TaxTMI 
TaxTMI 
2017 (2) TMI 1279
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....acts as per the show cause notice are that there was an inspection in the unit DSM chemical owned by DSM Ltd on 10 November, 2005, verification of stock of some finished goods as well as raw material was done, and the following discrepancy/variation was found: - Name of the Commodity Qty. found in stock in kg./litres Qty. as per RG-1 Register Days production as per production slip Total stock as per their records Diff. In Qty. Acetic Acid 58755.167 58490 0 58490 (+) 265.167 (say 265) Acetic Anhydride 14936.067 14035 831 14866 (+) 70.067 (say 70) Acetaldehyde 68094 65155 0 65155 (+) 2939 3. Statement of Mr. Chandra Prakash Singh the General Manager of the unit was taken under Section 14 of the Act, wherein he stated that in respect of Acetic Acid and Acetic Anhydride, the difference was mainly due to temperature variance at the time of stock taking. In respect of Acetaldehyde he accepted that 2939 kgs was excess in stock. However, no reason had been given by him for such excess stock. Such excess stock as aforementioned, was valued at Rs. 95,046/- involving duty of Rs. 15,512/- and the same was seized. 4. ....
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....nt in manufacture of some dutiable finished goods and some quantities had been cleared/sold to various customers at NIL rate of duty (as tariff rate on Rectified Spirit being nil). As such it appeared that the appellant was liable to pay under the Provisions of Rule 6(3)(a)(i) of CCR the proportionate amount attributable to the credit involved on the inputs/input services (molasses) used in the manufacture of Rectified Spirit cleared or sold at nil rate of duty. It further appeared that major part of the Rectified Spirit is used in manufacture of dutiable goods while a small part is cleared or sold at nil rate of duty. It further appeared that the appellant have procured molasses from various sugar units. The molasses were being stored in five tanks in the unit and Cenvat Credit was availed on the entire quantity of molasses received/procured. Cenvat Credit so availed being utilized by the appellant towards payment of duty on the clearance of finished goods or towards payment under Rule 6(3)(a)(i) of CCR, 2004. It further appeared that appellant while preparing the summary for the month of March 2005 of the RG 23 Pt. I register purposely bifurcated the said quantity of molasses in ....
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....red that appellant have not paid any amount from 03 June, 2005 under Rule 6(3)(a)(i) of CCR, 2004 on the quantity of molasses used in relation to the manufacture of rectified spirit, which have been cleared or sold by them at nil rate of duty. On scrutiny of documents further reveals that appellant have received molasses from DSM, Kashipur, wherein no duty was being paid on such molasses. In order to show separate inventory appellant had maintained receipt and consumption of the said molasses in RG 23A Part-1 Register (page no.1 to 18 of RUD-3) separately. It have been shown therein that with effect from 03 June, 2005 only the said exempted molasses have been used by them in manufacture of rectified spirit sold at nil rate of duty. It appeared to Revenue that since appellant was not utilising said exempted molasses exclusively for the manufactured of rectified spirit, which have been sold or cleared by them at nil rate of duty, it appeared that they were doing the same. In order to avoid payment under Rule 6(3)(a)(i) of CCR, 2004. it also appeared that: - (i) Appellant were not manufacturing rectified spirit kept separately for clearing at nil rate of duty, (ii) Appellant wer....
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....ed therein simultaneously. In his statement dated 10 November, 2005 Shri C.P. Singh GM Commercial of appellant in response to query whether they produced rectified spirit separately, that is one for sale, another for captive consumption, he stated that rectified spirit was produced and stored commonly. It further appeared that appellant was required to pay the amount attributable to Cenvat Credit involved on the quantity of molasses used in manufacture of rectified spirit sold as such at nil rate of duty under Rule 6(3)(a)(i) of CCR, 2004 for the said purpose of quantification of involvement of Cenvat Credit on the quantity of rectified spirit sold at nil rate of duty from time to time. It appeared to Revenue that the justified method was FIFO (First In First Out) was required to be adopted. The receipt and consumption of molasses was worked out as follows:- (a) Receipt of Molasses and rate of duty applicable S.No. Rate of applicable Qty. in Qtls. Month/date 1. @ 500 PMT i.e. Rs. 50/- per quintal 298503.87 (C.B. on 28.02.2005) 2. @ 1000 PMT i.e. Rs. 50/- per quintal 165913 75232.90 11188.30 (March-05) (April-05) (upto 07.05.05) ....
