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TMI Blog2019 (12) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... KSF (PYU) 2) I hereby disallow the exemption benefit under notification 6/2000-CE dated 1.3.2000 as claimed in declaration No 1/2000-01 dated 8.5.2000 under Rule 173B of the Central Excise Rules, 1944 by M/s KSF (PYU) 3) I hereby confirm the demand of Central Excise duty totally amounting to Rs. 38,24,41,595/-/- (Rupees Thirty Eight Crore Twenty Four Lakhs Forty One Thousand Five Hundred and Ninety Five only) for the period April 2000 to March 2001 and order the recovery from them under Section 11A of Central Excise Act, 1944. 4) I impose penalty of Rs. 38,24,41,595/-/- (Rupees Thirty Eight Crore Twenty Four Lakhs Forty One Thousand Five Hundred and Ninety Five only) on them under Rule 25 of Central Excise Rules, 2002 read with section 11AC of Central Excise Act, 1944. 5) I order recovery of interest at appropriate rate on the duty confirmed at Sr No (3) above, from them under the provision of Section 11AB of the Central Excise Act, 1944. (B) In respect of Show Cause notices mentioned at (Sr No 1 to 32) of Table at Para No 12, covering the period from April 2001 to June 2001:- 1) I hereby reject the declaration No 1/2000-01 dated 8.5.2000 filed under Rule 173B of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (7) Shri G M Jain, Vice President (Fin) (8) Shri D B Roongtha, Factory Manager (9) Shri R S Dhand, Vice President (Marketing Processed Yarn) of the impugned Show Cause Notice, under Rule 209A of the Central Excise Act, 1944/ Rule 26 of Central Excise Rules, 2002 as applicable at relevant time of the SCN period. 2.1 Appellants (M/s Konkan Synthetic Fibers (KSF) (Prop Century Enka Ltd) having Central Excise Registration No KSFBOM- III/PNL-II/MHD/47/92 for manufacture of partially oriented yarn 9POY) and different types of processed yarn (PY) falling under Chapter sub heading 5402.32, 5402.43, 5402.52 of Central Excise Tariff Act, 1985 respectively in the single composite plant. They availed MODVAT/ CENVAT Credit and paid the Central Excise duty advalorem. 2.2 The requested for bifurcation of their existing unit into two units for implementing, product management concept policy and requested separate Registration on the basis of information provided by them and as requested the existing manufactory of appellant at C-51, MIDC, Mahad registered under Central Excise, was altered by constructing a suitable compound wall and in/ out gate. The existing Central Excise Registration was am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by processed yarn product group of erstwhile KSF (Prop M/ CEL) and the goods produced by the so called new site created on the basis of same product group in the name of KSF(PYU) being the same, it appeared that old and new stock of such goods was sold at same price through depot of CEL as per the sales policy. The old stock was cleared on payment of duty at the rate of 36.8%, whereas new stock was cleared at specific rate in terms of notification 6/2000-CE dated 01.03.2000. Thus fraudulent intentions to evade payment of duty, by claiming themselves to be independent texturizer was quite evident. 2.7 The fact that artificial bifurcation done was only on paper and unit continue working as one composite unit, is evident from the following: * Prior to 26.04.2000.for Sales Tax Department, KSF (Prop CEL) Mahad was functioning as single unit engaged in manufacturing of POY and Processed Yarn. Accordingly, it was registered with the Sales Tax Department in the same name and for the place of business "C-61 MIDC Mahad". Even after bifurcation into two units, no change was incorporated in the sales tax registration. Since these two units were working under "Packaged Scheme of Incentive" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in connection with manufacture, production, storage, removal or disposal of such goods should not be confiscated under the provisions of Rule 209 of Central Excise Rules, 1944 Penalty under rule 209A of Central Excise Rules, 1944 was also proposed on other noticees. 2.8 Subsequently periodic show cause notices as detailed below were issued to the appellants, demanding duty short paid by them. S No SCN No Date Amount Period 1 V/Adj (SCN) 15503/M VII/01 23.11.01 9324997 01.04.01 to 05.04.01 2 V/Adj (SCN) 15534/2001/MVII 27.12.01 9335519 06.04.01 to 10.04.01 3 V/Adj (SCN) 15535/2001/MVII 27.12.01 8706184 11.04.01 to 13.04.01 4 V/Adj (SCN) 15536/2001/MVII 27.12.01 7349010 14.04.01 to 16.04.01 5 V/Adj (SCN) 15537/2001/MVII 27.12.01 9353561 17.04.01 to 18.04.01 6 V/Adj (SCN) 15538/2001/MVII 27.12.01 7289656 19.04.01 to 20.04.01 7 V/Adj (SCN) 15539/2001/MVII 27.12.01 5256257 21.04.01 to 22.04.01 8 V/Adj (SCN) 15540/2001/MVII 27.12.01 8811753 23.04.01 to 24.04.01 9 V/Adj (SCN) 15541/2001/MVII 27.12.01 8539632 25.04.01 to 27.04.01 10 V/Adj (SCN) 15542/2001/MVII 27.12.01 9281837 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore Commissioner (Appeal) which was allowed by the