TaxTMI 
TaxTMI 
2011 (10) TMI 82
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....as intermediate products vide Notification No.30/04 dated 9.7.04 without availing the input stage credit. As per the Board circular No. 795/28/2004-CX dated 28.7.04, the appellants had reversed the cenvat credit availed on the purchased input lying in stock and contained in the Work in progress (WIP) stock and finished stock as on 9.7.04 and started to avail full exemption on the pre-budgetary stock and finished products/WIP stock/input stock as on 9.7.04. As the pre-budgetary stock of finished fabrics/WIP stock/input stock as on 9.7.04 was exempted from central excise duty under Notification No.30/04 dated 9.7.04 , the department took the view that the exemption availed by the assessee under Notfn.No.67/95 in respect of tops, yarn and grey fabrics manufactured by them and used/contained in the finished fabrics stock/WIP (which is now exempted under Notfn.No.30/04) is not available to them for captive consumption because the condition of the Notfn. No.67/95 requires the final goods to be dutiable for availing the exemption under this Notification. Accordingly, a show-cause notice dated 6.7.05 was issued to the appellants demanding duty on" (i) grey fabrics captively consum....
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....se, Bombay vs. Kohinoor Mills reported in 1995 (77) ELT 12. In view of the ratio of the decision, he submitted that there is no short payment of duty on the date of removal of the tops, yarn and grey fabrics for use or used in the consumption within the factory. 4. The ld.counsel further contended that provisions of Sec.11A are not applicable in this situation where assessment was correctly made and duty is sought to be demanded by reason of change in law at a later stage or by reason of alleged violation of the condition of the Notification and therefore, show-cause notice issued under the present situation is entirely without jurisdiction. He further submitted that without admitting that provisions of Sec.11A are applicable in the present case, the demand is clearly hit by time limitation as the show-cause notice is issued on 6.7.2005 whereas the relevant date in the present case would be the date on which the intermediate goods were used in the manufacture and that is admittedly much prior to 9.7.2004. He further submitted that in any event no penalty can be imposed on them and no case of demand of interest also. 5. The ld.counsel further submitted that a....
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....on reversal of the credit after certain time. Regarding the issue of time limitation, Ld.JCDR submitted that the appellants were required to furnish the quantity and value of the tops, yarn and grey fabrics captively consumed upto July, 2004 by the Range Supdt. vide his letters dated 21.3.05, 18.4.05 & 3.6.05 and the appellants vide their letter dated 23.6.05 informed the Range Supdt. their inability to immediately compute and furnish the quantity and value of tops, yarn and grey fabrics captively consumed without payment of duty under Notfn.No.67/95. They also informed the Range officer that this exercise would be very voluminous and may take 8 to 10 months. In the absence of data furnished by the appellants, the data was derived from the monthly returns submitted by the appellants for the period from January 2004 to June 2004 on pro-rata basis considering the quantity and value of the tops, yarn and grey fabrics captively consumed during the said period. Therefore, the contention of the appellants that show-cause notice is time barred is not tenable as they themselves did not provide the data in time. He further submitted that since the provisions of Sec.11A are corre....
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....actory are not chargeable to Nil rate of duty. Proviso to the Notification clearly states that this Notification shall not be applicable to the inputs used in the manufacture of final products which are exempt from whole of the duty of excise. In the present case, on 9.7.04, the finished goods were exempted under Notification 30/04 as the appellants have opted for this Notification. The department is demanding duty on the inputs on the ground that the final products become exempted from 9.7.04. Therefore, the inputs contained in tops, yarn and grey fabrics and finished fabrics are chargeable to duty as condition of Notification No.67/95 gets violated. The scheme of the Notification No.67/95 suggests that the duty is payable either on the input stage or on the final product stage. If the final products are exempted, the duty is payable on inputs. If final products are dutiable, the duty is exempted on the inputs. After the issue of Notification No.30/04, the Notification No.67/95 continued to exist and it was not withdrawn. 8. The ld.counsel appearing for the appellants relied upon the decision of the Supreme Court in the case of Collecto....
