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1999 (5) TMI 625

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..... llant company have intentionally colluded with each other (i.e. two divisions of the same Company having different excise Registration numbers.) with a mala fide intention to defraud the Government of legitimate revenue. The Appellant Company s chemical division sold their entire production of Bulk drugs to the appellants pharmaceutical Divisions who were using them in the manufacture of P & P medicaments falling under Chapter 3 of the Schedule to the CETA. By the impugned order he confirmed the duty of ₹ 1,53,93,728/- on Pharmaceuticals Division of the Appellants holding that the said division with a malafide intention to defraud the Government of legitimate revenue by availing wrong credit in that division of deposit of excess d .....

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..... division not to take benefit of exemption and to pay tariff rate of duty. According to the Department, the tariff rate of duty paid was not duty but was only deposit. The credit taken on such duty paid pharma division was improper. Two show cause notices were issued on 17-7-1997 for the period 23rd July, 1992, to June, 1993. The appellants objected to the same inter alia on the ground that the classification list subsequent to July, 1992 were approved without any hearing. RT.12 returns have been approved. Therefore, a Show cause notice issued in July, 1992 could not have been issued under Section 11A of that Act read with Rule 57-I(i)(ii) of the Rules charging the appellants with collusion. The adjudicating authority did not agree with the .....

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..... Auto Parts Industries and SS Tin (P) Ltd. v. Collector [1998 (79) ECR 850 (T) = 1998 (28) R.L.T. 268]. He submitted that in terms of the Modvat rules the factum of payment on the inputs creates a right in favour of the assessee for the availment of Modvat credit. Once such payment is not challenged the Department cannot deny the Modvat credit. It is not challenged by the Department in this case that the chemical division did not pay the duty. It is undisputed in this case , it is argued , that inputs were specified under Rule 57A and such inputs are being duly indicated in the declarations filed under Rule 57G which was acknowledged by the proper officer. The inputs have been duly received under the cover of duty paying documents and the s .....

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..... accumulated in the book of accounts of M/s. B.W.(C.D) and there was no legal means with them to encash the same. Hence, the said M/s. B.W.(C.D) evolved a modus operandi in collusion with M/s. B.W.(P.D) according to which M/s. B.W.(C.D) filed a revised classification list w.e.f. 23-7-1992 for their bulk drugs and opted to pay 15% ad valorem rate of duty in utter disregard of the available Notification No. 31/88-C.E., dated 1-3-1988 thereby they could exhaust the accumulated Modvat credit and at the same time M/s. P.W.(C.D) could also enrich their Modvat account by availing credit @ 15% on the said bulk drugs. Thus, during the period from 23-7-1992 to 30-6-1993 M/s. B.W.(C.D) utilised the accumulated Modvat credit balance of ₹ 2,30,90,5 .....

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..... . They have also contravened the provisions of Rule 173B, and 173B by not properly under Rule 173G. Further M/s. B.W.(P.D) have also in collusion with M/s. B.W.(C.D) contravened the provisions of Rule 57A read with 57G with intent to evade payment of duty." 6. It is admitted fact that the two divisions are under same divisions. (sic.) Under the same division there should not be collusion between one unit of the same company and another unit of the same company. Collusion contemplates meeting of minds between two separate legal persons. There cannot be collusion by a single person. It involves concerted action of two independent persons. Here units are of the same company. It is wrongly found by the Assessing authority that sales w .....

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..... in (P) Ltd. v. Collector [1998 (79) ECR 850 (T) = 1998 (28) R.L.T. 268 after considering the Everest Converters case and also Lakshmi Enterprises case, [1997 (96) E.L.T. 428 (Tribunal) = 1997 (23) R.L.T. 613 the final order of the Tribunal, the Tribunal held that the option is left to the assessee to have full exemption or pay duty and Modvat credit on the inputs. 8. In this case a further question will arise whether the adjudicating authority was right in claiming invoking larger period of limitation. It is an admitted fact that classification list has been approved from 12-3-1993 without any questions. RT 12 returns have been approved without any objection. If that were to be so, it is not possible for us to accede to the impugned re .....

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