TaxTMI 
TaxTMI 
2016 (4) TMI 626
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.... 2. Appeal Nos.E/42499/14 & E/41030/2015 Appellant M/s.Ran India Steels Pvt. Ltd., Unit-II located in Nallur Village, Namakkal District, Tamil Nadu are engaged in the manufacture of MS Ingots falling under Chapter Heading 72061090 and registered with Central Excise. The entire M.S ingots manufactured by appellant Unit-II are cleared to their own Unit-I located in the same Nallur Village, Namakkal District for captive consumption in the manufacture of TMT bars. Appellant paid duty by adopting market value of MS ingots and obtained CAS-4 certificate for determining the value of goods cleared to their own inter-unit. The adjudicating authority issued SCN No.7/2013 dt. 7.5.2013 and another SCN No.05/14 AC dt. 12.3.2014 on the charge of passing on the excess credit to their Unit-I and proposing for penalty under Rule 26 & 27 of CER 2002. Accordingly, the adjudicating authority passed two Orders-in-Original viz. OIO No.1/2014 (AC) dt.20.3.2014 (in respect of Appeal E/42499/14) and OIO No.4/2014 (AC) dt. 17.11.2014 (in respect of Appeal 41030/15). In both the OIOs, the adjudicating authority rejected the value adopted by appellant's Unit-II and imposed penalty under Rule 26. S....
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....ey have paid excise duty on the goods transferred to their Unit-I based on the market value which is higher than 110% of cost of production. He further submits that there was no dispute on the duty paid by the appellant on the higher value. The department alleged that higher duty was paid with intention to pass on the credit. He submits that there is no intention to pass on the excess credit as the duty was paid by Unit-II, they are eligible for taking credit by Unit-I by calculating excise duty on the finished goods viz. TMT bars cleared from unit-I. Therefore there is revenue-neutrality. He further submits that there is no provision in Section 11A for alleging contravention of payment of higher duty. He submits that Section 11A is only for non-payment, misdeclaration or other contraventions. He further submits that adjudicating authority in the first two appeals has simply rejected the value and not quantified or determined the value as per Rule 8 of Central Excise Valuation Rules. Though the adjudicating authority imposed penalty under Rule 26, on the quantum of penalty he directed the penalty amount to be determined based on the redetermined duty amount. He submits that they ha....
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....s they have not contravened any of the provisions of CCR as the goods were MS rods, original input for manufacture of finished goods got duty paid invoice. He further submits that it is not the case before transfer of any credit, the goods were received by Unit II under valid central excise invoice and availed input credit. The goods were consumed in the manufacture of finished goods. Therefore, denial of cenvat credit on the ground of passing on the excess credit from Unit II to Unit I is not within the provisions of CCR. He submits that rule 26 cannot be invoked. Rule 26 penalty is imposable where no goods involved and also only before transaction. Whereas in the present case, the goods were transferred to their Unit I for captive consumption. The commissioner has denied entire credit based on the ground that Unit-I has passed on the credit. He relied on the following decisions :- (1) CCE Vs Purity Flexpack Ltd. -2008 (223) ELT 361 (Guj.) (2) Parasrampuria Synthetics Ltd. Vs CCE Jaipur-2005 (191) ELT 899 (Tri.-Del.) (3) Acero Fabrica Vs CCE Mumbai-2005 (191) ELT 670 (Tri.-Mumbai) (4) CCE Mumbai Vs Anand Arc Electrodes Pvt. Ltd.-2010 (252) ELT 4....
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....ey had only paid on provisional basis by adopting higher market value so as to avoid litigation on demand of duty on account of short payment. He further submits that presently they are paying appropriate duty as per the CAS-4. 10. The main issue is that the valuation adopted for removal of finished goods viz., M.S. Ingots was rejected on the ground that the appellant has not paid duty on CAS-4 value but paid duty on the market value which was slightly on the higher side and therefore penalty under Rule 26 was imposed which is equal to the alleged excess credit. The appellant had to pay duty on 110% of the cost and they had paid duty on the market value due to delay in obtaining the CAS-4 certificate from the Cost Accountant. The reason for paying duty on the market value is not on account of any malafide intention but due to delayed receipt of CAS-4 certificate only. A perusal of the CAS-4 certificates issued would show that the period for which the certificate was issued and the date of issue of such certificates was much after the clearance and therefore they could not have waited for the certificate. They cannot be faulted for adopting market value which was slightly higher ....
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....p;(iii) Monga Brothers Ltd. -Vs- CCE, Ludhiana (Supra) The above decisions would apply with greater force in the present case and the orders of the lower authorities are liable to be set aside on this ground also.] 15. Further a perusal of Rule 26 of the Central Excise Rules, 2002 would show that it has no applicability to the appellant . Rule 26(2)(i) applies only where there is no delivery of goods by the manufacturer of inputs. In the present case there is no dispute with regard to the fact that the goods were supplied to Unit I. The goods which are cleared in the instant case falls within the definition of "input" as found under Rule 2(k) of the CENVAT Credit Rules, 2004. They have been used in the manufacture of goods by the receiving Unit I of the appellant. Thus, the present issue is not a case of "ineligibility", also and therefore Rule 26(2)(ii) will not operate. The appellant has not enabled the receiving unit to take credit without payment of duty. Hence the lower authorities have wrongly applied Rule 26 for imposing penalty. Similarly, imposition of penalty under Rule 27 is also not correct. 16. With regard to Appeal No.E/40612/2015, there was no dispute raised....
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.... in the duty paying documents are eligible for credit and are received and used by a manufacturer in his factory there cannot be any ground for denial of credit. The manner in which the manufacturer has paid the duty on the goods so supplied is irrelevant. 19. It is also seen that during the period from April 2008 to March 2013, Unit II had paid substantial amount from PLA. The Appellant submits that, had Unit II followed the assessable value mentioned in the SCN, then the duty amount need not have been paid by cash by Unit II. As such, it is not the case of the department that Unit II has deliberately adopted higher assessable value to utilize accumulated Cenvat credit. If that had been the case of the department, then the payment of PLA would not have arisen at all. Neither the provisions of Rule 14 of Cenvat Credit Rules, 2004 nor the provisions of Section 11A of the Act are attracted to deny the credit for the following reasons: (i) Rule 14 ibid deals with the Cenvat credit wrongly taken or erroneously refunded. In the instant case, the Cenvat credit under dispute was taken correctly on MS Ingots received from Unit II and used as input in the manufacture of TMT Rods....