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....ified in this notification plus (b) the duty payable on such cellulosic spun yarn or cotton yarn or both, as the case may be, under the notification of the Government of India in the Department of Revenue and Banking No. 131/77-Central Excise, dated the 18th June, 1977". It was held by the Supreme Court in this case that the yarn manufactured on or before 18.6.77 and was utilized in the spinning department prior to 15.7.77 , liability to excise duty on such yarn, therefore has to be decided prior to 15.7.77 and since at the relevant time Notification No.132/77 dated 18.6.77 was holding the field under which yarn was wholly exempted from duty, no excise duty was to be paid thereon. We find that in this case, cotton yarn and cellulose yarn was exempt if used captively in the composite mill in the manufacture of cotton fabrics. There were no ineligibility condition in the Notification No.132/77 that the cotton fabrics if exempted from duty, exemption will not be applicable to yarn if captively consumed. Whereas in the present case, there is ineligibility condition in Notification No.67/95 which clearly states that exemption is not applicable if the ....
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....duct should be duty paid. It is the submissions of the appellants that cenvat credit taken by them on the inputs procured from outside has already been reversed. Therefore, they should be allowed to avail this exemption on inputs. The Revenue on the other hand relied on Tribunal's decision in Cheviot Company Ltd. vs. CCE, Kolkata reported in 2010 (255) E.L.T. 139(Tri-Kol) in their favour which held that once the credit has been availed even though it is reversed subsequently, the exemption under Notification No.30/04 should not be applied. The ld. JCDR submitted that Tribunal has referred to CCE vs Ashmia Dyecot Ltd. in this decision. On the other hand, the appellants relied on the judgement of the Gujarat High Court in the case of Commissioner vs. Ashima Dyecot Ltd. - 2008(232)ELT 580(Guj) holding that once the credit availed has been reversed it would amount to as if credit not availed. 10. The facts before the High Court in this case were whether the benefit of Notification No. 29/04-CE and 30/04-C E is applicable to the respondents if separate books of accounts are not maintained by the assessee . In this case the assessee&....
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....on. 11. We find that in the case before us, there was no issue of maintenance of separate books of accounts before the original authority. 12. The department on the other hand relies on the decision of the Tribunal in the case of Cheviot Co.Ltd. (supra). The facts in that case were that the appellants were manufacturer of jute yarn and jute Hessian/sacking bags. They were procuring the inputs which have suffered basic excise duty, additional excise duty and education cess. The appellants did not take any credit of BED and AED paid on the inputs. However, they took Cenvat credit of education cess paid on inputs. While clearing the final products, they availed the benefit of exemption notification No.30/04 dated 9.7.04. The said Notification is subject to the condition that nothing contained in this Notification shall apply to the goods in respect of which credit of duty on inputs has been taken under the provisions of the Cenvat Credit Rules, 2002. During the course of audit, it was pointed out to the appellants that inasmuch as they have taken credit amounting to Rs. 1,93,715/- they have not fulfilled the conditions of the Notification No.30/04. The appellants tho....
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.... to the facts before us in the present appeal. 13. We also find that the Commissioner while adjudicating the case in para 22 of the order has already subtracted the quantity of the stock purchased by appellants from the market on which credit was reversed by the appellants. Therefore, the issue regarding the reversal of the credit availed by them on the inputs purchased by them will not come in the way of the confirmed amount in the demand. As per the show-cause notice, the tops contained in yarn WIP, yarn contained in grey WIP and grey fabrics contained in the finished fabrics stock were held by the Commissioner as 90,194.15 kgs, 61,206.86 kgs. and 17,72,274.50 Mtrs respectively and total duty liability on these three stocks has been calculated by the Commissioner in para 22 of the order as Rs. 5,12,98,680/-. We also find that the Commissioner has also given the benefit of cenvat credit on tops/tow/fibre contained in WIP stock and he has also given benefit of Cenvat Credit on the inputs purchased ie. tops, Tow & fibres contained in stock of finished fabrics and credit of yarn contained in the stock of....