TaxTMI 
TaxTMI 
2024 (9) TMI 309
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....e Act, 1944, and (iii) I impose a penalty of Rs.2,78,870/- (Two Lakhs Seventy Eight Thousand Eight Hundred Seventy only) upon the party under Section 11AC 1(a) of Central Excise Act, 1944. Further, benefit of reduced penalty is applicable under Section 11AC 1(b) of Central Excise Act, 1944." 2.1 Appellant is engaged in manufacture of plastic moulds and dies falling under Tariff item No.84798700, 84807100 and 39239090 of the First schedule to Central Excise Tariff Act, 1985. They are also availing the benefit of Cenvat credit of duty paid on inputs used in the manufacture of their finished goods. 2.2 During the course of audit it was observed that some of the manufactured moulds with PP granules were transferred to other factory namely M/s Amrita Mouldings Pvt. Ltd. without payment of duty for manufacture of plastic items on job work basis and after completion of job work moulds were returned to them. These moulds were not charged to duty and consumed over a period of time. The fact about clearance of moulds in this manner was not reflected in the daily stock register and ER-1 returns. Thus, appellant was suppressing the fact about the manufacture and clearance of the....
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....at Credit Rules, the same can be sent for job-work. • Reliance is placed on the decision of this Tribunal in the case of M/s Zenith Machine Tools Pvt. Ltd. 2010 (255) ELT 83 (Tri.-Bang.). • In any case the demand is revenue neutral, Appellate Authority have in para 5.11 observed as follows:- • The Appellants have pleaded that it is a case of revenue neutrality. I have carefully considered the defence plea that the case is fully covered by revenue neutrality. I agree with the defence contention that the entire exercise is revenue neutral since entire amount of Tax paid by them would be available to them as Cenvat credit on such capital goods. • Thus, in view of the decision in case of M/s Anglo French Textiles 2018 (360) ELT 1016 (Tri.-Chennai) and in the case of M/s Hindustan Zinc Ltd. 2008 (232) ELT 687, the demand should have been dropped. 3.3 Learned Authorized Representative reiterates the findings recorded in the orders of the lower authorities. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 On the merits of the issue impugned order records ....
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.... 3, 5 Member Bench of the Hon'ble Supreme Court held that object and purpose of the procedure should not be overlooked. Procedures are put in place to see that the goods be not diverted or utilized for some other purpose, on the guise of the exemption notification. Hon'ble Supreme court also rejected the plea of "substantial law" and "procedural law" in this case. The Apex court explained in Para 24:- 24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if clear statutory prerequisite which effectuates the object and the purpose of the statute has ....
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.... Ltd. Vs. Thane Municipal Corporation 1991 (55) ELT 454 (S.C.) Hon'ble Supreme Court of India observed:- Para-3.......... .....Therefore the petitioner Company has definitely failed to fulfil an important obligation under the law though procedural. The learned Counsel, however, submitted that even now the authorities can verify the necessary records which are audited and submitted to the authorities and find out whether the material was used in its own undertaking or not. We do not think we can accede to this contention. Having failed to file the necessary declaration he cannot now turn around and ask the authorities to make a verification of some records. The verification at the time when the raw material was still there is entirely different from a verification at a belated stage after it has ceased to be there. May be that the raw material was used in the industrial undertaking as claimed by the petitioner Company or it may not be. In any event the failure to file the necessary declaration has necessarily prevented the authorities to have a proper verification." 5.5 I also observe that the Appellants have contravened the provisions of Rule 4, 6, 8, 10, 11 &....
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.... accordance with the statutory scheme the department would be deprived of an opportunity to examine the feasibility of levy and collection of Central Excise Duty. Thus non adherence to above provisions cannot be regarded as merely non compliance of unimportant procedure alone. 5.7 I further find that moulds, in question, have been manufactured in the factory. They are not such moulds which were purchased from outside and on which credit of duty was availed. It is provided under rule 4 of the Central Excise Rules, 2002 that no excisable goods would be removed from the factory without payment of duty. It is further provided under rule 11, of the Central Excise Rules, 2002 that all excisable goods would be removed from the factory under cover of an invoice, in view of these two provisions it is clear that manufactured goods are required to be removed on payment of duty under cover of an invoice. In the absence of provisions that the capital goods which are used in job-workers' factory will also be exempted in notification no.67/95-CE dated 16.03.95, the benefits of said notification cannot be extended when capital goods are used in a factory other than the factory of prod....
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.... to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well-nigh be Impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the two-fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section. The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clauses seek to avoid." It can thus be seen that the submission namely that the dealer, even without filing a declaration, can later prove his case by producing other evidence, is also rejected. This ratio applies on all fours to the case before us. As already mentioned the concession can be granted only if the raw material is used in the industrial undertaking seeking such concession. ....