Commissioner (Appeal) vide his order in appeal dated 09.08.2001 in their favour holding that two registrations were correctly granted. Against the order of Commissioner (Appeal) revenue filed the appeal to CESTAT which was dismissed by tribunal vide its order as reported at [2004 (171) ELT 494 9T-Mum)]. The appeal filed by Revenue against the order of CESTAT bearing Central Excise Appeal No 39/2005 was dismissed by the Hon'ble Bombay High Court vide its order dated 14.06.2013. Thus the issue of bifurcation of the unit and grant of two registrations has attained finality and could not have reopened in the subsequent proceedings. ii. It was not proper on the part of Commissioner to hold that they cannot be treated as an independent processor. The definition of an independent texturizer is a person who does not have the facility in his factory including plant and machinery for producing POY. They in relation to their factory at KSF (PYU) are an independent texturizer and from the phrase used in the exemption notification 6/2000-CE, the benefit of that notification could not have been denied to them. iii. In the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly registered factories. * As per the ground plan there was Separate Gate for each factory and they had made application to Joint Director Industrial Safety and Health on 20.04.2000 for modification of existing factory license. * Reliance placed on the "Explanatory Memorandum to Budget Changes 2000-01" and the decision of tribunal in case of Dhampur Sugar [2001 (129) ELT 73 (T-Del)] {the appeal filed by the revenue against the tribunal order was dismissed by the Apex Court as reported at [2007 (216) ELT A 23 (SC)] do not advance the case of revenue. In case of Rollatainers Ltd [2004 (170) ELT 257 (SC)] it has been specifically held that merely because both factories are located in the same premises will not lead to the inference that both factories are one and same. * The decision of Hon'ble Apex Court in case of Grauer & Weil (India) Ltd 1994 (74) ELT 481 (SC) is distinguishable. * In case of Bhilosa Industries Private Ltd [2015 (317) ELT 283 (T-Ahmd)], Ahmedabad bench has while considering the expression "in his factory" in the same notification state that, will mean the factory of manufacturer and the same factory. * In case of Amaravathi S V Paper Mill Ltd [2010 (256 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Sales Tax and Textiles Cess which are admissible have been disallowed without assigning any reason except that no documents were produced. * The benefit of cum duty price too should have been allowed to them after taking into account the excise duty payable @36.8% as has been claimed by them to be inclusive in the sales price and sought to be recovered by revenue. * In case the benefit of exemption under notification is to be denied to them, then benefit of CENVAT Credit of duty paid on inputs should be given to them. Earlier the same was not availed by them as they claimed exemption under Notification No 6/2000-CE. 4.3 Arguing for the revenue and in his submissions, learned special counsel submitted that- * The issue in these appeals is in respect of exemption as per notification No 6/2000-CE, Sr No 114 and 134. Subject to the conditions specified this notification prescribedo * At Sr No 114, duty @ Rs. 2.50 per kgs on texturized yarn manufactured by an independent texturizer who does not have facility in his factory (including plant and equipment) for producing partially oriented yarn (POY) of polyester; * At Sr No 134, duty @ Rs. 9 per kg on dyed, printed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per his order No M-VII/MHD/09/2001 dated 25.05.2001 and restored the position as it existed prior to 26.04.2000. Appellant to the matter to Commissioner (Appeal) who allowed the appeal filed by them and set aside the order of Deputy Commissioner. Revenue carried the matter to tribunal, the appeal filed by revenue was dismissed by tribunal vide order No A/616- 624/2004-WZB/C-I dated 24.03.2004. Revenues appeal against the tribunal order was dismissed by Bombay High Court on account of delay in filing the appeal. * The issue involved in the present case is for denial of benefit of exemption under Notification No 6/2000-CE as claimed by the Appellants and is not the same as the issue decided by the Tribunal in its order dated 24.03.2004, where the issue was in relation to revocation of two registrations granted. * Admittedly on 01.03.2000, M/s KSF were not an independent texturizer as they had the facility to manufacture POY in their factory at Mahad and hence not entitled to the benefit of the Notification No 6/2000-CE dated 01.03.2000. * In order to claim the benefit of exemption under the said Notification, appellants bifurcated the unit into two KSF (PYU) and KSF(POY) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re they were manufacturing POY. The term factory used in the notification no 6/2000-CE, should mean any of the factories of the manufacturer as "legal entity" as per