2005 (98) ECC 45 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Shri V.K. Agrawal, Member (T) and Shri P.S. Bajaj, Member (J)

Timex Watches Limited

Versus

CCE, Noida

Appeal No. E/1521/2004-NB(A)

[Arising out of Order-in-Appeal No. 485/CE/APPL/Noida/03 dated 28.10.2003 passed by the Commissioner (Appeals), Customs & Central Excise, Noida]

Final Order No. 903/2004-NB(A), dated 10.8.2004, Certified on 15.9.2004

Central Excise Rules, 1944

Rule 57CC and Rule 57AD(2) -- Notification No. 6/2000-CE dated 1.3.2000 -- Wrist watches -- Appellants were engaged in the manufacture of exempted as well as dutiable goods and were required to maintain separate records in respect of the inputs utilized by them in the manufacture of the exempted goods, as no credit on those inputs could be legally availed by them and if availed, were required to reverse the same before clearing the exempted goods -- This procedure was not followed -- While calculating total price of such goods excluding sales tax and other taxes of 8% under Rule 57CC and 57AD(2) of the Rules, appellant was not entitled to take abatement of 35% from MRP -- Duty Demand and penalty confirmed.

PRESENT :

Shri Sriniwas Katni, Adv. for the appellant.

Shri S.M. Tata, SDR for the respondent.

Cases Cited :

1. Hi-Line Pens Pvt. Ltd. v. CCE, Delhi, 2003 (85) ECC 633 (T)............................. [Para 4]

2. Pushpaman Forgings v. CCE Mumbai, 2002 (149) ELT 490............................... [Para 4]

Per : P.S. Bajaj

In this appeal which has been filed by the appellants against the impugned Order-in-Appeal, the controversy centres round the question as to whether the appellants are entitled to take abatement of 35% from MRP, while arriving at the price of the goods excluding sales tax and other taxes, for payment of 8% of the amount under Rule 57-CC and 57-AD(2) of the Central Excise Rules, 1944, or not. The lower authorities have disallowed this abatement and confirmed the differential demand of Rs. 16,30,197 with penalty of Rs. 1 lakh against the appellants.

2. The facts are not much in dispute. The appellants are engaged in the manufacture of wrist watches. They availed the modvat credit on the inputs used in the manufacture of those watches, the retail price of which was Rs. 500 per piece during the period March 2000 to February 2001 and cleared those watches without payment of duty by availing exemption under Notification No. 6/2000-CE dated 1.3.2000. For having not maintained the separate record in terms of Rule 57-CC and 57-AD(2) of the Rules in respect of the inputs utilized by them in the manufacture of the exempted wrist watches, as they were also during that time, manufacturing the wrist watches having sale price of more than Rs. 500 per piece and on which there was no exemption from payment of duty, they were required to pay 8% of the total price of the exempted wrist watches cleared by them and which was to be calculated after excluding the sales tax and other taxes. But they calculated the price after availing abatement of 35% on account of the taxes as has been notified under Section 4-A of the Central Excise Act. We have heard both the sides.

3. From the record, we find that since the appellants were engaged in the manufacture of exempted as well as dutiable goods, they were required to maintain a separate record in respect of the inputs utilized by them in the manufacture of the exempted goods, as no credit on those inputs could be legally availed by them and if availed, were required to reverse the same before clearing the exempted goods. But admittedly, this procedure was not followed by the appellants as required under the above-said Rules. It has also not been disputed before us that the appellants, during the relevant period, were required to pay 8% of the total price excluding sales tax and other taxes, if any paid, at the time of clearance of the exempted goods in terms of Rules 57-CC and 57-AD(2) of the Rules. The contention of the Counsel that while calculating the total price of the exempted goods, the appellants are entitled to take abatement of 35% of MRP is wholly mis-conceived and cannot be accepted. The wording of Rule 57-CC is quite clear and unambiguous and it mandates that an assessee shall pay 8% of the total price excluding sales-tax and other taxes, if any paid, of the exempted cleared goods. The exclusion provided under this Rule is of sales tax and other taxes, if any, paid while computing the total price of the exempted cleared goods. This rule does not speak of availability of any abatement of 35% of the MRP, to an assessee, while calculating the total price of such goods, for the purpose of payment of 8% thereon. The appellants, therefore, cannot legally claim this abatement while calculating the 8% of the total price of the exempted goods cleared by them during the period is dispute. This abatement has been rightly disallowed to them by the lower authorities. The demand of the amount in question detailed above, has been correctly raised through show cause notice and confirmed on appellants by the lower authorities.

4. Another argument of the learned Counsel that duty could not be confirmed as no machinery is provided under the Act for its recovery, being not a demand of duty or of modvat credit, is also not legally sustainable. The appellants have wrongly availed the modvat credit on the inputs which they utilized in the manufacture of exempted goods. They also did not maintain separate record in respect of those inputs as required under Rules 57-CC and 57-AD(2) of the Rules. They were required to reverse the credit if they had maintained separate record at the time of making clearances of the exempted goods. It is for this lapse that they had been asked to pay 8% of the price of the exempted goods cleared by them during the relevant period. This demand is in lieu of the modvat credit wrongly availed by the appellants which they were required to reverse under the above referred rules. Therefore, the demand is enforceable under the law. The ratio of law laid down in the case of Pushpaman Forgings v. CCE Mumbai, 2002 (149) ELT 490 and Hi-Line Pens Pvt. Ltd. v. CCE, Delhi, 2003 (85) ECC 633 (T) : 2003 (158) ELT 168 referred by the Counsel wherein it has been observed that amount of 8% under Rule 57-CC being neither duty nor modvat credit, could not be recovered for want of proper machinery, is not attracted to the facts of the present case in the light of the facts detailed above. Moreover, the appellants themselves had already debited amount of Rs. 7,39,194 out of the total demand of Rs. 16,39,190. Their only pleas throughout, had been that they were entitled to abatement of 35% of MRP in terms of Section 4-A of the Act while computing 8% of the price of the exempted goods cleared by them. The lower authorities in view of discussion made above, had rightly rejected their plea.

5. In the light of the discussion made above, we do not find any illegality in the impugned order regarding confirmation of duty against the appellants of the amount detailed therein. However, keeping in view the facts and circumstances of the case, the penalty on the appellants is reduced to Rs. 50,000. Except for this modification in the penalty, the impugned order is upheld. The appeal of the appellants accordingly, stands disposed of.

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