TMI Blog2020 (1) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified area and had started commercial production with effect from 22.03.2002 and requested sanction of eligibility certificate and that the Assistant Commissioner by an order dated 27.09.2002 held that Ishaan is eligible for exemption under the said notification by way of refund of duty paid from account current on the products allowed to be manufactured and cleared; accordingly an amount of ₹ 10,21,26,696/- was refunded to Ishaan during the period from October 2002 to December 2004 for clearances claimed to have been during March 2002 to November 2004 - By the impugned order the Revenue has sought to recover an amount of ₹ 8,92,62,243/- out of the said refunded amount in terms of Section 11A(2) of the Act, pursuant to a show cause notice issued under the Proviso to Section 11A of the Act, as amount wrongly refunded under the said Notification No. 32/99-CE. A further sum of ₹ 53,05,582/- has also been confirmed against Ishaan as wrong cenvat credit availed and utilised in terms of Rule 12/14 of the Cenvat Credit Rules 2002/2004 read with Section 11A of the Act. In the present case, since according to the show cause notice and the impugned order themselves the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) upon Basu Deo Agarwal (Noticee No. 5 - SCN dt. 28.02.2006) (v) upon Jugal Kishore Agarwal (Noticee No. 6 - SCN dt. 28.02.2006) (vi) upon Rajib Kumar Lalwani (Noticee No. 7 - SCN dt. 28.02.2006) and (vii) ₹ 50,000/- upon Baijnath Agarwal (Noticee No. 8 - SCN dt. 28.02.2006) under Rule 26 CCR 2002. The Commissioner dropped the proceedings initiated under SCNs dated 29.08.2006, 17.08.2006, 15.06.2006, 16.04.2006, 16.04.2006 28.11.2007 against the respective show cause noticees therein, being different units of Manaksia Ltd. situated at various places in the country. But while dropping the proceedings against Manaksia Ltd., Anjar, Kutch, Gujarat, initiated by SCN dated 28.11.2007, the Commissioner appropriated a sum of ₹ 2,37,57,760/-, deposited by it under protest during investigation, towards the above duty demand confirmed against Ishaan. 2. Being aggrieved by the impugned orders, to the extent it is against them both the respective assessees, their officers and the Revenue have preferred the instant appeals. 3. The issues in the present appeals relate to av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise Rules and the Cenvat Credit Rules, as applicable during the relevant period so as to enable the buyers of the products manufactured and cleared from units eligible to exemption under the said notification to avail cenvat credit of the duty paid on the said products. The different units of Manaksia which purchased the goods from Ishaan therefore availed cenvat credit of the duty paid on the goods received by them and utilised the same in the manufacture of final products in their respective factories. (v) On the ground that Ishaan had been misusing the benefit under the said notification by not actually manufacturing any excisable goods in its factory and by resorting to over-invoicing of the products claimed to have been manufactured and cleared from the said factory with intention of passing irregular cenvat credit to its customers, being the various units of Manaksia Ltd., all of whom together with Ishaan were so associated that they had interest directly or indirectly in the business of each other, thereby enabling the said customers to evade central excise duty by way of availment of excess and irregular cenvat credit and to avail undue benefit in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudication of all the show cause notices. (ix) The proceedings under the said show cause notices resulted in the impugned order. 5. On behalf of the assessees and appellants against whom personal penalties were imposed, Dr. Samir Chakraborty, Senior Advocate and Shri Abhijit Biswas, Advocate has contended as under: (i) The demand of ₹ 9,45,67,825.70 has been made and confirmed on the ground that this amount has been wrongly refunded under the said notification, in proceeding under Section 11A(1) of CEA 44. This is impermissible, as held by the jurisdictional High Court of Gauhati in the case of Commissioner of Central Excise, Shillong Vs. Jellalpore Tea Estate, 2011 (268) ELT 14 (Gau), the condition precedent laid down not being satisfied. This decision has been followed by CESTAT, Kolkata, in the case of Adhunik Meghalaya Steel Pvt. Ltd. Vs. Commissioner of Central Excise, Shillong, 2013 (294) ELT 292 (T). Both the above decisions have been accepted by the Revenue. (ii) It has been held in the impugned order that there was no manufacture by Ishaan in