Section 13 of General Clauses Act, 1897. * In case of Dilip Kumar & Co [2018 (361) ELT 577 (SC)], Hon'ble Supreme Court has held that exemption notification should be interpreted strictly and any ambiguity in the notification should be interpreted in favour of revenue. * Reliance placed by the appellants on the decisions in case of Rollatainers Limited [2004 (170) ELT 257 (SC)], Amaravathi S V Paper Mills Ltd [2010 (256) ELT 679 (SC)] & Bansi Paper Mills Pvt Ltd [2014 (306) ELT 650 (T-Mum)] is erroneous as these decisions are clearly distinguishable Reliance placed by the Appellants on the decision in case of Bhilosa Industries Pvt Ltd [2015 (317) ELT 283 (TAhmd)] is erroneous because the said decision besides being distinguishable on facts is an order in sub silentio. Also appeal against this order has been admitted by the Apex Court * The decision of tribunal in case of appellant, holding that "two premises in question clearly constitute two separate factory", was not the issue before the tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, - from so much of the duty of excise specified thereon under the First Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table; and from so much of the Special duty of excise leviable there on under the Second Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column(5) of the said Table, subject to the relevant conditions specified in the Annexure to this notification, and referred to in the corresponding entry in column (6) of the said Table. Provided that in respect of S. No. 65 of the said Table, nothing contained in this notification shall apply on or after the first day of April, 2000. Explanation.- For the purposes of this notification, the rates specified in columns (4) and (5) of the said Table are ad valorem rates, unless otherwise specified. Table S. No. Chapter or heading no. or subheading No. Description or goods Rate under The First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f polyesters falling under sub-heading No.5402.42. The word independent texturizer has not been defined in the said notification. As per the appellants because the registrant who has claimed the benefit of the exemption, do not have facility in the same factory to produce the Partially Oriented Yarn, he will qualify as an independent texturizer for the purpose of said notification. They have further referred to the definition of "Independent Texturizer" as per explanation to sub-rule 3(b) of Rule 57AG of Central Excise Rules, 1944, which read as under: "Explanation: For the purposes of this sub rule, "independent texturizer" means a manufacturer engaged in the manufacture of texturized yarn (including draw-twisted or draw-wound yarn) of polyesters falling under heading No 5402 of the said First Schedule, and who does not have the facility in his factory (including plant and machinery) for manufacture of partially oriented yarn of polyesters falling under sub-heading No 5402.42 of the said First Schedule." The explanation referred by the appellant states the same as has been stated in the notification and do not add any value to the argument of the appellants. 5.3.3 The entire ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, cannot be accepted. The letterhead of the erstwhile KSF itself states "M/s. Konkan Synthetic Fibres (Prop. CEL)". The application states that M/s. KSF are a Division of M/s. Century Enka Ltd. Further application for L. 4 licence in 1989 was made by erstwhile M/s. KSF and in 1992 when Central Excise registration was required instead of licence, it was the erstwhile KSF that made the application and was also granted Central Excise Registration. At no point of time did the Excise Authorities raise the issue that a Division of a company could not make such application. It is also to be noted that the respondents company had given Power of Authority to the Factory Manager Shri D.B. Roongtha to enable to apply for all licences etc. for Century Enka Ltd. 7. The two premises in question clearly constitute two totally separate factories which have been separately registered. In the case of CCE v. Broach Textile Mills Ltd. [1998 (79) ECR 411], the Tribunal has held that the registration cannot be denied to separately registered premises, which function as two different factories. The contention of the Revenue that the respondents put up a fence for creating the new factory for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "was not in a position to dispute this legal position". The judgment in Panchmukhi (supra) has little precedential value. The point whether Dharmada involved in Panchmukhi (supra) and the surcharge held as price in Tata Iron & Steel (supra) were identical and liable to be included in the transaction value passed sub silentio. Salmond on Jurisprudence Twelfth Edition p.15h states that a decision held is not binding since it was decided "without argument, without reference to the crucial words of the rule, and without any citation of authority", therefore, would not be followed. The author also states that precedents sub silentio and without arguments are of no moment. This is enough reason for not treating the decision in Panchmukhi (supra) as a binding precedent." 