TMI Blog2001 (2) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. 3. The Collector came to the following findings - "To summarise the whole issue, the salient features of findings are enumerated hereunder : It is not in dispute that M/s. BEML, Bangalore has opted for availment of exemption under Notification No. 452/86, dated 20-11-1986 (as amended). It is also not in dispute that they have availed the exemption under this notfn. from 20-11-1986 onwards. One of the essential condition for availing this Notfn. is that - "no credit of duty paid on any of the inputs used in the manufacture of the said goods has been availed of under Rule 56A or 57A of the CER 1944." Pursuant to this requirement, M/s. BEML have given a declaration to the effect in the CL that : "we undertake that we have not availed credit of duty on inputs used in the manufacture of the above goods under Rule 56A or 57A." Thereafter, they have also filed a declaration on 10-8-1987 consequent to Range Supdt. letter dated 6-7-1987, indicating the total duty liability on 30 inputs on which credit was availed which were reflected as closing balance as on 19-11-1986. However, there were other items on which the party had not reversed the credit and they had also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand the language used by an exemption notification, one should keep in mind two important aspects : (a) the object and purposes of the exemption; and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which the exemption is granted." In the present case, the purpose of the exemption was to fix specific rate of duty on Rail Coaches provided certain conditions are satisfied. As held supa, there is clear evidence of non-fulfilment of condition of the proviso to the exemption notification. The nature of actual process involved is of non-consequence in the present case as it relates to determination of whether any modvat availed input is used in the manufacture of Rail Coaches or not. For this reason, this decision of the Hon'ble Supreme Court stands distinguished. In the case law of Wood Papers Ltd., which has been relied upon by BEML, it has been held that : "In fact an exemption provision is like an exception. Its construction, unlike charging provision, has to be tested on different touchstones. On normal principles of construction or interpretation of statutes, it is construed strictly either because of legislative intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the aforesaid discussions, it is clear that M/s. BEML have not fulfilled this basic condition of the notification due to the fact that availment of Modvat credit on some items like Oxygen acetylene gases which have actually been used in the manufacture of rail coaches, is not being controverted (even in the manufacture of rail coaches) in the reply by M/s. BEML. Therefore, by applying the principles of interpretation BEML becomes disentitled to the benefit of the above notification. It is a fact that Modvat availed oxygen acetylene gases among other inputs have been clearly utilised in the manufacture of Rail coaches cleared at specific rate of duty and such facts have been wilfully suppressed from the dept. and hence the declaration by them in the CL is a clear instance of wilful mis-declaration and establish their mala fide intention to wrongly avail the benefit of the exemption. Nowhere in the reply it has been established by BEML that they have fulfilled all the conditions stipulated in the said notfn. The arguments resorted to, indicate that they were willing to reverse the Modvat credit. Moreover, there has been clear evidence that availment of modvat credit was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's contention is not acceptable as mere non-mention of a particular clause does not vitiate the show cause notice when the charge against them for wrong availment of Notfn. 452/86 has been clearly brought out in the show cause notice. To artive at this conclusion, I take support from the decision of Hon'ble Tribunal in the case of Indore Bottling Co. v. Collector [1986 (24) E.L.T. 80 (T)]. The final aspect to be decided is regarding imposition of penalty. It has been alleged that M/s. BEML have not struck the balances in RG23A Pt. I which facts have been established supra, justifying the invoking of penal clause in the instant case as there is contravention of Rule 226. So also, it has been held by the Hon'ble Tribunal in the case of Grawer Weil v. Collector [1986 (25) E.L.T. 338 (T) that penalty is imposable when an exemption to which the assessee is not entitled to, is availed of. So also the Hon'ble Tribunal in the case of Mahindra Radio TV v. Collector [1988 (35) E.L.T. 668 (T)] has held that when the provisions of the CESA or the Rules made thereunder are contravened, with an intent to evade payment of duty or to avoid payment of duty, penalty is imposable." 4. After h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds that there was a stock of Modvat availed inputs on 28-11-1986 (the date of notification No. 452/86) which was sufficient for 3 months production, therefore duty was sought to be reversed at ad valorem rates by denying the cleared from 20-11-1986 to 20-2-1987 under notification No. 452/86 rates. A reply was submitted to this notice and the Assistant Collector, without granting a hearing dropped the proceedings. However, the very same A.C. took up further investigations and the present show cause notice was issued pursuant to the same on 1-10-1990 from this portion, we are of the view that there is case to invoke the proviso clause of Section 11A(1) in the facts of this case. (c) The appellants have submitted and are prepared to reverse such amounts of credits, as can be proved by the Department so that they can enjoy the benefit of the Notification. We have considered this aspect and find that the Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. - 1996 (81) E.L.T. 3 (S.C.), consider the question of reversal of credit and its permissibility in case of a similar notification which provided the exemption from payment of whole of duty subject to the condition that no c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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