its factory of the specified machinery/structures etc. and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the demand part on the allegation of overvaluation of the said goods, since there was no manufacture thereof by Ishaan as per the show cause notice and in the impugned order, there being no duty payable thereon irrespective of whether or not they were overvalued, the refund demanded of the excess amount was not and cannot be said to be duty of excise levied under the Act and, consequently, the provisions of the said notification are inapplicable. This excess amount, if any, which was refunded cannot be said to be erroneous or wrong refund of any duty payable or paid by Ishaan as per provisions of the Act nor can it be said that there has been any evasion of such duty by Ishaan. Therefore, there can be no invocation of the provisions of Section 11A of the Act in respect of this amount also and there can be no proceedings thereunder for recovery of any duty of central excise , erroneously refunded. (v) In support of the above reliance has been placed upon: (a) Hyderabad Industries Ltd. Vs. Union of India, 1995 (78) ELT 641 (SC), paragraphs 6 and 7 (b) Moti Laminates Pvt. Ltd. Vs. Collector of Central Excise, 1995 (76) EL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, Ishaan was entitled to in law to take cenvat credit of the duty paid on such goods and utilise the same in accordance to the provisions of the Cenvat Credit Rules. There is also no dispute that the final products involved were removed upon payment of duty of central excise payable thereon, including by way of utilisation of the cenvat credit involved, thus, duly satisfying the requirement of Rule 16(2) also. The amount of duty paid on the said finished products is also fully covered by the Explanation of Rule 16(2) of the said Rules. Hence, this demand is also contrary to Rule 16 of the said Rules and thus unsustainable. (viii) Without prejudice, even otherwise, the findings of the Commissioner in the impugned order are contrary to law, contrary to records, misconceived, erroneous and thus untenable and unsustainable. This is evident from the detailed submissions contained in the reply to the show cause notice filed by Ishaan and the submissions made before the Commissioner at the time of hearing, supported by voluminous documentary evidence forming a part of the reply, none of which has neither been referred to nor considered in the impugned order, thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (2) of the said Rules in order that the appellants can be held to be liable to penalties thereunder. The findings in the impugned order are based on surmises and conjectures and/or on incorrect premises, evident from the records. There exists no material on record and none has been disclosed in support of these findings against the appellants. No penalties can be imposed upon the appellants on the basis of such surmises and mere opinion of the Commissioner based on no evidence and/or incorrect reasonings (xi)(a) By the impugned order the Commissioner, while confirming the allegations and demands made against the show cause noticees covered by the show cause notice dated February 28, 2006, dropped the proceedings under show cause notices dated 29.08.2006, 17.08.2006, 15.06.2006, 16.04.2006, 16.04.2006 28.11.2007 issued by DGCEI to the different units of Manaksia Ltd. at Guwahati, Haldia, Howrah, Medak (AP) [two units] and Anjar, Kutch (Guj.) [covered by CBEC Order Nos. 3/2008-CE dated April 2, 2008, 06/2009-CE dated October 26, 2009 and 03/2012-CE dated February 22, 2012, detailed in para 1.3 of the impugned order], following the decision of the Tribunal in Mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard reliance is placed upon, inter alia, the following decisions: (i) Glass Ceramic Decorators Vs. Commissioner of Central Excise, 2014 (305) ELT 133 (T) (ii) Finolex Cables Ltd. Vs. Commissioner of C.Ex., 2007 (210) ELT 76 (T) (iii) Essel Propack Ltd. Vs. CCE, 2014 (314) ELT 584 (T). (xii)(a) However, the Commissioner, while dropping the proceedings initiated by the show cause notice dated November 28, 2007 against Manaksia Ltd., Anjar [Revenue s Appeal No. E/76094/2014], has wrongfully and illegally appropriated the amount of ₹ 2,37,57,760/- deposited by Manaksia Ltd., Anjar, under protest, during the course of investigation by the DGCEI authorities, towards the duty demand confirmed by the impugned order against Ishaan under proceedings initiated against the said company in terms of another show cause notice dated February 28, 2006, in erroneous exercise of powers under Section 11 of the Act. (b) Having dropped the proceedings initiated against it under