2005 (98) ECC 314 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(S)

Shri P.S. Bajaj, Member (J)

Binani Cement Ltd.

Versus

CCE, Jaipur

AND

CCE, Jaipur

Versus

Binani Cement Ltd.

(1) A.No. E/3894/03-NB(S) & (2) A.No. E/3340/03-NB(S)

[Arising out of common Order-in-Appeal No. 325-326(RM)CE/JPR-II/2003 dated 16.9.2003 passed by the Commissioner of Central Excise (Appeals), Jaipur]

Final Order No. A/764-65/04/NB/SM, dated 4.3.2004,
Certified on 14.5.2004

Notification No. 2/2001, dated 27.1.2001

Reversal of Credit -- Clinkers -- Assessee was required to be made and for having failed to maintain proper record, to arrive at the exact amount of the credit on the inputs gone in the clearances of the cement cleared by the assessee under exemption Notification No. 2/2001 dated 27.1.2001, they had to pay 8% of the value of such clearances.

Demand (C. Excise)

Rule 57AD of the Central Excise Rules Notification No. 2/2001 dated 27.1.2001 -- Assessee did not pay any duty on clinkers used by them captively in the manufacture of cement cleared by them under the exemption Notification No. 2/2001, dated 27.1.2001 -- Demand of 8% of the value of cement cleared without payment of duty under exemption Notification No. 2/2001.

Penalty (C. Excise)

Duty on the intermediate product captively consumed had been deposited by them only on the asking of the department and not suo motto of their own -- Penalty upheld.

Appeal allowed

PRESENT :

Shri Alok Mathur, Mgr. for Binani Cement Ltd.

Shri Randhir Singh, JDR for CCE, Jaipur

Per : P.S. Bajaj

This order will dispose of the above captioned two appeals -- first appeal No. E/3894/03-NB(S) has been filed by the assessee vide which he has challenged the confirmation of duty on clinker and imposition of the penalty, while the other Appeal No. E/3340/03-NB(S) has been filed by the Revenue challenging the correctness of a part of the impugned order of the Commissioner (Appeals) dropping the demand regarding 8% of the value of the goods for having availed the modvat credit on the inputs used in the exempted goods by the assessee.

2. I have heard both sides and gone through the record. The perusal of the record shows that the assessee is engaged in the manufacture of cement and the supply of the cement by the assessee to the earthquake hit area was exempted by Notification No. 2/2001 dated 27.1.2001. Since the assessee availed the modvat credit on the inputs used in the supply of cement to the earthquake victims, they were served with a show cause notice for reversal of the credit. But as the assessee had not kept any separate record regarding the inputs utilized in the exempted supply of the cement to the earthquake victims and the clearances made by them in the market, they were called upon to pay an amount of 8% in terms of Rule 57-AD. It is also clear from the record that the assessee did not pay any duty on clinkers used by them captively in the manufacture of such cement cleared by them under the above-said exemption Notification No. 2/2001.

3. Through the impugned order, the Commissioner has dropped the recovery of 8% but confirmed the duty payable on clinkers. So far as confirmation of duty on clinkers is concerned, in my view, it has been rightly confirmed as the assessee was liable to pay the same on this intermediate product, although the captively used during the period prior to 1.3.2000. The benefit of Notification No. 67/95, amended by Notification No. 31/2001-CE, for allowing the duty benefit to the manufacturer on captive deemed intermediate product, has been rightly denied to the assessee in this case as the said amendment could not be given retrospective effect. It was made effective from 1.6.2001.

4. The demand of 8% on the value of the cement cleared without payment of duty under Exemption Notification No. 2/01 has been also, in my view, correctly raised in terms of Rule 57-AD. The assessee was required to maintain separate record for the inputs utilized in the manufacture of the cement cleared without payment of duty and the inputs used in the cement manufactured and cleared on payment of duty. Since the assessee failed to maintain such a record, the reversal of the credit by them on pro rata basis could not be accepted. The assessee was required to pay 8% of the value of exempted goods. The plea of the assessee that the amount at that rate payable would come to more than duty exemption allowed on the cement cleared under the above-said exemption notification and that the exemption allowed would become nugatory, cannot be accepted. The view of the Commissioner (Appeals) that their (sic, there) existed no machinery for the recovery amount of 8% under the law and such amount at this rate could not be confirmed against the assessee, is also erroneous and cannot be accepted. It is only a reversal of credit which the assessee was required to be made and for having failed to maintain the proper record, to arrive at the exact amount of the credit availed on the inputs gone in the clearances of the cement cleared by the assessee under the exemption notification, they have to pay @ 8% of the value of such clearances. By reversing the credit on pro rata basis, the provisions of Rule 57-AD did not stand satisfied and the view taken by the authority below in this regard is erroneous. The Boards Circular No. 591/29/2001-CX dated 16.10.2001 that Department can only recover the credit on the inputs gone in the exempted goods is not of any avail the assessee in this case for having failed to maintain the record, as required under the Rules.

5. Regarding the imposition of penalty, the plea of the assessee that it could not be imposed as duty had been paid by them and modvat credit was also reversed by them before the issuance of the show cause notice, cannot be accepted. The duty has been paid only when the assessee was caught on wrong foot by the Department. It is not a case that they after detecting the mistake of not maintaining the separate record regarding the inputs, reversed the credit in accordance with law. Similarly, the duty on the intermediate product captively consumed has been deposited by them only on the asking of the Department and not suo moto of their own. Therefore, the penalty has been rightly imposed on them.

6. In view of the discussion made above, the part of the impugned order appealed against in appeal No. E/3894/03-NB(S) is upheld and the appeal of the assessee is accordingly dismissed, while the part of the impugned order appealed against in appeal No. E/3340/03-NB(S) is set aside and the appeal of the Revenue is allowed.

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