TaxTMI 
TaxTMI 
2020 (1) TMI 537
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....long in proceedings under show cause notices (SCN) dated 28.02.2006, 29.08.2006, 17.08.2006, 15.06.2006, 16.04.2008, 18.11.2007 and 16.04.2008, all issued by DGCEI. By the said order the Commissioner has confirmed a central excise duty demand of Rs. 9,45,67,825/- under Section 11A(2) of CEA'44 and Rule 12 of CCR 2002/Rule 14 of CCR 2004 read with Section 11A of CEA'44 respectively, along with interest under Section 11AB of CEA'44 and Rule 12/14 of CCR 2002/2004 against Ishaan Technologies Pvt. Ltd. (in short, "Ishaan"), the show cause noticee no. 1 in the SCN dated 28.02.2006. The Commissioner has also imposed the following penalties: (a) Rs. 9,45,67,825/- upon Ishaan (Noticee No. 1 - SCN dt. 28.02.2006) under Section 11AC of CEA'44 and Rule 13/15 CCR 2002/2004 read with Section 11AC of CEA'44. (b) Rs. 2 lakhs each under Rule 26 of CCR 2002: (i) upon Manaksia Ltd. (Noticee No. 2- SCN dt. 28.02.2006) (ii) upon Sunil Kumar Maskara (Noticee No. 3 - SCN dt. 28.02.2006) (iii) upon Kiran Bhagwat (Noticee No. 4 - SCN dt. 28.02.2006) (iv) upon Basu Deo Agarwal (Noticee No. 5 - SCN dt. 28.02.2006) (v) upon Jugal Kishore Agarwal (Noticee No.....
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....Credit Rules, by way of refund of the said amount to the manufacturer. The exemption under the said notification was extended to new industrial units which commenced their commercial production on or after December 24, 1997 and industrial units existing before December 24, 1997 but which had undertaken substantial expansion by way of increasing the installed capacity by not less than 25% on or after December 24, 1997. (iii) Ishaan, upon satisfying the requirement of the said notification in respect of the goods manufactured in its factory, availed benefit thereunder. Upon payment of the duty on the subject goods said to have been manufactured by it, refunds thereof were granted to Ishaan by the jurisdictional Central Excise authority under the said notification, in the manner and to the extent allowable, upon following the procedure in terms of the said notification. (iv) Provisions were also made in the erstwhile Central Excise Rules and the Cenvat Credit Rules, as applicable during the relevant period so as to enable the buyers of the products manufactured and cleared from units eligible to exemption under the said notification to avail cenvat credit of the duty paid on the....
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....f Manaksia Ltd., to whom the subject goods were sold by DGCEI between 15.06.2006 and 16.04.2008. In all of them the allegation was that the subject machineries in their respective factories had not been manufactured by Ishaan and hence there were no clearance of the said capital goods from Ishaan's factory under invoices issued by Ishaan and hence cenvat credit of the duty paid on the said machineries were on the basis of bogus and fabricated invoices and consequently the said credit amounts were recoverable from them, along with interest and the said show cause noticees were liable to penalty, as proposed in the respective show cause notices. (viii) By Order Nos. 3/08-CE, 06/09-CE & 03/2012-CE dated April 2, 2008, October 26, 2009 and February 22, 2012, the Board appointed the Commissioner of Central Excise, Shillong as common adjudicator for the purpose of adjudication of all the show cause notices. (ix) The proceedings under the said show cause notices resulted in the impugned order. 5. On behalf of the assessees and appellants against whom personal penalties were imposed, Dr. Samir Chakraborty, Senior Advocate and Shri Abhijit Biswas, Advocate has contended as under: ....
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....e being no manufacture or production thereof as per the show cause notice and the impugned order, the said notification therefore, has no applicability whatsoever to the instant case. Hence, the question of granting refund of any "duty paid" as per the said notification also did not and could not arise. Therefore, there can be also no question of any wrong or erroneous refund of duty paid or any evasion of duty because thereof by Ishaan in the instant case. What was paid by Ishaan and what was returned to it by the Department were in fact sums of money which were not payable as and by way of duty by Ishaan, even as per the show cause notice/impugned order. Therefore, the Revenue cannot retain or seek recovery thereof in violation of Article 265 of the Constitution of India. (iv) As regards the demand part on the allegation of overvaluation of the said goods, since there was no "manufacture" thereof by Ishaan as per the show cause notice and in the impugned order, there being no duty payable thereon irrespective of whether or not they were overvalued, the refund demanded of the excess amount was not and cannot be said to be duty of excise levied under the Act and, consequently, t....