show cause notice dated November 28, 2007 the Commissioner should have directed, as consequential relief, refund of the sum of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of changed opinion of the Department as regards satisfying the requirements under the said notification for availing benefit thereunder by the assessee and not in a case like the instant case. (iii) Relying upon the allegations contained in the show cause notice and the findings in the impugned order based thereon it is seen that fraud had been perpetrated by Ishaan to wrongfully and illegally in connivance with Manaksia Ltd., obtain the subject refunds inspite of allegedly not manufacturing in its factory the subject goods and thus being disentitled to the benefit under the said notification and therefore the Commissioner was right in seeking recovery thereof. 6.1 In respect of the appeals filed by the Revenue against the impugned order of the Commissioner dropping the proceedings against the 6 units of Manaksia Ltd., the Learned A.R. has reiterated the grounds contained in the Review Order dated 09.07.2014 of the Committee of Chief Commissioners and the grounds of appeal contained in the respective appeal petitions filed by the Revenue pursuant to the said Review Order against the findings of the Commissioner and dropping of the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /76154/2014), in the impugned order the Commissioner merely repeated in a different form, to make the same as his findings, the allegations made in the show cause notice, without dealing with or/or perfunctorily dealing with the detailed contentions and submissions of Ishaan in respect thereof, contained in its reply to the show cause notice, which were reiterated and further elaborated during the course of personal hearing and in the Written Notes of Argument submitted before the Commissioner in the adjudication proceedings, with supporting decisions and evidences. Both the Commissioner in the impugned order and the Learned AR while making submissions before the Tribunal have conveniently glossed over the said detailed contentions and submissions of Ishaan in the reply to the show cause notice dated October 9, 2008 and the Written Notes of Argument submitted before the Commissioner although taken on record (as noted in paragraph 24, at page 134, of the impugned order). In its reply to the show cause notice, Ishaan had demonstrated and had established the fact that the said goods had in fact been manufactured and cleared in accordance with the provisions of the Act and the rules fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation granted to Ishaan by the Assistant Commissioner was legal, valid and proper. 8. We have heard the parties and have perused the records of the appeals. 9. Notification No. 32/99-CE dated July 8, 1999 exempted from excise duty and additional excise duty goods, cleared from a unit located in the places specified in the notification situated in the specified States of North East India, from so much of such duties leviable thereon under, inter alia, the Central Excise Act, as is equivalent to the amount of duty paid by the manufacturer, other than the amount paid by utilisation of cenvat credit under the Cenvat Credit Rules. The exemption is to be given effect in the following manner: (a) The manufacturer shall submit a statement of the duty paid from the said account current to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 7th of the next month in which the duty has been paid, other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2001. (b) The Assistant Commissioner or Deputy Commissioner of Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng units making an expansion of 25% or more of the installed capacity. Setting out the material portion of Section 11A of the Act, the Division Bench of the Hon ble Gauhati High Court has held as follows: 12. A bare reading of Section 11A of the Act indicates that power can be exercised only if duty has not been levied or paid or has been short-levied etc. on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act . Insofar as the present case is concerned, the only issue that arose for consideration was whether the assessee was entitled to the benefit of Notification No. 33/99-CE, dated 8.7.99. There was no issue of any approval, acceptance or assessment relating to the rate of duty nor was there any issue relating to the valuation of any excisable goods. Ex-facie, therefore, Section 11A of the Act was inapplicable to the facts of the case. 13. That apart, the Assistant Commissioner of Central Excise, Silchar had passed a final order in favour of the assessee on 29.4.2002 and