5.3.4 Now coming to the phrase ""independent texturizer who does not have the facilities in his factory (including plant and equipment) for producing partially oriented yarn (POY) of polyesters". In case of Dhampur Sugar Mills [2001 (129) ELT 73 (T-Del)], following was held: 4. We have considered the submissions of both the sides. As per Section 2(e) of the Central Excise Act "factory" means any premises, including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (SC)]. As per the ratio laid down by this decision, the concept of factory under Central Excise has been delinked from the Registration granted. It has been held that there can be more than one registration within the same factory. Counsel for the Appellant submitted that Apex Court in the case of Rollatainers, has taken a contrary view. Hon'ble Apex Court has in case of Rollatainers, held as follows: 8. Simply because both the factories are in the same premises that does not lead to the inference that both the factories are one and the same. In the present case, from the facts it is apparent that there is no commonality of the purpose, both the factories have a separate entrance, there is a passage in between and they are not complimentary to each nor they are subsidiary to each other. The end product is also different, one manufactures duplex board and the other manufactures paper. They are separately registered with the Central Excise Department. The staff is separate, their management is separate. It is also not the case of revenue that end product of one factory is raw material for the other factory. From the above facts it is apparent that there is no commonality between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to bifurcation. 5.3.5 Thus the interdependence of the two units as the entire raw material i.e. POY for KSF (PYU) was being supplied from KSF (POY), completely distinguishes the present case from that of Rollatainers. In case of Grauer and Weil [1994 (74) ELT 481 (SC)] Hon'ble Apex Court held as follows: "10. The Tribunal also in its turn, re-appraised the relevant materials and concurred with the finding of the Collector with the following observations : "Here, the appellants were engaged in the manufacture of sodium bichromate, a vital input for manufacture of chromic acid and using it as such. How the two activities can be said to be independent of each other passes our comprehension, especially considering the other features of the case, i.e. common water and power connections, common payments for these facilities, common payments to workers, common delivery challans, etc. This is not, therefore, a case in which it can be said that the activities in the chromic acid section were not connected with but were totally independent of the activities in the rest of the premises." 11. From a bare perusal of the definition of factory under Section 2(m) of the Factories Act, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be dismissed. We order accordingly with no order as to costs." Similarly the other decisions relied upon by the appellants in case of Bansi Pulp and Paper Mills Pvt Ltd [2014 (306) ELT 650 (T-Mum)]. 5.3.7 Now coming to the phrase "independent texturizer" used in the Notification No 6/2000-CE, we are of the view that independent texturizer, is a person (legal or natural) who procures the partially oriented yarn from the open market and then clears the texturized yarn after texturizing the same. We are holding this view because the phrase "independent texturizer" used in the notification is followed by the phrase "who does not have the facilities in his factory (including plant and equipment) for producing partially oriented yarn (POY) of polyesters", which implies that he has no facility to produce the partially oriented yarn. Thus procurement of the partially oriented yarn which is the raw material to start with for him can be only by way of purchase. Undisputedly KSF(PUY) and KSF (POY) are having common sales tax registration and PAN and are proprietorship concerns of M/s CEL, before and after bifurcation. The interpretation put by the tribunal in case of Bhilosa Industries Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termining the duty short paid by them. Rejecting their plea on valuation, the Commissioner has in his para 44 and 45 of his order held as follows: "44. As regards the aforementioned plea of the noticee, I find that the demand in the impugned SCNs has been computed based on the chartered Accountants Certificate dated 27.04.2001 produced by the noticee. The assessable value in terms of section 4 of the Central Excise Act, 1944 and the valuation of the Rules thereof, has been considered as per the declared value in the C.A. Certificate. However, the deduction claimed on account of quality discount & rebate/cash discount, the noticee failed to adduce any