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.... payment of duty are exempt from duty. The goods which are finished goods by one person can be capital goods for another person. However, the same do not change the nature of the goods being finished goods that being so appellants claim to the benefit of exemption under Notification No.67/95-CE cannot be upheld. Even otherwise, it is now settled by Constitutional Bench of Hon'ble Supreme Court in the case of M/s Dilip Kumar & Company [2018-TIOL-302-SC-CUS-CB] that in case of ambiguity the benefit of such ambiguity should be given to the revenue. The relevant paras of the said decision of constitutional bench of Hon'ble Supreme Court is reproduced as follows: "52. To sum up, we answer the reference holding as under- (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. ....
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....Commissioner 2015 (324) E.L.T. 656 (S.C.) -Para 35 of the Judgement reads as follows:- 35. It was submitted by the learned counsel for the assessee that the entire exercise is Revenue neutral because of the reason that the assessee would, in any case, get Cenvat credit of the duty paid. If that is so, this argument in the instant case rather goes against the assessee. Since the assessee is in appeal and if the exercise is Revenue neutral, then there was no need even to file the appeal. Be that as it may, if that is so, it is always open to the assessee to claim such a credit. 36. We, thus, do not find any merit in this appeal and dismiss the same with cost. 5.12 In this regard I am also placing reliance on the case of Shree Rainie Gums and Chemicals Pvt. Limited Vs. CCE Jaipur-II (2017(4) GSTL 340(Tri.-Del) Para 7 of the order passed by the Tribunal reads as follows:- 7. Before applying the principles of revenue neutrality, it is to be noted that the eligibility of credit to the appellant should be clearly established with supporting evidence. Further, the appellants' claim for refund of the said credit is subject to various conditions stipul....
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....l in the case of Surya Pharmaceuticals Limited-2016(43) STR 479 (Tri-Chan)." 4.6 In case of Kakateeya Fabs (P) Ltd [2018 (15) G.S.T.L. 350 (Tri. - Del.)] Delhi Bench held as follows: "10. ...... Further, we also note there is a claim for exemption in terms of Notification No. 67/95 for capital goods manufactured in a factory and used within the factory of production as well as of excisable goods manufactured in a factory and used within the factory of production in or in relation to manufacture of final products. The said exemption has no application as the main appellant is not using the capital goods in the factory of manufacture. It appears that the manufacture is in the factory premises of NTPC. ....". In case of JBM Auto [2017 (357) E.L.T. 1107 (Tri. - Chan)] Chandigarh Bench has observed as follows: "7. We find that in this case the appellants have recovered the cost of tools and dies from M/s. Ashok Leyland Ltd. and M/s. Volvo India Pvt. Ltd. by raising debit notes. They also recovered sales tax by calculating Central Excise duty and treating the same as cum-duty price. However, they did not discharge Central Excise duty liability. Recovery of conside....
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....hough within the factory complex of appellants. The business arrangement and need is such that the impugned goods (oxygen) is cleared through pipeline to FSNL premises for further use. FSNL are using the said oxygen in the scrap recovery operation and are not registered with Central Excise department for any payment of duty on any final products. We find that the original authority fell in error in examining the issue like ownership of goods, free of cost supply and return of recovered scrap, etc., to arrive at the finding that there is no physical clearance or sale of goods and hence no duty liability. Clearance to FSNL through pipeline is an admitted fact. FSNL is a separate corporate entity having assigned factory premises of their own is also admitted. Sale for a consideration or ownership of goods are not relevant to decide Excise duty liability. The contractual arrangements to meet business needs do not take away the duty liability which may otherwise exist. FSNL have established a factory at a site provided by the appellant inside their factory premises as per contract agreement. The oxygen is cleared to FSNL and consumed by FSNL. The exemption contemplated under Notificatio....
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....concurrently available to them and therefore no intention to evade duty payment can be inferred does not appear to merit acceptance since it is not in dispute that the appellants were admittedly availing of modvat credit under Rule 57A and Rule 57Q. There is also no evidence on record to show that MUL had given any undertaking under Para 2 of Notfn. No. 214/86 in relation to the manufactured items sold by the appellants to MUL. The said defence cannot therefore be accepted for want of factual substantiation. As regards the contention of the appellants that the SCN issued under Section 11A(1) would apply only to a situation where a duty payment is subsisting at the time of issue of notice and where no such outstanding duty liability exists at the time of issuing the SCN, we are of the view that a careful reading of Section 11A(1) does not allow such a construction to be put on the said provision. Inasmuch as Section 11A(1) gives power to the Central Excise Officer to serve a notice within a period of six months from the 'relevant date' from the date when non-levy/non-payment or short levy/short payment has occurred, we are of the view that so long as it is not in doubt that ther....