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....) RLT 950 (T), paragraph 2.1 and this Bench of the Tribunal, being Order No. FO/A/75027-75028/2019 dated January 7, 2019 passed in Appeal Nos. E/278/2009 & E/412/2006 (Manaksia Ltd. & Spark Exports Ltd. Vs. CCE, Bolpur). (vii) Further, in view of the provisions of Rule 16 of the Central Excise Rules, 2002 and on application of the undisputed facts on record in the present case thereto, this finding cannot survive. It is an undisputed fact, evident from the show cause notice itself, that the goods which were brought into the factory and on which the cenvat credit was availed, were duty paid and were brought into the factory "for any other reason" within the meaning of Rule 16(1) of the said Rules. Hence, Ishaan was entitled to in law to take cenvat credit of the duty paid on such goods and utilise the same in accordance to the provisions of the Cenvat Credit Rules. There is also no dispute that the final products involved were removed upon payment of duty of central excise payable thereon, including by way of utilisation of the cenvat credit involved, thus, duly satisfying the requirement of Rule 16(2) also. The amount of duty paid on the said finished products is also fully cove....
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....hereunder. In the instant case, there is no allegation or finding or materials disclosed that these conditions were satisfied. In so far as Rule 26(2) of the said Rules is concerned, from the allegations in the show cause notice and the findings in the impugned order it is clear that the said provision does not have application to the instant case. The reasons contained in the impugned order to come to the conclusion that the said appellants were liable to penalties under Rule 26 of the said Rules are not only patently erroneous, devoid of any merit or substance whatsoever, they also do not satisfy the requirements of Rule 26(1) or (2) of the said Rules in order that the appellants can be held to be liable to penalties thereunder. The findings in the impugned order are based on surmises and conjectures and/or on incorrect premises, evident from the records. There exists no material on record and none has been disclosed in support of these findings against the appellants. No penalties can be imposed upon the appellants on the basis of such surmises and mere opinion of the Commissioner based on no evidence and/or incorrect reasonings (xi)(a) By the impugned order the Commissioner,....
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....ise, 2000 (121) ELT 738 (T). (d) Further and in any event, assuming though denying that there has been no "manufacture" within the meaning of Section 2(f) of the Act by Manaksia in their factories with the subject input materials received, in as much as undisputedly there being no dispute that the final products produced upon assembly of the said input materials having been cleared and exported upon payment of duty under the rebate claimed procedure, the assessee cannot be denied the credit availed on the subject input materials. In this regard reliance is placed upon, inter alia, the following decisions: (i) Glass & Ceramic Decorators Vs. Commissioner of Central Excise, 2014 (305) ELT 133 (T) (ii) Finolex Cables Ltd. Vs. Commissioner of C.Ex., 2007 (210) ELT 76 (T) (iii) Essel Propack Ltd. Vs. CCE, 2014 (314) ELT 584 (T). (xii)(a) However, the Commissioner, while dropping the proceedings initiated by the show cause notice dated November 28, 2007 against Manaksia Ltd., Anjar [Revenue's Appeal No. E/76094/2014], has wrongfully and illegally appropriated the amount of Rs. 2,37,57,760/- deposited by Manaksia Ltd., Anjar, under protest, during the cours....
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....Court in Commissioner of Central Excise, Shillong Vs. Jellalpore Tea Estate (supra), in view of the decision of the Hon'ble Supreme Court in Grasim Industries Ltd. Vs. Commissioner of Central Excise, 2011 (271) ELT 164 (SC). Specific reference was made to paragraph 13 of the judgment. (ii) The decision of the Gauhati High Court in Jellalpore Tea Estate (supra) is applicable only in cases where the demand for recovery is made on the basis of changed opinion of the Department as regards satisfying the requirements under the said notification for availing benefit thereunder by the assessee and not in a case like the instant case. (iii) Relying upon the allegations contained in the show cause notice and the findings in the impugned order based thereon it is seen that fraud had been perpetrated by Ishaan to wrongfully and illegally in connivance with Manaksia Ltd., obtain the subject refunds inspite of allegedly not manufacturing in its factory the subject goods and thus being disentitled to the benefit under the said notification and therefore the Commissioner was right in seeking recovery thereof. 6.1 In respect of the appeals filed by the Revenue against the impugned order o....
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....e Tea Estate's case (supra) is based on general principles and interpretation of the relevant statutory provisions of the Act, detailed in the said judgment and has complete applicability to the instant case. (iii) In so far as the other contention made on behalf of the Revenue on factual aspects, as set out in Ishaan's appeal petition (Appeal No. E/76154/2014), in the impugned order the Commissioner merely repeated in a different form, to make the same as his findings, the allegations made in the show cause notice, without dealing with or/or perfunctorily dealing with the detailed contentions and submissions of Ishaan in respect thereof, contained in its reply to the show cause notice, which were reiterated and further elaborated during the course of personal hearing and in the Written Notes of Argument submitted before the Commissioner in the adjudication proceedings, with supporting decisions and evidences. Both the Commissioner in the impugned order and the Learned AR while making submissions before the Tribunal have conveniently glossed over the said detailed contentions and submissions of Ishaan in the reply to the show cause notice dated October 9, 2008 and the Written No....
