2018-TIOL-3834-CESTAT-DEL

2018-TIOL-3833-CESTAT-AHM

CX - M/s. Metal Closures (P) Ltd. (MCPL) one of the assessee have been visited by Preventive Wing of Bangalore - The records of unit and registers were verified - The Officers found that there was shortage of certain variety of PP caps and excess stock of caps - The same were seized - A SCN was issued proposing to confiscate the seized goods and proposed imposition of penalty - Merely on the basis of records being found with another unit, clearances cannot be clubbed in view of the ratio of case in Geeta Valves and Engg. Pvt. Ltd. - There was no evidence shown that the money was transferred to MCPL accounts, therefore, the clearances cannot be clubbed - It was alleged that goods supplied to M/s. Brooke Bond were manufactured in the name of M/s. WC, on the basis of a dairy maintained by Shri Armstrong - As a matter of fact, they were manufactured by M/s. WC and were sold to M/s. ECPL and eventually supplied to M/s. Brooke Bond - This was clear by statement of Shri Dineshan the Assistant Manager of Brooke Bond - The assessee was vehemently contending on the fact that there was no facility to manufacture crown corks in the factory of M/s. MCPL - Therefore, it cannot be alleged that they have manufactured and cleared crown corks - Shri M. B. Mammoo during cross-examination stated that he did not remember as to whether he had conducted any investigation regarding the availability of infrastructure to manufacture crown corks at M/s. MCPL - The Department has not sufficiently rebutted this claim by assessee - Since the manufacture was done in assessee's premises, duty of demand raised in SCN with regard to manufacture and clearance of crown corks - It is pertinent to see that neither the mahazar or any subsequent statement or investigation conducted have given reasons for this inference - The SCN notice alleges that the manufacturing activity was done by M/s. MCPL, without giving any concrete proof to the effect that M/s. MCPL had any facility to manufacture the same - As contended by assessee, department did not issue any SCN to M/s. WC - Even assuming that the Department has considered M/s. WC, a non-existing unit, the issue required to be investigated deeply whether such goods were manufactured at M/s. ECPL, this investigation was not conducted - Moreover, no SCN was given to assessee alleging manufacture of crown corks that was ultimately alleged to have been cleared by M/s. MCPL in the name of M/s. WC - Revenue has not taken any steps to come to a definitive conclusion as to whether the impugned crown corks were manufactured at M/s. MCPL or at assessee - This being not done, arriving at a conclusion that the goods have been manufactured at assessee and cleared later by M/s. MCPL in the name of M/s. WC does not stand the scrutiny of law.

It was alleged that assessee have availed MODVAT credit on tin sheets - The assessee could not produce any proof to sustain that credit was correctly availed by them with the help of any statutory or private records maintained either at assessee or at M/s. MCPL - Therefore, assessee is required to pay MODVAT credit wrongly availed by them on goods which were not utilised in their factory - The adjudicating authority has imposed penalties on assessee and M/s. MCPL and various personal penalties - Looking into the amount of duty confirmed on M/s. MCPL, penalty reduced to Rs.2,00,000/- and the penalty imposed on Shri Prasanth Hegde, from Rs.2,00,000/- to Rs.1,00,000/- - No need to interfere with the penalties imposed on assessee - However, it is not clear as to any criminal proceedings have been initiated against him - As far as the instant proceedings are concerned, nothing was brought on record to show that as to how they were benefitted by alleged evasion by M/s. MCPL or assessee, to substantiate the penalties levied on them, hence the penalties set aside: CESTAT

- Appeals partly allowed: BANGALORE CESTAT

CX - Assessee is engaged in business of manufacturing bulk drugs and drug intermediates; some of them are dutiable and some of them are exempted products; avails CENVAT credit facility as per the provisions of CCR, 2004 and has devised a method of availment of CENVAT credit on the common inputs by which, they avail the CENVAT credit based upon the consumption of common inputs in manufacturing activity of dutiable products and utilizes the same for discharge of central excise duty on the final products - A SCN was issued demanding an amount equivalent to 8% or 10% value of exempted goods cleared on the allegation that assessee had not maintained any separate records for respective consumption of inputs used in dutiable and exempted goods - Assessee is able to co-relate the consumption of inputs to manufacturing and clearances of dutiable products - Assessee being manufacturer of bulk drugs and drug intermediates are also covered under the provisions of Drugs and Cosmetics Act and Rules made there under, which mandates the assessee to maintain definitive accounts of consumption of all inputs and packing materials for manufacturing of bulk drugs and intermediates, which is required to be done batch wise and the data on such records is the basis on which assessee had availed CENVAT credit on inputs consumed for dutiable goods - Such data is not disputed by adjudicating authority - If assessee is required to maintain meticulous records of consumption of materials used for manufacturing of bulk drugs and drug intermediates, no reason found to hold that consumption of inputs for the manufacturing of dutiable goods needs to be done in a different way - Assessee had only shown the receipt of common inputs in one raw material register while that issues in the said raw material register indicate the issues made batch wise for manufacture of bulk drugs and drug intermediates - If it be so, working out of the materials consumed for manufacturing of excisable goods and availing of proportionate CENVAT credit on such inputs is/can be one of the scientific way of following the provisions of Rule 6(2) and 6(3) of CCR, 2004 - The system adopted by assessee is also resulting in bifurcated availment of credit only in respect of inputs used in manufacturing of dutiable goods, which needs to be accepted - Identical issue came up before Tribunal in case of IPCA Laboratories Ltd - 2015-TIOL-1097-CESTAT-DEL wherein the Bench held that assessee having not taken and foregone the CENVAT credit attributable to the quantum of input services based upon the turnover of exempted products cannot be faulted with - The impugned order is unsustainable and is set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT

CX - The appeal was originally disposed by Tribunal - The assessee filed appeal before High Court of Madras and vide judgment dated 9.2.2017, the High Court remanded the matter to the Tribunal to consider the issue of limitation - The main argument put forward assessee is that the department was put to knowledge that they were job work manufacturer for M/s CPSML who supplied the raw materials - If the department had conducted verification immediately on receiving these intimations it would have been clear that M/s. CPSML is under obligation to pay duty - Thus the defence put forward by assessee appears to be shifting the burden on the department - Apart from the raw materials supplied by M/s CPSML which were delivered through challans and accounted, the assessee was receiving raw materials from other sources without invoices which was unaccounted and this unaccounted raw material was used to clear finished product clandestinely without payment on duty - The mahazar establishes that there were discrepancies in the registers maintained for stock of raw material, stock of finished product - Physical verification of stock showed shortage of both - Apart from this during investigation, HDPE bags for the packing of cone yarn with names of Shalini Textiles, Vishnu textiles, MSML (assessee) and plain bags along with cone labels with the names of Shalini textiles and Vishnu textiles were found in the packing section of assessee company - These packing materials in the name of others indicated that assessee was clearing finished products in the names of these companies - We do not find any refutal or plausible explanation offered by assessee in their reply to SCN regarding these documents / packing materials recovered from their premises - All these lead to irresistible conclusion that assessee is guilty of suppression of facts with intent to evade payment of duty - The ingredients of the proviso to section 11AC is strongly established - Therefore the extended period has been rightly invoked - The SCN issued beyond the normal period is just and proper: CESTAT

- Appeal dismissed: CHENNAI CESTAT

CUSTOMS

2018-TIOL-3829-CESTAT-DEL