TaxTMI 
TaxTMI 
2000 (12) TMI 870
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....0,000/- under Rule 173Q and 226 of the Central Excise Rules, 1944. The same has been ordered to be released on imposition of fine of Rs. 1,00,000/- under section 125 of the Customs Act read with Central Excise Notification No. 68/63 as has been amended. There is a penalty of Rs. 31.00 lakhs on M/s. SCL under Rule 173Q of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Rules. On the other two appellants namely M/s. Salzar Exports Pvt. Ltd. (hereinafter called as SEPL) and M/s. Salzar Electronics Ltd. (hereinafter referred to as SEL) penalty of Rs. 1,00,000/- on each has been imposed under Rule 173Q and 209A of the Central Excise Rules, 1944. 2. Briefly stated the facts are that M/s. SCL are job workers to receive raw materials under challans issued under 57F(4) read with Notification No. 214/86 from the ledger accounts of M/s. SEPL. The investigating authorities noticed that job charges for operations were shown in the records to the extent of Rs. 2.2 lakhs only and for the rest of the amount M/s. SCL had raised labour charges/delivery challans. On a perusal of their raw materials, receipt issued for production and the quantity that went into the ma....
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.... under challans and all the items has been accounted in the registers of M/s. SEPL. The goods were received back by M/s. SEPL and that had been fully processed and thereafter they were all exported through the shipping bills. Thereafter they had applied drawback in terms of law and taken the drawback only on the Customs duty and not on CVD or Excise duty. M/s. SCL, who had processed the goods on job work basis were fully entitled to take Modvat credit on goods so received and which was in order. The goods were meant for exports and there was a clear provision under Rule 57F(4)(iii) to avail Modvat credit. Although they had not executed bond, however, it was only a procedural lapse and for not following such procedure, substantive benefit of Modvat credit cannot be denied. As regards certain other discrepancies, they had admitted the liability only to the extent of Rs. 2,11,893/- which was proposed to be demanded on certain goods cleared as samples without payment of duty. The appellants admitted this amount and stated that they have already pre-deposited an excess amount of Rs. 7,50,000/- and after realizing this amount of Rs. 2,11,893/- the department has to refund them the ....
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....has for the first time considered the fact that both drawback at all industries rate as well as Mod vat was availed of by various persons with respect to these goods exported. He submits that this charge was not enunciated in the show cause notice at all and to this extent the order impugned has traversed beyond the scope of the show cause notice. Since this is also one of the factors leading to the confirmation of duty demand, therefore, it has been arrived at behind their back. (v) He also submits that the said verification report was not supplied to them by the department despite request at the original stage. Therefore, there is a miscarriage of natural justice in these proceedings. (vi) He, therefore, submits that apart from the demands for Rs. 98,878/- for PVS conduit pipes against which they are not desiring to press the appeal at this stage. The rest of the demands for duty are not established by law. 5. Learned DR Sri S. Kannan submits that the order impugned is a detailed order and has exhaustively dealt with all the issues for each category for each financial year. He submits that the order has contested that ....
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..... ALPHA GARMENTS. In the above case laws, I find that M/s. American Dry Fruit Stores, the assessee had exported entire Custard Powder manufactured by them for the period from December, 1988 to March, 1989 and had approached the department for certificate to the fact of non Modvat availment for the purpose of claiming drawback. The custard powder manufactured by them was all exported by themselves. In the case of M/s. Alpha Garments, unlike M/s. American Dry Fruit Stores, they were not assessees, but they were clearing huge percentage of their products for export and a negligible quantity for home consumption. When compared with these cases, I find that the facts in the present case of M/s. SCL are different. Like M/s. American Dry Fruit Stores, M/s. SCL are also registered manufacturer but the difference is that M/s. SCL had not exported the goods directly. M/s. SCL had cleared them to their sister units from where these goods were reported to have been exported. M/s. SCL had availed Modvat on the inputs and cleared the final products without payment of duty from their factory to their sister nits. Hence, I find the case laws cited by the assessees are not relevant to the present i....
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....ompute as the value of clearance for home consumption. Thus, I find even if the goods were cleared for export by M/s. SEL & SEPL through their merchant-exporters, the duty should have been discharged at the time of clearance by M/s. SCL and rebate of duty should have been claimed instead of method followed by M/s. SEL & SEPL i.e removal of goods without payment of duty by M/s. SCL, export of the same by M/s. SEPL & SEL under bond and also leaving scope for claim of duty drawback by the merchant-exporters. Thus the method followed by the above units was designed to claim double benefits which they were not entitled to and the clearances without paying duty effected by M/s. SCL were in the nature of intentional evasion of duty and the duty demand of Rs. 1,35,002/- is sustainable. 135. Regarding the demand of duty of Rs. 1,10,218/-, M/s. SCL submitted that the goods under DC No. 764/23/3/96 to SEPL were sold by SEPL under invoice No. M126, 125, 127 all dated 25-3-96 and hence it could be evident that goods had been exported. Since the above goods were accounted in the R.6.1 register and actually exported, they had no intention to evade duty and since transactions were genuine an....
