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TMI Blog2024 (12) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... led at the time of applying for registration in October, 1996 under Rule, 174 of Central Excise Act, 1944 and only registered itself for its by-product like soap stock, acid oil, industrial monocarboxylic fatty acid etc. It had started taking MODVAT Credit from November, 1996 and also paid excise duty on those by-products. Undisputed fact remained in this appeal is that total amount of credit availed by Appellant was Rs.1,54,71,283/- for the disputed period from March, 1997 to August, 2001 for which period, demand-cum-showcause notice was issued to the Appellant by the Respondent that resulted in ultimate confirmation of duty demand alongwith interest and penalty while during the relevant period Appellant had paid excise duty of Rs.1,62,80,444/- by way of adjustment of MODVAT & CENVAT Credit amount noted above and by debiting its cash balancing in PLA Account for an amount of Rs.11,25,600/-. Contention of the Respondent-Department, as revealed from its show-cause notice and the Order-in-Original, is that Appellant had supressed about manufacturing of edible vegetable oil as its primary product which was attracting "Nil" rate of duty in terms of Notification No. 115/75-CE and availe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & 12, reproduce below: "11. Firstly, the Commissioner has not recorded a finding of fact that the entire exercise was revenue neutral. No reasons have been assigned by the CESTAT for coming to the conclusion that entire exercise was revenue neutral. None of the specific findings of fact recorded by the Commissioner have been dealt with by the CESTAT. In our view, when the CESTAT was the final Court of fact, the same ought to have dealt with the findings recorded by the Commissioner and ought to have recorded findings one way or the other. There is complete absence of findings of fact. Perusal of three decisions relied upon by the CESTAT show that same were rendered in the facts before the Apex Court. We have already quoted the decisions in the case of Commissioner of Central Excise (A) v. Narayan Polyplast (supra) and in the case of Commissioner of Central Excise v. Narmada Chematur Pharmaceuticals Ltd. (supra). There was a finding of fact that the exercise was revenue neutral. It was not a case where allegation of the suppression of material fact by the assessee was made. In the present case, a specific finding is recorded to that effect by the Commissioner. The said finding is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. were not entitled to avail of MODVAT/CENVAT credit on all the inputs used by them in their factory." 10. On the aspect of penalty also there are findings of fact recorded by the Commissioner. There is a clear cut finding of suppression of material facts in paragraph-33. The relevant part of the said finding reads thus : "33. .............. From the above, it is clear that M/s. Parekh Foods Ltd., by resorting to the aforesaid modus operandi, had contravened different provisions of the Central Excise Rules, 1944 and the CENVAT Credit Rules, 2001 with intent to evade duty (availment of ineligible MODVAT/CENVAT credit and passing on the same to the customers to enable them to make use of such credit for payment of duty on their final products amount to evasion of duty). They suppressed the manufacture of fixed vegetable oil while applying for registration. In the various classification declarations filed by them, they did not declare the manufacture of fixed vegetable oil by them. Similarly, in the declarations filed by them under Rule 57G and 57T, giving particulars of the inputs and capital goods on which they were availing of MODVAT/CENVAT credit, M/s Parekh Foods Ltd. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra at para No. 27 learned Commissioner had also provided answer to this in expressed words that Appellant was not entitled to MODVAT/CENVAT Credit on all inputs used by it in the factory as all the end products manufactured by it were either "exempt" from the whole of duty of excise duty leviable thereon or were chargeable to "nil rate of duty". Admittedly all the end products manufactured by Appellant including the main refined vegetable oil and its by-products were not dutiable products and therefore, Appellant was not entitled to CENVAT Credit, but it is required to place on record that since not a single end product was dutiable maintenance of separate records as per Rule, 57 was also not a requirement for the reason that the same Rule, which is para materia to Rule, 6(2) of the CENVAT Credit Rules, has in express, clear and unambiguous term directed that both final products or any of the several final products were to be chargeable to duty and one or several of it was chargeable to either 'nil' rate of duty or an exempted product, in which case as has been held by us in the case of M/s. Network Advertising Pvt. Ltd. Vs. Commissioner of Service Tax-V, Mumbai vide Final Order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot subjected to duty means either exempted from excise duty or subjected to 'nil' rate of duty, then tax collection from the components like would, cushion, etc. would be retained with the Government and would not be passed on to the manufacturer who is not going to pay any excise duty on its final product. However, due to erroneous understanding of some of the provisions, many manufacturers take credit of those inputs and pay duty on its final product, which they feel are liable to pay duty and therefore, when duty that is finally paid on final product exceeds the total input credit taken by the manufacturer, it causes no loss to the Revenue and Revenue-Department remains in an advantages position and in common trade parlance, such a scenario is called 'revenue neutral situation' for the reason that there would not be any revenue gain or loss for the Department since any such exercise proposing to levy or collect tax will only result in unnecessary utilisation of resources of the Revenue and yield nothing in return. In the case on hand, Appellant had already paid more than Rs.11 lakhs for the relevant period in addition to what was taken in total towards accumulated CENVAT Credit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue, we feel it proper to place on record that utilisation of MODVAT Credit which is known as availment of MODVAT Credit in common parlance was done alongwith payment of differential duty on the final product on which Appellant was entitled to get refund with interest as no duty was payable and therefore, no interest is said to have accrued to the Revenue to bring it out of the purview of revenue neutrality. 6. Going by our observation made above and concurring with the findings of the Commissioner that not a single final product was dutiable, invocation of extended period would result in the same situation as that of a duty assessment for normal period but having regard to the fact that there is a clear observation of Hon'ble Bombay High Court that specific finding concerning allegation of suppression of material fact was available in the order passed by the Commissioner, that has not been dealt with properly by the Tribunal, we would consider it worthwhile to reiterate that at no point of time for the entire extended period covering calendar month from March 1997 to August 2001, final products manufactured by Appellant were dutiable and after analysing with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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