TaxTMI 
TaxTMI 
1999 (7) TMI 405
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.... 71.82 Rs. 20 08/07/96 Rs. 329.00 Rs. 350 Rs. 90 2. The facts of the case are that the Appellants are manufacturer of HP Sponge Iron 72.03 wherein the Appellants has one of the inputs required is Iron Ore Pellets falling under heading 26.01. The inputs are either imported, procured from domestic manufacturers, or procured from 100% EOUs (Export Oriented Units). 3. When they are imported they bear customs duty as well as Additional Duty of Customs. The Appellant avails Modvat credit of Additional Duty. When such inputs are received from domestic manufacturer they bear Central Excise duty and the Appellants take Modvat credit on such duty paid. When such inputs are received from 100% EOUs they bear the Central Excise duty which according to the Appellants is quantified in terms of Notification 2/95 and the Appellants take modvat credit on such duty paid. The Appellants also stated that Notification No. 5/94 is also relevant for the purpose of determination of the cases. The learned Advocate for the appellants Shri C.S. Lodha argues that the restriction provided in the Notification will be applicable to the facts of the case. It was the case of....
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....ore the excise duty and Modvat credit is taken by the Appellants. The problem in this case, according to him, in respect of procurement of such pellets from 100% EOUs. He invited our attention to two Notifications viz. Notification No. 5/94 and Notification No. 2/95. He explained that the duty payable for clearance into domestic area of goods manufactured by 100% EOU, is prescribed in Notification 2/95. It only limits that the duty payable on such clearances to 50% of the duty of similar goods which would be payable on such goods when they were imported into India, but provides that the duty payable will not be in any case less than the excise duty leviable on like goods produced or manufactured in the domestic tariff area. The Excise duty payable on Iron ore pellets is classifiable under heading 26.01 at 10% ad valorem and since this is higher the 50% customs duty this is the rate that will apply. He further explained to us that because of the same dispute, the manufacture of iron ore pellets, namely Kudremukh Iron Ore Company had been paying excise duty at 7.62%. Shri Lodha says on this fact Notification 5/94, dated 1-3-1994 is very relevant. That Notification issued under Rule 5....
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....ot correct. He specifically stated that all actions have been taken in a bona fide manner. He also invited our attention to the opinions given by the three advocates namely, himself, Shri P.K. Desai, incidentally who was the former Member of the Tribunal, and Mr. L.P. Asthana in this matter and question of levy of penalty on these officers do not arise. He also argued that even though the judgment of the Tribunal in the first Weston Electronics case in Order No. 766/94 is there, that Judgment should not be followed and that it has been rendered per incuriam and it need not be referred to a Larger Bench because of the fact that it a sub-silentio. He states the decisions of the Supreme Court in Synthetics & Chemicals Ltd., 1991 (4) Supreme Court Cases 139, as well as judgment of the Bombay High Court in Sitaram Hari Salunke v. Lakshman Rambodh Dubey, AIR 1980 Bom. 55. There were also other decisions which he discussed about the discrepancies in the weight. He refrained about the discrepancies in the weight of the inputs shown in the invoices and the actual receipt for which we passing reference. 8. Shri C.P. Rao, the learned SDR would argue that, provisions contained in the N....
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.... Duties equal to the Basic Excise duty was otherwise higher than the Additional Duty component. If the ratio laid down in this case is applied to the facts of the case it would lead to anomalies which are as follows : GIP Value Rs. 100% Basic Customs Duty Rs. 5% Additional Customs Duty Rs. 10.50%. By virtue of Notification 2/95 half portion of Customs duty, half of 2.5% of Additional Customs Duty l.25%, Additional Excise Duty payable is 7.635%. Component additional customs duty permitting they are imported. It is submitted that the in lieu of the above working that apparently the ratio is not workable. He also argued that there is nothing on record except the statement of learned Advocate to indicate that the supplier 100% EOU has paid duties in like manner. In the first place it was submitted that the measure ....
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....re no penalty could be levied on him. He also adopts the case law cited by Shri Jain, namely Cement Marketing Co. of India Ltd. v. Assistant Commissioner - 1980 (6) E.L.T. 295, etc. Shri C.P. Rao countered these two cases adopting the reasoning given by the adjudicating authority. 11. We have considered the rival submissions. For the purpose of Modvat claim we have to see the Notifications referred to by both sides. Section 3 of the Central Excise Act provides for levy of excise duty on the goods manufactured and proviso thereof provides that the excise duty shall be levied and collected on any excisable goods which are produced or manufactured by 100% Exported Oriented Undertaking and allowed to be sold in India, it shall pay amount would to equivalent to the aggregate of the duties of customs which shall be leviable under Section 12 of the Customs Act chargeable notwithstanding anything contained in any other provisions in this Act to be determined in accordance with the Customs Act and the Customs Tariff Act. We have to see the Notifications 5/94 and 2/95. * * &n....