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..../- in the course of investigation, there was still required to reverse or pay an amount of Rs. 5,21,161/- under Rule 6(3)(a)(i) of CCR, 2004. 11. On scrutiny of document resumed from appellant revealed that between the period 24 January, 2005 to 10 March, 2005, they had diverted 25,964.50 Qtls. of raw material - molasses to another manufacturing unit M/s Dhampur Specialty Sugar Ltd (DSSL), which itself has been engaged in the manufacture of sugar related products by using sugar and molasses and other raw materials. It was also noticed that appellant had also availed Cenvat Credit on the said molasses which was diverted by them to DSSL and the said transfer was done by appellant without reversal of credit. As per Rule 3 and 4 of CCR, 2004 appellant was required to reverse the amount of Cenvat Credit involved on the said 25,964.50 Qtls. of molasses. The total Cenvat Credit involved was worked out at Rs. 20,29,755/- as per the register which was resumed at Sr. No. 25 of Annexure B to the Panchnama. The said register have been named as 'Invertose Sheera'. It also appeared that the old name of M/s DSSL was M/s Dhampur Invertose Ltd and so the said Invertose Sheera appeared to be the ....
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....dehyde under Rule 25 of CER with option to redeem on payment of fine Rs. 20,000/- in lieu of confiscation. Further, penalty Rs. 15,512/- was imposed under Rule 25 of CER, 2002. The proposed demand of Rs. 13,087/- involved on the goods found short was confirmed and the amount already paid Rs. 12,323/- was appropriated and the balance demand remaining Rs. 764/-. Further proposed differential demand of Rs. 25,48,951/- involved on the molasses used in the manufacture of rectified spirit cleared at nil rate of duty under Rule 14 of CCR, 2004 read with Section 11 A of the Act was confirmed. Further, allowing appropriation of Rs. 20,27,790/-. There was balance demand remaining Rs. 5,21,161/-. Further penalty was Rs. 5,21,161/- was imposed under Rule 15 of CCR, 2004 read with Section 11 AC of the Act. Further, the proposed amount of Rs. 20,29,755/- involved on molasses transferred to M/s DSSL were disallowed under Rule 14 of CCR and further equal amount of penalty was imposed under Rule 15 of CCR read with section 11 AC of the Act. Being aggrieved the appellant preferred appeal before learned Commissioner (Appeals) who vide the impugned Order-in-Appeal dated 30 December, 2008 was pleased t....
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..... The appellant was required to pay or reverse the appropriate amount under the provision of Rule 6(3)(a) of CCR on the quantity of molasses used for manufacturing of rectified spirit. As regards the quantity of molasses stored outside the factory and/or allegedly diverted to M/s DSSL. The learned counsel held that the appellant had diverted the inputs to other units on which Cenvat Credit had been taken. Accordingly, holding that the appellant had not followed Rule 3(5) of CCR read with Rule 9 it was held that duty of Rs. 20,29,755/- is rightly demanded. As regards the Revenue appeal, the learned Commissioner has observed that the preventive officers detected the violations in the course of investigation, wherein the appellant deposited Rs. 12,323/- against due amount of Rs. 13,087/-. The appellant had not deducted the levy, on its own. So they had not reversed themselves under intimation to the Department. Accordingly, the appeal of the appellant assessee was dismissed and the appeal of Revenue was allowed and accordingly, penalty on shortage Rs. 13,087/- was confirmed along with penalty of Rs. 25,48,951/- on the molasses used for manufacture of rectified spirit (cleared duty-fre....
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....rtment post facto. It is his submission that as per Rule 8, for confirming the duty demand, it is required to show that inputs received have not been used in the manner specified in the Rules and mere fact that the same has been stored outside the factory without permission of the Department, is not sufficient. The learned counsel also demonstrated the proper account of molasses kept from the register maintained under the State Excise Act and Rules, being Register No. MF - 6. Thus, it is the case of only venial breach of the provisions of Rule 8 of CCR, whether the duty can be demanded under Rule 3(5) of CCR, which provides for payment of duty, when inputs on which Cenvat Credit is taken, are removed as such. Such facts are not obtaining in the facts and circumstances and as such the demand of Rs. 20,29,755/- is fit to be set aside. So far the confirmation of duty and confiscation for the discrepancy and shortage or excess found, at the time of inspection, the learned counsel demonstrated that such difference and/or discrepancy is less than 10% and in some cases, even less than 5%. Further, the cogent explanation given for the shortage or difference was not found untrue and the ord....