documentary evidence to claim that these deductions are in the nature of normal trade discounts. Accordingly, I reject their claim in the matter. Similarly, apart from a bald claim they have not produced any documentary evidence to substantiate their claim that Textile Committee Cess has been paid and that it is in the nature of permissible deduction in terms of section 4 of the Central Excise Act, 1944. In the absence of such evidence, their claim to deduct the same from the assessable value cannot be accepted and is hence reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy the prices are inclusive of 36.8%, which is Rs. 120 per kg. and according to payment details; it is recovered from the customers. However, in the invoice number 17 dated 03.04.2001, the Central Excise duty paid Rs. 2.5 per kg, plus additional duty @15%. Are you agree that the above facts are correct." "I have seen above papers. Above statements are correct. However, detailed explanation can be provided by V.P. (Marketing). Mr. R. S. Dhand, I have put my signature on above documents, in token of having seen the same." 45.2 Thus, it is evident that the noticee have paid Central Excise duty @ Rs. 2.50 per kg + 15 % additional, whereas in actuals they have charged and collected from their customers such duty @ 36.80% adv, and hence their claim to deduct Central Excise duty @36.80% adv is not acceptable." 5.4.2 We are not in agreement with the approach made by the Commissioner in rejecting the deductions claimed by the appellants for determining the assessable value from the sale value at depot. Commissioner should have considered and allowed the admissible deductions from the sale value for determination of assessable value. While doing so Commissioner should have taken into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itish Courts have done and to dissociate ourselves from the observations of Shah, J. and similar observations made elsewhere. The evil consequences of tax avoidance are manifold. First there is substantial loss of much needed public revenue, particularly in a welfare state like ours. Next there is the serious disturbance caused to the economy of the country by the piling up of mountains of black money, directly causing inflation. Then there is "the large hidden loss" to the community (as pointed out by Master Sheatcraft in Modern Law Review 209) by some of the best brains in the country being involved in the perpetual war waged between the tax-avoider and his expert team of advisers, lawyers and accountants on one side and the tax-gatherer and his perhaps not so skilful, advisers on the other side. Then again there is the 'sense of injustice and inequality which tax avoidance arouses in the breasts of those who are unwilling or unable to profit by it'. Last but not the least is the ethics (to be precise, the lack of it) of transferring the burden of tax liability to the shoulders of the guideless good citizens from those of the 'artful dodgers'. It may, indeed, be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last more than ten years. We have kept pace with the development of the PFY industry and the emergence as also greater use or value added products and have accordingly established facilities not only for manufacture of PFY but also for value added products viz. Texturised Yarn, Draw Twisted/Draw Warper Yarn, Dyed Yarn, etc. CEL is a multi locational company manufacturing variety of products which are briefly given below : Location/Site Name of the unit/division Products manufactured Pune (Century Enka Ltd.) POY. PFY. NIC Mahad Konkan Synthetic fibres; POY. PFY Bharuch Rajshree Polyfil Chips POY The corporate office for all the three location is at Pune site, the production and marketing of the products manufactured at various location is generally under the control of the Managers/CEOs who are in charge of each site location. This was a natural fallout of the fact that each site/location was separately developed at different points of time. However, we now find that this is an inefficient way of managing our business. The market for POY and the market for value added products is different and different strategies are required to address the market. Production and pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with separate piece of land, buildings, manufacturing machines and utility services except very limited areas of services like ETP, compressed air, etc. for which adequate transfer pricing mechanics will be put in place so that appropriate cost of such services provided by one unit will be chargeable to the other. As a part of this process, taking a separate excise registration becomes imperative and therefore we are submitting herewith our application in Form R1 for registration of the new unit in name and style of KONKAN SYNTHETIC FIBRES - POY UNIT. The ground plan with detailed write up about manufacturing process, is enclosed. Simultaneous to granting new registration, you are also requested to modify the ground plan of existing unit by deleting