2025 (11) TMI 319

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.... Finance Act, 2005. (ii) All clearances of tubes & Flaps effected by the party during Oct 97 to Jan 98 (upto 19.01.1998) utilizing the AED credit existing in their RG23A Pt. II account towards payment of BED leviable thereon should not be treated as non-duty paid and also the amount equivalent to the amount of credit utilized of Rs. 3,06,95.274.00 should not be demanded in cash under Section 11A of Central Excise Act 1944 read with Section 88 of the Finance Act, 2004 as amended by Clause 124(a) of Finance Act, 2005; (iii) Interest at the applicable rate on the amount of duty of Rs. 3,06,95,274.00 evaded should not be demanded from them under Section 11AB of Central Excise Act 1944 read with provisions of clause 124(a) of the Finance Act. 2005." 3. Petitioner was engaged in the manufacture of tyre, tubes and flaps. For that manufacturing activity, the petitioner purchased Tyre Cord Fabric as an input from 13.10.1993 to 19.01.1998. That commodity was exposed to payment of Additional Excise Duty (AED in short). It was paid by the petitioner under Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act 1957. 4. Vide amendment made to the M....

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....to pay an amount of Rs. 3,06,95,274.00 (Rupees Three crores six lacs ninety five thousands & two hundred seventy four only) in cash / PLA towards. clearances of goods on which credit of AED was misutilised by them under Rule 9(2) read with Section 11A of Central Excise Act They have to pay interest on this amount under Section 11AB. (3) A penalty of Rs 3,06,95,274. 00 (Rupees Three crores six lacs ninety-five thousand & two hundred seventy four only) is imposed upon M/s Modi Rubber Ltd., Modipuram, Meerut under Rule 9(2), 52A, 571(4), read with 173Q of Central Excise Act. I also impose the following amount of penalties upon the executive of the aforesaid company, under Rule 209A:- S/Shri (i) B.K. Modi, Managing Director Rs. 30,00,000/- (Rs. Thirty Lacs) (ii) B.K. Gupta, Chief Executive Rs. 20,00,000/- (Rs. Twenty Lacs) (iii) Anand Agarwal, Executive Director Rs. 20,00,000/- (Rs. Twenty Lacs) (iv) A.P. Arora, Manager (Excise) Rs. 5,00,000.00 (Rs. Five lacs) (v) I also confiscate, land plant, building, machinery of M/s Modi Rubber Ltd., Modipuram, Meerut under Rule 173Q (2) of the Central Excise Rules. However, I....

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....er first day of March 97. Thus, we find that all the requirement of enacting clause of Rule 57F(12) are fully complied with. In this view of the matter, we find that the impugned order in erroneous, the same is, therefore, set aside and these appeals are allowed." 8. Arising from that order of the Tribunal, the revenue preferred Central Excise Reference before this Court being Central Excise Reference No. 02 of 2009 on the following questions of law: "1. Whether credit of Additional Duties of Excise can be utilised towards payment of Basic Excise Duty when Notification No. 5/94-CE(NT) dated 1.3.1994 specifically provides that AED shall be utilised only towards payment of duty of excise leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957? 2. Whether on the facts and circumstances of the case, the Tribunal has erred in law in overlooking the provisions of notification No. 5/94-CE(NT) dated 1.3.1994 which specifically provides that credit Additional Excise Duties shall be utilised only towards payment of excise leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957?" 9. Vide order dated 19.12.20....

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....horities. As to the proceedings being time barred, it has been submitted, no proceeding could have been conducted during pendency of the Reference before this Court. The revenue authorities have only acted with judicial discipline in mind. After the Reference came to be rejected, proceedings were continued. However, no reason could be assigned for non-conclusion of the proceedings beyond six months, from 19.12.2016. 15. Having heard learned counsel for parties and having perused the record, in the first place, the real issue between the parties is eligibility of AED to MODVAT. Undeniably, the period during which the dispute arose is 13.10.1991 to 19.1.1998. It is equally admitted that CENVAT scheme first came into force on 01.7.2001 and not earlier. Therefore, in the first place in absence of any express provision making any part of the CENVAT scheme directly applicable to transactions performed prior to 01.7.2001, it is difficult to entertain a possibility that the provisions of the CENVAT scheme would govern the issue at hand. 16. Rucially, the issue had not only arisen under the MODVAT scheme but it had led to issuance of Show Cause Notice dated 02.04.1998 (extracted above....