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....n the above paragraphs. Therfore, the crux of the whole issue is - (a) as to whether the first appellants M/s. SCL are required to pay duty on all the clearances made by them under documentation to M/s. SEL and SEPL? (b) As to whether the demands are barred by time? (c) As to whether any portion of duty is required to be confirmed including penalty in the matter? 7. On a careful consideration of all the material on record, we are of the considered opinion that - (i) that there is no dispute on the fact that the entire raw materials were supplied by M/s. SEPL and M/s. SEL to the first appellant M/s. SCL under the cover of challans and documentation made under Rule 57F(4)/Notification No. 214/86 as amended. The first appellant M/s. SCL processed the materials and manufactured the necessary items like LB Switches, Terminal connectors and other accessories falling under Chapter 85 of CETA as well as PVC conduit tubings falling under Chapter 39 ibid. (ii) that there is no dispute that M/s. SEPL & SEL were working un....
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....de capital goods used in the factory in or in relation to manufacture of export goods. 9. In terms of the above Rule, the Government has issued the Notification in question which is reproduced hereinbelow :- NOTIFICATIONS UNDER RULE 13 [1] Exports under bond without payment of duty - Exemption to inputs used in the manufacture of such goods. - In exercise of the powers conferred by Rule 13 of the Central Excise Rules, 1944, .the Central Government hereby permits for the purpose of export outside India, the manufacture in bond of the export products specified in column (2) of the Table hereto annexed from the excisable goods specified in column (3) thereof provided that the provisions of Chapter X of the said rules are followed. 2. The manufacturer shall file a declaration with the Commissioner of Central Excise having jurisdiction over the factory of manufacture describing the finished goods proposed to be manufactured along with their rates of duty leviable and manufacturing formula with particular reference to quantity or proportion in which the materials are actually used as well as quality, tariff classification, [rate of duty payable] on the materials so use....
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.... the duty payable thereon, the duty payable thereon be remitted : Provided that such waste may be destroyed by the manufacturer in accordance with the provisions of Chapter VIIA-of the Central Excise Rules, 1944. In terms of the above Notification, the Merchant-Exporters and suppliers of raw materials i.e. M/s. SEPL and M/s. SEL have supplied the raw materials and documents to M/s. SCL and M/s. SCL have manufactured and sent back the goods to M/s. SEPL, who were working under bond aw3this Notification. Therefore, in terms of a combine reading of Rule 13 and the said Notification, the goods which are manufactured in India are exempt from payment of Excise duty and therefore, the clearances of goods made by M/s. SCL, all the manufactured items to M/s. SEPL d M/s. SEL are in terms of the Notification under Rule 13 and therefore, they are not liable to pay any duty as raised by the department in the matter. The reason being that goods are clearly exempt from duty and raw materials had been received by M/s. SCL from a manufacturer in bond of the export products and all the products had been exported. There is no% dispute regarding this and when this being the case, the question of lev....
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....er has come for stay, we grant waiver of pre-deposit with the consent of both sides and take up the appeal itself for final decision and after considering the submissions we find - (a) that para 10 of the order itself records "the duty involved on the remaining goods for which no Excise invoices has been produced works out to Rs. 4,14,425/-". For which the ld. Advocate submitted a statement and therefore it would be apparent that a major part of the impugned goods out of the total demand of Rs. 32 lacs or so have been satisfactorily explained to have been used for export shipments; (b) we find that the facts of this case are covered by the decision of Mirza Tanners Ltd. as reported in 1999 (114) E.L.T. 1032 (T) = 2000 (37) RLT 46 (CEGAT) and we respectfully follow the same. A major portion of the goods have been shown to have been eventually exported. We find that leather tanneries operators were working on an assumption of liberalised system of exports and there has been no clear finding arrived at of the goods having entered the Indian domestic market so that the levy of Excise duty would be attracted; we a....
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.... or by other evidence and that merely because there is a procedural violation, that by itself will not disentitle them from taking the benefit. This ratio of the Hon'ble Apex Court rendered in Theremax Pvt. Ltd. has since been followed by the Larger Bench of [FIVE MEMBERS] the Tribunal in the case of Breach Candy Hospital & Research Centre v. CCE as reported in 2000 (118) E.L.T. 271 (T-LB) and have held that so long as intended use of Air-conditioners was in hospital establishment and it had been so satisfied, then violation of Chapter X procedure should not be a cause for denying the benefit. In view of this settled position of law, we have to hold that merely because the first appellant have not executed the bond, by that reason alone, the Modvat credit eligible to them and utilised by them should not be a cause for directing them to pay Excise duty, when they cleared the goods received from in bond export manufacturer and the same having been sent back under the relevant challans issued under Rule 57F(4). Therefore, the findings arrived at by the Commissioner in para 133 on this issue is not in keeping with the law laid down and he has not justified in not applying the ratio of ....