. Though both sides carried this dispute to Commissioner of Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her clearances. All manufactured goods, to the extent that they are not exempted, are required to be cleared on payment of duty. The exemption availed on the goods procured by the appellant enabled the manufacturer to clear the goods without payment of duty but which, nevertheless, requires the recipient to discharge the burden of duty liability in the event of non-utilisation of the goods for the intended purpose. The liability to discharge duty on the goods manufactured out of the inputs so procured remains unchanged and is mandated in the Central Excise Act, 1944; discharge of that liability will not suffice to make good the duty liability that was waived under the exemption notification. The Larger Bench of the Tribunal in re Supreme Lamps held that: 2......... The Supreme Court declared that the procedure laid down in Chapter X is meant to establish receipt of goods by the recipient unit and their utilisation; that the object and purpose of the procedure laid down in Chapter X is to ensure that goods are not diverted or utilised for some other purpose, under the guise of the exemption Notification; that goods manufactured at the supplier's end were excisable goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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