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.... the Learned AR are completely silent on the above contentions. Such avoidance to deal with, inter alia, these contentions of Ishaan conclusively establishes that the fabricated case made out against Ishaan in the show cause notice and repeated in the impugned order is untenable and unsustainable and, consequently, the benefit under the said notification granted to Ishaan by the Assistant Commissioner was legal, valid and proper. 8. We have heard the parties and have perused the records of the appeals. 9. Notification No. 32/99-CE dated July 8, 1999 exempted from excise duty and additional excise duty goods, cleared from a unit located in the places specified in the notification situated in the specified States of North East India, from so much of such duties leviable thereon under, inter alia, the Central Excise Act, "as is equivalent to the amount of duty paid by the manufacturer, other than the amount paid by utilisation of cenvat credit under the Cenvat Credit Rules. The exemption is to be given effect in the following manner: "(a) The manufacturer shall submit a statement of the duty paid from the said account current to the Assistant Commissioner of Central Exc....
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....ase of Commissioner of C.Ex. Vs. Jellalpore Tea Estate (supra), in a similar case, dealing with a similar Notification No. 33/99- CE dated 08.07.1999 whereby exemption from duty was granted to units set up in the North East after 24.12.1997 and also to existing units making an expansion of 25% or more of the installed capacity. Setting out the material portion of Section 11A of the Act, the Division Bench of the Hon'ble Gauhati High Court has held as follows: "12. ......................................................................................................... A bare reading of Section 11A of the Act indicates that power can be exercised only if duty has not been levied or paid or has been short-levied etc. 'on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act'. Insofar as the present case is concerned, the only issue that arose for consideration was whether the assessee was entitled to the benefit of Notification No. 33/99-CE, dated 8.7.99. There was no issue of any approval, acceptance or assessment relating to the rate of duty nor was there any issue....
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....shaan during the period October 2002 to December 2004. The order of the Assistant Commissioner granting refund could have been challenged by the Department only by resorting to Section 35E of the Act, which has not been done in the instant case, and therefore, as held by the Hon'ble Gauhati High Court, the Revenue cannot initiate collateral proceedings to set aside the said order by resorting to Section 11A of the Act. 11.2 Moreover, Section 11A(1) of the Act provides for recovery of duties of excise, not levied or not paid or short levied or short paid or erroneously refunded. Hence, the condition precedent for invoking Section 11A(1) of the Act is that there is a duty leviable on a particular goods, which duty has not been levied or has not been paid or has been erroneously refunded or in respect whereof there has been short levy or short payment of the duty payable under the Act read with the Tariff Act. Since the sine qua non for such levy of duty is manufacture or production of goods as per the charging Section 3(1) of the Act and since, according to the show cause notice/impugned order, there has been no manufacture of goods by Ishaan, the condition precedent for invoking ....
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....t must further have been produced or manufactured and it is capable of being bought and sold.' 7. Assuming that Tariff item 22F, when it refers to 'asbestos fibre and yarn', covers asbestos fibre that has been separated from its parent rock in the manner aforementioned, such asbestos fibre is not the result of a process of manufacture, it is not a new and commercially identifiable article and it is, therefore, not liable to excise duty." 11.3 In the case of Union of India Vs. Ahmedabad Electricity Co. Ltd., 2003 (158) ELT 3 (SC), upon discussing its earlier decisions, the Hon'ble Supreme Court observed as follows: "32. From the above discussion it is clear that to be subjected to levy of excise duty 'excisable goods' must be produced or manufactured in India. For being produced and manufactured in India the raw material should have gone through the process of transformation into a new product by skilful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone through the process of manufacture." 11.4 The above has been reiterated by the Hon'ble Supreme Cou....
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....Ishaan as wrongly availed and utilised cenvat credit, the said notification does not allow refund of the cenvat credit utilised. Therefore the act of utilisation of the subject cenvat credit by Ishaan for payment of part of the total excise duty paid on the subject goods effectively reversed the cenvat credit of Rs. 53,05,582/- and hence there is no wrongful or irregular cenvat credit being availed by Ishaan, as held by this Bench itself in the case of Manaksia Ltd. & Spark Exports Ltd. Vs. CCE, Bolpur, Order No. FO/A/75027-75028/2019 dated 07.01.2019 passed in Appeal Nos. E/278/2009 & E/412/2006. As such, this demand is also unsustainable. 11.10 In the view taken and conclusion arrived at as above, we are not required to considered the contentions of the parties on the disputed issues of fact involved. 11.11 In the premises the demands of duty, interest and penalties against Ishaan and the other appellants in Appeal Nos. E/76156-76160/2014 imposed by the impugned order are unsustainable. 11.12 As regards the appeal of Manaksia Ltd., Anjar against appropriation of the sum of Rs. 2,37,57,650/- deposited by it towards the duty confirmed by the impugned order against Ishaan, ....