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....nder Section 3 of Central Excises and Salt Act, 1944. As per the first proviso to the said Section, such duty of excise shall be an amount equal to the aggregate of duties of Customs which would be leviable under Section 12 of the Customs Act, 1962, on like goods produced or manufactured outside India if imported into India. Further as a matter of further concessional benefits, the rate in operation on the sale of Iron Ore Pellets manufactured by EOU and allowed to be sold in Domestic Tariff Area was 50% of the tariff rate on the import of such goods as far as basic customs duty as well as Additional (Customs) duty (C.V.D.) was concerned in terms of Notification No. 2/95-C.E., dated 4-1-1995. Thus according to concessional rate the assessee herein was entitled to take Modvat credit to the extent of 50% of the Additional (Customs) duty leviable on the import of such product and which actually paid by the manufacturer of Iron Ore Pellets as excise duty. 5. As per the first proviso to the Notification No. 5/94-C.E. (N.T.), dated 1-3-1994 issued under Rule 57A of the said Rules, the credit of specified duty in respect of any inputs produced or manufactured by a 100% E.O.U. and ....
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....R1A 1. 9 60500 M.T. 59656 M.T. 27-1-1996 2. 10 45000 M.T. 44720 M.T. 12-2-1996 80/125 (iii) they have taken the credit of duty on the document which has not been prescribed as proper duty paying documents in terms of Rule 57G(2) i.e., they have taken the credit on invoices No. 9 dated 27-2-1996 and 10 dated 12-2-1996 which have been issued under Rule 100E of Central Excise Rules, 1944. The said invoices issued under Rule 100E are not prescribed as proper duty paying documents for availing the Modvat credit under Rule 57A. Whereas the AR1A's dated 27-1-1996 and 12-2-1996, accompanying the said invoices show only the excise duty equal to basic Customs Duty paid on such inputs and Excise duty equal to Additional (Customs) Duty is shown as NIL. Therefore the credit equal to Basic Customs duty is not at all admissible to the assessee as per the above referred restrictive provisions." 13. In the show-cause notice dated 2nd July, 1996 it has been stated as follows : "4  The assessee manufacture product called Hot Briquetted Iron (HBI) more commonly and popularly known as Spong....
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....nt is not admissible as Modvat credit under Rule 57A and Notification issued thereunder. 6. During the course of investigation, pertaining to the period from December '96 to April '96, it was revealed that : (i) even though they have been issued show-cause notice on 2-11-1995 whereby the view point of the department regarding the misuse of Modvat credit was specifically brought to the notice of the assessee, they continued to misuse the Modvat benefit even for a period subsequent to the issuance of the said show-cause notice. This has been very evident from the fact that they availed the differential credit for the entire duty paid overlooking purposely and wilfully the restrictive clause of the said Notification. The details are as under : Sl. No. Invoice No. and Date/ 57E Cert. and date R.G.23 A Part II E. No. and Date Credit availed Rs. 1. 57E Cert. No. 1/95 dt. 13-12-1995 cleared vide GP1 A No. 03 dt. 12-12-1993 229 - 21-12-1995 43,068.00 (out of this Rs. 14,356 reversed vide Entry No. 336 dt. 20-3-1996) 2. 57E Cert. No. 2/95 dt. 13-12-1995 cleared vide GP1 A No. 02 dt. 30-10-1994 230 - 21-12-1995 ....
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....f rate on the import of such goods as far as basic customs duty as well as Additional (Customs) duty (C.V.D.) was concerned in terms of Notification No. 2/95-CE dated 4-1-1995 (or earlier similar Notification). Thus according to concessional rate the assessee herein was entitled to take modvat credit to the extent of 50% of the Additional (Customs) duty leviable on the import of such product and which was actually paid by the manufacturer of Iron Ore Pellets as excise duty. 5. As per the first proviso to the Notification No. 5/94-CE (NT) dated 01-03-94 issued under Rule 57A of the said Rules, the credit of specified duty in respect of any inputs produced or manufactured by a 100% E.O.U. and used in the manufacture of final products in any place in India is restricted to extent of duty which is equal to additional duty leviable on like goods under Section 3 of the Customs Tariff Act, 1975, paid on such inputs. In other words the restrictive clause provides that the recipient of the goods cleared by 100% E.O.U. will be entitled to avail of the Modvat credit of duty of excise paid, subject, however, to the condition that the said credit shall be restricted to the extent of dut....