admittedly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, and therefore, as held by the Hon ble Gauhati High Court, the Revenue cannot initiate collateral proceedings to set aside the said order by resorting to Section 11A of the Act. 11.2 Moreover, Section 11A(1) of the Act provides for recovery of duties of excise, not levied or not paid or short levied or short paid or erroneously refunded. Hence, the condition precedent for invoking Section 11A(1) of the Act is that there is a duty leviable on a particular goods, which duty has not been levied or has not been paid or has been erroneously refunded or in respect whereof there has been short levy or short payment of the duty payable under the Act read with the Tariff Act. Since the sine qua non for such levy of duty is manufacture or production of goods as per the charging Section 3(1) of the Act and since, according to the show cause notice/impugned order, there has been no manufacture of goods by Ishaan, the condition precedent for invoking Section 11A of the Act has not and/or cannot be said to have been satisfied. This has been made clear by the Apex Court consistently. In Hyderabad Industries Ltd. Vs. Union of India, 1995 (78) ELT 641 (SC), the Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covers asbestos fibre that has been separated from its parent rock in the manner aforementioned, such asbestos fibre is not the result of a process of manufacture, it is not a new and commercially identifiable article and it is, therefore, not liable to excise duty. 11.3 In the case of Union of India Vs. Ahmedabad Electricity Co. Ltd., 2003 (158) ELT 3 (SC), upon discussing its earlier decisions, the Hon ble Supreme Court observed as follows: 32. From the above discussion it is clear that to be subjected to levy of excise duty excisable goods must be produced or manufactured in India. For being produced and manufactured in India the raw material should have gone through the process of transformation into a new product by skilful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone through the process of manufacture. 11.4 The above has been reiterated by the Hon ble Supreme Court in Grasim Industries Ltd. Vs. Union of India, 2011 (273) ELT 10 (SC). 11.5 In the present case, since according to the show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not allow refund of the cenvat credit utilised. Therefore the act of utilisation of the subject cenvat credit by Ishaan for payment of part of the total excise duty paid on the subject goods effectively reversed the cenvat credit of ₹ 53,05,582/- and hence there is no wrongful or irregular cenvat credit being availed by Ishaan, as held by this Bench itself in the case of Manaksia Ltd. Spark Exports Ltd. Vs. CCE, Bolpur, Order No. FO/A/75027-75028/2019 dated 07.01.2019 passed in Appeal Nos. E/278/2009 E/412/2006. As such, this demand is also unsustainable. 11.10 In the view taken and conclusion arrived at as above, we are not required to considered the contentions of the parties on the disputed issues of fact involved. 11.11 In the premises the demands of duty, interest and penalties against Ishaan and the other appellants in Appeal Nos. E/76156-76160/2014 imposed by the impugned order are unsustainable. 11.12 As regards the appeal of Manaksia Ltd., Anjar against appropriation of the sum of ₹ 2,37,57,650/- deposited by it towards the duty confirmed by the impugned order against Ishaan, we accept the contention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utomatic Coil Making Machine, Automatic Crown Lining Machine, Shearing Machine, Parts for Continuous Galvanising Line and its accessories, manufactured by Ishaan. On receipt of the said machinery in their factories, in accordance with the provisions of the Cenvat Credit Rules, the said units of Manaksia availed cenvat credit of the duty paid on the said machinery. (c) However, pursuant to searches and seizures carried out by the DGCEI authorities and investigation proceedings thereafter, the said units received the show cause notices requiring them to show cause as to why the specified cenvat credits in respect of the duty involving the said machinery procured from Ishaan, wrongly availed should not be recovered from them under Rule 12/Rule 14 of the Cenvat Credit Rules, 2002/2004 read with Section 11A of the Act, along with interest thereon. (d) Similar show cause notice issued to the Kutch unit of Manaksia Ltd. on September 2, 2005, based on same/similar investigation by the DGCEI authorities and adjudication order passed thereon was set aside by the above order of the Tribunal s Ahmedabad Bench, which decision was affirmed by the Gujarat High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
