TaxTMI 
TaxTMI 
2014 (2) TMI 447
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.... has been using as one of the inputs PVC resins and Polyurethene (PU) resins of all grades. According to the petitioner, at any one time, only one grade of resin is used. The petitioner has been permitted to maintain a common combined account for crediting and debiting Resin duty paid on all grades of resins in statutory form RG-23A. According to the petitioner, the utilization of the said duty credit towards payment of duty on coated fabric is without one to one corelation in respect of different Resins. According to the case of the petitioner, it developed a new product of Lacquer based on synthetic polymer by use of PVC Resins in the year 1992. A classification list was filed with the sample. On 24th February, 1992 prescribed declaration of all inputs intended to be used in manufacture of the new product Lacquer based on synthetic polymer (LBSP) was filed. The said declaration provided that apart from other inputs, PVC Resins in different names, grades and numbers will be used as input. For clearance of LBSP manufactured with one grade of PU Resin as one of the inputs, Modvat credit of duty is utilized from common combined account. 4. The Collector issued show cause noti....
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....er documents on record. The learned counsel submitted that the utilization of inputs was started at the end of February, 1992 and during the relevant period i.e. from 26th February, 1992 till 31st May, 1992, various inputs were utilized. He submitted that there was intention on the part of the petitioner to use the inputs of PU resin of various grades other than Grade 5702 and in any case, the said intention cannot be ruled out even though during the aforesaid period which was a short period, the said inputs were not actually used. He submitted that it is nobody's case that the said inputs cannot be used in manufacture of LBSP. He submitted that it is not the case that the inputs of various grades other than Grade 5702 cannot be used. He submitted that the provision of Rule 57F(3)(i) of the said Rules of 1944 could not have been applied. He pointed out that the CEGAT held that there is no bar on the availment of accumulated credit on inputs used in manufacture of one product if similar input has been used in manufacture of another product. He submitted that credit cannot be denied on the ground that PU Resin of a different grade has been used in manufacture of LBSP. He submitted th....
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....y, 1992 for PU (Polyurethane) other than grade 5702 has been utilised by the Petitioner. It is stated in the Annexure to the notice that no separate record in relation to receipt and utilization of inputs and credits regarding LBSP has been maintained. It is observed that negligible quantity of PU Resin of Grade 5702 to the extent of 1.7% has been used in LBSP. It is stated that only because of maintenance of common RG-23A Part-II that the petitioner could use credits of PU other than grade 5702 towards the payment of duty on LBSP cleared from the factory. In the Annexure to the notice, there is a reference to the statements of the officers of the petitioner. 8. It will be necessary to make a reference to the findings recorded by the Collector. The relevant portion of the finding of facts reads thus : "Duty demand of Rs. 25,87,588-90 on account of misdeclaration of inputs : The assessee, I observe, manufactures LBSP by mixing PVC and polyurethane resins in the organic solvents viz. MEK/Toluene. They declared that "Thermoplastic Polyurethane resins - all grades, names and numbers" are inputs for LBSP. Once they make a declaration to such an extent, a duty is cast on them ....
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.... filed under sub-rule (1) of Rule 57G. Sub-rule (1) of Rule 57G provides that every manufacturer intending to take credit of the duty paid on inputs under Rule 57A shall file a declaration indicating the description of final products manufactured in the factory and the inputs intended to be used in each of the said final products. The submission made before this Court as well as the authorities below is that as it is not disputed that the grades other than Grade 5702 can be used for production of LBSP, it can be said that the said inputs were intended to be used. Thus, in short, the submission is that the said inputs could have been used for manufacture of the final product. The argument is that the said inputs could have been possibly used. Mere possibility cannot be equated with intention to use. In fact, as pointed out by the Collector and more particularly by CEGAT, the statements of the officers of the petitioner show that the inputs of only Grade 5702 were used by the petitioner. Perusal of the statements shows that the intention to use other grades is not at all reflected from the said statements. A mere desire to use the other grades in future or a mere possibility that the....