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....th a guilty mind and with an intention to evade payment of duty, they have deliberately and wilfully resorted to such act by availing the credit of Basic Customs duty under the guise of Central Excise duty. This also shows their intention to defraud the Government revenue. (d) They have taken the credit of duty on the invoices which have been issued under Rule 100E of Central Excise Rules, 1944 and which have not been prescribed as proper duty paying documents in terms of Rule 57G(2) of the said Rules. The said invoices issued under Rule 100E are not prescribed as proper duty paying documents for availing Modvat credit under Rule 57G. The AR1A's accompanying the said invoices show only the excise duty equal to Basic Customs duty paid on such inputs and excise duty equal to Additional (Customs) duty is shown as Nil. Therefore the credit equal to Basic Customs Duty is not all admissible to the assessee as per the above referred restrictive provisions. Taking into account the inadmissible credit as discussed in the Annexure A to this Notice, the remaining inadmissible credit taken on the improper documents is to the extent of Rs. 1,31,30,80....
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....e above provisions except to this that Notification No. 127/84 exempts all excisable goods produced or manufactured in a 100% Export Oriented Undertaking from the whole of the Additional Duty leviable thereon under Section 3. This is necessary for our purpose since Notification No. 177/86 (as amended) makes a specific mentioned about it and its implication was a bearing on the issue on dispute in the case before us. In this connection we note that this notification emphasise the word "Specified duty" paid on inputs and by a proviso restricts the Modvat credit of specified duty to the extent of duty which equal to the Additional Duty leviable on like goods under Section 3 of the Customs Tariff Act paid on such inputs. We take note of the repeated emphasis on the word "paid on inputs" since the payments of such duty was exempted under Notification 127/84 therefore the payment was nil and admittedly so. Hence in our opinion the amount of credit of specified duty was required to be restricted to the amount of Additional duty paid on the inputs that is Nil. In other words the Learned DR was right in pointing out that no Modvat credit was available. In going through the order of the Coll....
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....d by the manufacturer, the assessee will not be entitled to any Modvat credit. On careful reading of the two Notifications referred to above and Section 3 of the Central Excise Act 1944, we find that credit of additional duties of customs has been permitted only for the purpose of bringing in equity in the case where the inputs were imported on payment of additional duties of customs. In the instant case we do not see any connection between the actual payment of additional duty by a 100% EOU because what is paid by a 100% EOU is Central Excise duty. If any Central Excise duty has been paid by a 100% EOU while selling the goods in domestic tariff area, customer becomes entitled to take Modvat credit and the extent of Modvat credit is determined by Notification No. 177/86. So we have to read the Notification for measuring the quantum of credit that can be taken out of the total Central Excise duty paid on such goods." Shri Lodha mainly draw support from this judgment. As far as Shri Rao is concerned he derive support from the first Weston Electronics judgment. Shri Lodha states that the Tribunal in first Weston Electronics did not see the Notification 127/84 which is as follows : ....
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....the English Courts and Jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. "A decision passes sub-silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind." (Salmond on Jurisprudence 12th Edn., p.153). In Lancaster Motor Company (London) Ltd, v. Bremith Ltd. the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words of the rule and without any citation of the authority, it was approved by this Court in Municipal Corporation of Delhi v. Gurnam Kaur. The bench held that, 'precedents sub-silentio and without argument are of no moment'. The courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escap....
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....766/94-NRB, dated 24-8-1994 where the Tribunal held in these circumstances of the case the asseessee's case was dismissed. As against this the Tribunal in similar case for subsequent year in the case of Collector of Central Excise, Meerut v. Weston Electronics Ltd., Final Order Nos. A571-72/97, dated 6-5-1997, 1997 (95) E.L.T. 624 decided in exactly opposite manner. The instant case in our view exactly similar to the case decided by the Tribunal in Weston Electronics case. In that view of the matter can we say that the person who has dealt with such types of goods could have knowledge or reason to belief that such goods are liable for confiscation or penalty. In our view it cannot be stated and answer must be in the negative only. Even if the Larger Bench decision at reference, accept the pleas of the department even then it has to be held that there has been a scope for doubt. Therefore when there is scope for doubt it has been held in the case of Padmini Products v. Collector of Central Excise, 1989 (43) E.L.T. 195, at page 200 the court has at paragraph 8 thereof. We therefore of the view that appeals filed by V.R. Nahar, Wakade and others namely appeals nos. E/1753/96-Bom., E/1....