TaxTMI 
TaxTMI 
2013 (5) TMI 796
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.... 5. Pristine Exports - 58,41,820/- - 6. Ashok Khetan (Power of Attorney holder for s. nos. 4 & 5) - 50,00,000/- - 2. Out of the above duty amounts confirmed, Rs. 1,10,01,414/-, Rs. 12,47,163/- and Rs. 6,16,699/- represents excess credit availed by the three processors on clearances of processed fabrics effected by them on behalf of M/s. Global Overseas and the same has been directed to be recovered under Rule 12 of the Cenvat Credit Rules, 2002 read with the proviso to Section 11A(l) of the Central Excise Act; Rs. 29,27,828/- and Rs. 10,35,406/- represents excess deemed credit availed by processors at serial nos. 1 and 2 respectively on clearances of processed fabrics on behalf of M/s. Pristine Exports; Rs. 18,78,586/- is the duty paid on goods cleared for export by applicant at serial no. 1, which were diverted in the local market in contravention of conditions of Notification 42/2001-C.E., dated 26-1-2001, which has been ordered to be appropriated; Rs. 12,52,453/- represents deemed credit disallowed to the applicant at serial no. 1 above under the provisions of Rule 12 of the Cenvat Credit Rules, 2002. 3. The case of the department in ....
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....f duty on the final product. In fact, the allegation and the findings are to the effect that there was an excess payment of duty on the final product. Therefore, denial of the entire amount of deemed credit by invoking para 6 of the Notification 6/2002-C.E. (N.T.) is erroneous. 4.1 In alternate he submitted that if at all the allegations were found correct, the Commissioner ought to have disallowed the excess amount of deemed credit availed by the appellant (to the extent of the value inflation) for the normal period of limitation. There was no basis existing for denying the entire amount of deemed credit, as has been done in this case. On the issue of time bar he submitted that in the absence of any allegation to the effect that the appellant was aware of the manipulation to the proviso to Section 11A could not have been invoked against the appellant in view of the judgment of the Hon'ble Supreme Court in the case of C.C.E. v Lajya Dyeing and Bleaching Works - 2008 (224) E.L.T. 345 (S.C.). He also relied on the decision of Commissioner v. Madhu Tex Industries Ltd. - 2010 (257) E.L.T. A18 (Bom.), Madhu Tex Industries Ltd. v. C.C.E., Thane-I - 2009 (246) E.L.T. 443 (Tri.-Mum....
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....dvocate appeared and submitted that in the impugned order these appellants were not held to be the manufacturers and it is settled law that there cannot be two manufacturers as held by this Tribunal in the case of Kooverji Devshi & Co. Pvt. Ltd. - 1997 (89) E.L.T. 796 (Tri.). He further submitted that assuming without admitting that the appellants were guilty of mis-declaration of higher value of unprocessed fabrics, no penalty can be imposed on the appellant under Rule 13 of the Cenvat Credit Rules, 2004 read with Rule 25 of the Central Excise Rules, 2002. Rule 13 of Cenvat Credit Rules, 2004 applies to person who has taken the credit. Admittedly in this case, the appellants have not taken any credit and no recovery is ordered against the appellants for the wrong excess deemed credit. 5.1 For imposition of penalty, he submitted that penalty under Rule 25 of Central Excise Rules, 2002 can be imposed on the producer, manufacturer, registered person of the warehouse and registered dealer. Admittedly, in the impugned order the appellants are not held to either the producer or the manufacturer or the registered person of the warehouse or the registered dealer. Therefore, penalt....
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....se Law." From the above said findings it was held that the appellant believe they are liable to confiscation but no order has been passed for confiscation of the impugned goods. The Hon'ble Karnataka High Court in the case of Vijaya Steels Pvt. Ltd. - 2012 (282) E.L.T. 215 set aside the imposition of penalty for want of confiscation. Therefore, he submitted that, penalty under Rule 26 of Central Excise Rules, 2002 on Shri Ashok Ketan is also not imposable. 5.5  Therefore, both the learned Counsels prayed that the impugned order be set aside. 6. On the other hand, learned A.R. Shri V.R. Kulkarni, Dy Commissioner drew our attention to the findings of the learned Commissioner that since the value of grey fabrics was inflated on the basis of fake invoices/suppliers so as to arrive at a higher assessable value, there was mis-declaration and payment of duty in excess which was a means of obtaining excess rebate and inadmissible higher deemed credit, deemed credit was liable to be recovered from the processors who are the actual manufacturers and since the credit was taken and utilized wrongly on account of fraud, wilful misstatement and suppression of facts, the extend....
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....this Tribunal in the case of Madhu Tex Inds. Ltd. (supra). 8.1 We further find that for the month of December 2002 is concerned, we do agree with the contention of the learned Counsel that disallowance of deemed credit will have to be limited to the actual extent of inflation in the value of grey fabric cleared for export under bond. We also do agree with the learned Counsel that the goods exported under rebate is not required to be reversed in the light of the judgment of the Hon'ble Apex Court in the case of Narmada Chemataur Pharmaceuticals Ltd. (supra) wherein it was held that in case of exports made under claim for rebate the wrong deemed credit availed already stands reversed by virtue of excess payment of duty on the final product. The demand for duty in respect of goods cleared for export under rebate therefore cannot sustain even for the normal period of limitation also. 8.2 Further we find that the demand of Rs. 12,52,453/- is not sustainable against the processors as they have cleared the goods to M/s. Pristine Exports under bond and CT-3 certificate. It was also not in processor's knowledge that their goods shall be diverted in the local market although ....
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....ntion of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [rupees two thousand], whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. From the plain reading of the said rule, it is clear that ....