Customs, Excise and Gold Tribunal - Delhi
Harbans Lal Malhotra & Sons vs Commissioner Of C. Ex., Kolkata on 22 January, 2002
Equivalent citations: 2002(80)ECC580, 2002(141)ELT521(TRI-DEL)
ORDER
K.K. Uhsa, President
1. When the application for stay came up for hearing it was agreed by both sides that the appeal itself can be disposed of.
2. The appellant is a manufacturer of razor and razor blades falling under Heading 82.12 of the Tariff and the excise duty is paid on the same. The appellant manufactures wax paper also which falls under sub-heading 4811.40. Wax paper is captively consumed for the manufacture of blades. Though the wax paper captively consumed was exempt under Notification Nos. 217/86-CE. and 67/95-C.E. during the relevant period, the appellant paid excise duty on the wax paper and took Modvat credit of the duty so paid. During the relevant period the appellant had also purchased duty paid wax paper from other manufacturers and used the same in the manufacture of blades. Therefore, for the purpose of valuation of the wax paper manufactured and captively consumed, appellant took the price at which it purchased the wax paper from the market as the basis being price of comparable goods under Rule 6(b)(i) of the Valuation Rules. In 1997 the Department insisted on payment of duty on the cost of production under Rule 6(b)(ii) whereupon the appellant declared the cost of production and paid excise duty on the same. Thereafter, a show cause notice dated 27-10-98 was issued to the appellant proposing to refix the price of wax paper of all the periods in question and demanded differential duty by invoking extended period of limitation under proviso to Section 11A of the Central Excise Act. In spite of the objection raised by the appellant the demand of duty amounting to Rs. 25,92,581/- was confirmed in terms of Section 11 AC(2) and a penalty of equal amount was imposed on the assessee in terms of Section 11AC, There was a direction to pay interest also in terms of Section 11AB. Aggrieved by the above, the assessee has filed the present appeal.
3. Contentions are raised in this appeal both on the merits of the demand as also on the justification of taking recourse to the provisions contained under the proviso to Section 11A covering the period from April 1994 to August 1998. If the proviso to Section 11A is not applied then the major portion of demand will be time barred and there could be demand only for the period April to August 1998. The learned Counsel for the appellant placed reliance on a Larger Bench decision of this Tribunal in Jay Yuhshin Ltd. v. CCE, New Delhi - 2000 (119) E.L.T. 718 (T-LB) = 2000 (39) RLT 501 (CEGAT-LB) and contended that in the facts of this case the extended period of limitation cannot be applied at all. We find merit in this contention. It has been held in the above decision that when the assessee is claiming the benefit of a Modvat credit it has to be shown that the Revenue neutral situation comes about in relation to the credit available to the assessee himself so as to establish that there was no intention to evade duty. Inasmuch as the goods are manufactured by the same assessee and therefore credit being available to himself there can be no intention to evade duty, there is no question of intent to evade duty. The provisions contained under the proviso to Section 11A would not apply at all.
4. We, therefore, find that except for the period April to August 1998 the demand raised against the assessee is barred by limitation. In the light of the above, we do not consider it necessary to go into the contentions raised by the appellant on the merits of the case, namely, whether the price of the wax paper was validly fixed or not.
5. The impugned order is, therefore, set aside to the extent of the demand for the period 1994-95 to March 1998. The penalty and interest are also set aside. We make it clear that the appellant will be bound to pay the duty as demanded for the period from April to August 1998 and can take credit of the same.
6. Appeal stands disposed of in the above terms.