Customs, Excise and Gold Tribunal - Mumbai
Heat Shrink Technologies Ltd. vs Commissioner Of Central Excise on 25 February, 2005
ORDER T. Anjaneyulu, Member (J)
1. This is an application under Section 35F of the Central Excise Act, 1944, filed by the appellants for waiver of pre-deposit amount and to stay its recovery.
2. The matter pertains to admissibility of Cenvat credit and dutiability.
3. M/s. Heat Shrink Technologies Ltd. assemble two types of Joining Kits - one for telecom and the other for energy/power. They were paying duty on the Cable Joining Kits used for energy/power, but they did not pay duty on the Cable Joining Kits for telecom.
4. Show Cause Notice was issued for recovery of duty of Rs. 8,89,66,738.04 on Cable Joining Kits for telecom. The appellants continued paying the duty on the power kits and availed of the Modvat credit on the inputs that went into the power kits. They, however, were not paying any duty on the telecom kits. In this regard, a Show Cause Notice was issued for the same. The matter went up to the Supreme Court and it was decided that the telecom kits assembly did not amount to manufacture.
5. Again in the year 2003, a Show Cause Notice dated 09.10.2003 was issued alleging that the Modvat credit was wrongly taken on the inputs.
6. The appellants submitted a detailed written submission. The matter was adjudicated by the Commissioner of Central Excise and by his impugned order dated 24.07.2004, allowed Modvat credit to the tune of Rs. 1,60,75,217/- and also imposed equal amount of penalty under Section 11AC. Hence this appeal.
7. The contentions of the appellants are that the major part of the demand is hit by limitation. The demand is valid only for the period from October 2002 onwards and the amount of demand without considering the merits, works out to Rs. 11,71,949/-. However, as on merits, the appellants deserve to get the Modvat credit on the goods and in case they paid the duty on the final product, they would be entitled to refund. The unit is taken over by the Court Receiver of High Court of Bombay and working under the Court Receiver as an agent on payment of Rs. 3,00,000/- as royalty. In the aforesaid circumstances, the appellants pray for unconditional waiver of pre-deposit.
8. Perused the records and heard the submissions made by both sides.
9. The Commissioner, Central Excise, Mumbai, in his impugned order, observed as follows:-
"Further malafide intention of the assessee can be seen from facts that they were classifying cable joining kits under chapter 8547 for availing inadmissible Cenvat credit on brought out items under the guise of manufactured produce i.e. "insulating fittings" which constitute the bulk of the value of cable joining kits. The assessee included value of brought out items in export goods i.e. cable joining kits but did not include the same in the value of cable joining kits cleared for home consumption. Thus the assessee sought to gain benefit both ways i.e. avail Cenvat on brought out items and claim rebate on higher value for export goods and at the same time reduce the value of goods for home consumption. The assessee suited the value of some product according to their misrepresenting the facts and ignoring Supreme Court judgment. Hence proviso to Section 11A was invokable in this case".
"The assessee was not entitled to take Cenvat on inputs used in exempted/ non-excisable goods i.e. cable joining kits. The brought out items were either cleared individually or in the form of cable joining kits which were non-excisable. The assessee, therefore, foiled to comply with Rule and 6 of Cenvat Credit Rules, 2002".
10. In view of the aforesaid findings and other aspects of the case, we are of the opinion that the appellants did not make out strong prima facie case for complete waiver of the pre-deposit amount. Therefore, the appellants are directed to make pre-deposit of Rs. 50,00,000/- (Rupees Fifty Lakhs only), of which compliance is to be reported on 27.04.2005 and subject to which further pre-deposit is waived and its recovery is stayed.
(Pronounced in Court)