TaxTMI 
TaxTMI 
1997 (5) TMI 162
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....) Additional duty exempted under Notification No. 127/84, dated 26-5-1984 (iii) Special Excise Duty (SED) exempted under Notification No. 49/92, dated 1-3-1992. 3. The remark on the GP were given as "Each Customs duty reduced @ 50% against Notification No. 81/91, dated 25-7-1991." The department alleged that the assessee took credit of Rs. 32,94,720/- in RG-23A Part II wrongly and utilised this credit for payment of duty by the unit of assessee at Noida. A Show Cause Notice was issued to the assessee unit at Noida alleging that in terms of the provision of Notification No. 177/86, dated 1-3-1986 issued under Rule 57A specified duty on which Modvat credit is admissible in respect of clearance made from 100% EOU and used in the manufacture of final product in any place in India shall be restricted to the extent of duty which is equal to the additional duty leviable under Section 3 of the CETA, 1975. It was also alleged that for the clearance made from their unit at Daruhera, the GPIs shows nil additional excise duty under Notification No. 127/84-C.E.; that this notification was not relevant. It was also alleged that the assessee's unit at Noida availed and utilised credit duty ....
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....t which accompanied the goods and that the assessee's unit at Daruhera paid Central Excise duty on this input. It was also argued that the assessee's unit at Noida was not concerned with non-payment of excise duty equivalent to countervailing duty. After careful consideration of the submissions made, the ld. Collector, Central Excise framed the issues for determination and held as under : 22. The amount of Excise duty payable on the goods @ 50% of the Basic Customs duty leviable on like goods under Notification No. 97/91 on the basis of Rs. 3,200.00 assessable value per unit comes to Rs. 29,95,200.00, (50% of Rs. 3,200.00 x 1.872 = Rs. 29,95,200.00). This amount is much higher than the amount of additional duty of Customs leviable as aforesaid viz. Rs. 21,70,022.40. I consider that the Modvat credit to the extent of Rs. 21,70,022.40 is admissible to the Party in terms of Proviso (1) to Notification No. 177/86. Since the party had taken the Modvat credit to the extent of Rs. 32,94,720.00 on their own without any regard and consideration of the restricting clause in Proviso (1) to Notification No. 177/86, the amount in excess of Rs. 21,70,022.40 is recoverable. Accordingly I ad....
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....al whereas against the order of the Collector holding that the assessee was entitled to Modvat credit of Rs. 21,70,022.40, the ld. Collector, Central Excise, Meerut has filed the appeal. 3. Shri V. Sridharan, ld. Advocate arguing for the assessee submitted that normal rates of duty, basic customs duty + auxiliary duty applicable to goods manufactured by Dharuhera Unit if they were to be imported was at 110% (basic customs duty + auxiliary duty); that the normal excise duty leviable on the said goods under main Section 3(1) of the Central Excise Act, 1944 is 15% as basic excise duty + 15% thereof as SED; that if the goods manufactured by Dharuhera unit were to be imported, the total duties payable thereon would be 110% of the basic customs duty + 15% of basic customs duty as SED. Ld. Counsel illustrated his argument as under : CIF value of imports Rs. 100/- Basic Customs Duty + Auxiliary duty Rs. 110/- Additional duty/CV duty Rs. 36.225 Total duties payable Rs. 146.225 By virtue of Notification No. 97/91 the excise duty payable would be Rs. 73.125 (50% of Rs. 146.225) The ld. Counsel submitted that the total excise duty paid ....
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..../s 3 of the CTA, 1975; that a similar situation was considered by the Hon'ble Supreme Court in the case of Thermax Ltd. v. C.C., reported in 1992 (61) E.L.T. 352; that the Hon'ble Supreme Court held that "In other words we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determined the amount of excise duty that he would have been called upon to pay in that event"; that in the instant case we have to assume that these goods have been imported and therefore, the additional duty of customs leviable u/s 3 of the CTA, 1975 has to be worked out. The ld. Counsel submitted that the words `paid on such inputs' appeared at the end of the proviso to Notification No. 177/86 does not permit the deptt. to dissect the additional duty of customs portion paid by EOU in the excise duty paid by it. Ld. Counsel also submitted that similar provision was made u/r 56A(2). Ld. Counsel submitted that Notification No. 177/86 consists of two steps; that the first step is to find out the normal excise duty that would be otherwise payable by the 100% EOU and that second step is to ascertain the amount of additional duty of customs leviable on like g....
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....ction 3(1). Thus, the additional duty which is mentioned in Section 3(1) of the Tariff Act is not in the nature of countervailing duty. The law is settled on this issue vide Supreme Court's order in Khandelwal Metal & Engineering Works & another etc. v. Union of India and others - 1985 (20) E.L.T. 222 (S.C.). The Supreme Court Bench summarised the conclusion as - (1). The charging section under which duties of customs are leviable is Section 12 of the Customs Act, 1962 read with Section 3(1) of the Customs Tariff Act, 1975, Additional duty which is mentioned in Section 3(1) of the Customs Tariff Act, 1975 is of the same character as the customs duty since it is in addition to the duty which is leviable under Section 12 of the Customs Act, 1962 the rates for which are prescribed by Section 2 of the Tariff Act, 1975. The duty mentioned in Section 3(1) of the Tariff Act, 1975 is not countervailing duty. Section 3(1) of the Tariff Act, 1975 provides a measure of the additional duty, which has to be equal to the excise duty leviable on a like article if produced or manufactured in India as defined in the explanation to that Section. The measure of tax or duty cannot determine its ....
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....C.E. which specifically read Import Policy provision in the Notification. (10). In view of these facts mentioned above M/s. WEL, Noida are not entitled for any Modvat credit in terms of Notification No. 177/86-C.E. issued under Rule 57A of the Central Excise Rules and in view of the fact that WEL, Noida have availed and utilised Modvat credit of duty amounting to Rs. 32,94,720/- equivalent to 55% of Basic and auxiliary duty. The entire Modvat credit taken was wilful and fraudulent resulting in revenue loss of Rs. 32,94,720/- to the Govt. and WEL, Noida was liable for penal action under Rule 173Q(1)(bb) of Central Excise Rules, 1944. (11). The Collector should have taken all the facts stated above and other grounds mentioned in the Show Cause Notice into consideration and should have confirmed the demand of Rs. 32,94,720/- against WEL, Noida and should have imposed suitable penalty on them for the wilful, suppression of facts and fraudulent acts under Rule 173Q(1)(bb) of Central Excises & Salt Act, 1944. 5. Ld. DR therefore, prays that the impugned order may be set aside and the appeal filed by the deptt. may be allowed. 6. Heard the submissions of both sides....
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....e the goods manufactured by 100% EOU are manufactured or produced in India, they become liable to Central Excise Duty. A tax has two features. The first feature is the nature of duty and the second feature is the measure of duty. In the instant case, the nature of duty leviable under Section 3 is Central Excise duty whereas for calculating the amount of duty, Section 3 itself has provided the manner and method of calculation. Thus this calculation (sic) the measure of the Tax. For calculation of duty, Section 12 of Customs Act, 1962 has been quoted. 8. In the normal course, the amount of duty paid as Central Excise duty is available for Modvat credit u/r 57A in its entirety. However, Notification No. 177/86 issued u/r 57A places a restriction on the quantum of specified duty which will be eligible for credit under the Modvat scheme on the items. A careful reading of this Notification shows that the duty collected is central excise duty and out of this central excise duty, only that portion will be eligible for credit which is equal to the additional duty leviable on like goods u/s 3 of the CTA, 1975. Now the issue which needs clarification is whether the credit amount should ....