the areas now transferred to new unit and also adding the words "Processed Yarn Unit" after the present name which will now stand modified as KONKAN SYNTHETIC FIBRES - PROCESSED YARN UNIT. We would also like to add that presently our products attract ad valorem excise duty @ 36.8% and we avail MODVAT/CENVAT' credit on inputs as well as capital goods used by us. After segregation, the product of new unit - POY will attract excise du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is for the noticee to disclose the true facts regarding their manufacturing activity to the _ department and the notice cannot take advantage of the fact that the Excise Department had been visiting their unit in order to resist the invocation of larger period. In another judgment of M/s. Jaishri Engg Co. Pvt. Vs CCE [1989(40)ELT 214(SC)] the Honourable Supreme Court has held that "the fact that Department visited the factory of appellant and they should have been aware of the production of goods in question, were no reason for the appellant to truly and properly describe these goods". Further the intention to evade duty has at time to be inferred by the act of parties, because is done by stealth and it is not always possible for the department to establish evasion with documents that conclusively show the intention to evade duty. 'Following the ratio of above said decisions of Honorable Supreme Court & CESTAT, I find that the element of suppression with intention to evade payment of duty exist in the present case and it has been substantially expend in para 31.2 to 32 above, hence, I am inclined to hold that the extended period to demand duty has correctly been invoked in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed in the following decisions: a) Kanhai Ram Thakedar [2005 (185) ELT 3 (SC)] b) TCP Limited [2006 (1) STR 134 (T-Ahd)] c) Pepsi Cola Marketing Co [2007 (8) STR 246 (T-Ahd)] d) Ballarpur Industries Limited [2007 (5) STR 197 (T-Mum)] 5.7 Whether penalties are imposable on appellant. 5.7.1 We have held that appellants have by way of omission and commission, contravened the provisions of Central Excise Act, 1944 and the Rules made there under with the intention to evade payment of duty. Commissioner has in para 49 and 49.1 held as follows: "49. These acts of commission and omission of all the Noticees as Sr.No.1 to 9 have resulted in short payment of Central Excise duty totally amounting to Rs. 2,29,27,38,960/ - covering the period April 2000 to March 2003 and is recoverable from them. I find that the investigations carried out clearly established that it was with only one intention of taking undue benefit and evading payment of Central Excise duty, all the said notices have indulged in above acts of commission and omission and as such proviso to Section 11A(1) is clearly invokable in this case. The said differential duty short paid is therefore recoverable along with inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides." 5.6.3 In view of the above we uphold the order of Commissioner to the extent of imposing penalties under Rule 173Q of the Central Excise Rules, 1944 or Rule 25 of the Central Excise Rule 2002 as the case may be read with Section 11AC of the Central Excise Act, 1944. However the quantum of penalty needs to be redetermined after determination of actual duty evaded by the appellants. 5.8 Whether penalties are imposable on four functionaries in the unit. 5.8.1 Commissioner has in para 50 and 50.2 of his order recorded as follows: "50. In his statement dated 27.02.2001, recorded under section 14 of the Central Excise Act, 1944, Shri D.B. Roongtha, admitted that, as per the direction of Shri G.M. Jain, Vice President(Fin), he filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and as such rendered themselves liable for penal action under Rule 209 (A) of Central Excise Rules, 1944 and Rule 26 of CER, 2002 as applicable during the respective period as proposed in the respective SCNs." 5.8.2 In view of the specific finding recorded by the Commissioner, to the effect that the four functionaries were instrumental and in knowledge of the entire façade being created to evade payment of duty we uphold the penalties imposed on these functionaries. However, the quantum of penalty needs to be re-determined after ascertaining the duty evaded. 5.9 CENVAT/ MODVAT Credit 5.9.1 Appellant have in their submissions stated that for claiming the exemption under Notification 6/2000-CE and its successor notifications they had not availed the benefit of CENVAT/ MODVAT credit in respect of the inputs received by them as per the condition specified for availing the exemption. If the benefit under that notification is not admissible to them then they should be allowed the benefit of CENVAT credit of duty paid on the inputs. 5.9.2 We do not have any hesitation in holding that the benefit of CENVAT/ MODVAT credit in respect of the duty paid on the inputs used by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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