JUDGMENT
Archana Wadhwa
1. The amount of duty (sic) in Appeal No. E/R-465/2001 is to the tune of Rs. 15,43,551.74 (rupees fifteen lac forty three thousand five hundred fifty one and paise seventy four) which has been confirmed by the Authorities below on the ground that during the period 19.4.1995 to 25.5.1995, the appellants were liable to pay duty in respect of the goods repacked and relabelled from the duty paid bulk packs. In Appeal No. E/R-487/2001 the amount of duty confirmed against the appellant is to the turn of Rs. 5,71,492.20 (rupees five lac seventy one thousand four hundred ninety two and paise twenty) for the period 26.5.1995 to 13.7.1995 and penalty of Rs. 20,000/- (rupees twenty thousand has been imposed upon them.
2. Arguing on both the applications Shri R.N. Rajoria, learned Senior Advocate submits that duty of Rs. 15.43 lack (approx.) has been confirmed against the appellants on the ground that with introduction of Chapter 3 to Chapter 32 in Tariff Act w.e.f. 19.4.95 lays down that a artificial definition of manufacture which is to the effect that repacking of goods from bulk packs and relabelling of the same would amount to manufacture. He submits that the appellants filed a Writ Petition challenging the introduction of the said Chapter Notes by the Finance Bill under the provisions of Provisional Collection of Taxes Act. There was an interim injunction by the Hon’ble High Court for the period till the Bills become an Act. Thereafter they had started paying duty on the repacked goods after availing Modvat credit of duty paid on the bulk products. He submits that the matter is pending before the High Court and no final order has been passed on the Writ Petition. Revenue started proceedings against the appellants by way of issuance of Show-cause Notice on the ground that injunction by the High Court was only till the Bill become Act and that on Bill becoming Act, the injunction is automatically vacated. Shri Bajoria, Senior Advocate fairly agrees that against the action initiated by the Revenue on the above credit they have not approached the High Court for further clarification or for further injunction. As such for the purpose of stay he is not arguing on the above issue.
3. However, he submits that out of the total demand of duty of Rs. 15.43 lac, the appellants would become entitled to Modvat credit to around Rs. 5 lac (approx.). He submits that it is well settled law that in case of subsequent demand of duty the credit paid on the materials has to be extended and the demand would get neutralised to that extent. In view of the above he fairly agrees that the amount of duty of Rs. 10 lac (approx.) would be due against them.
4. In view of the foregoing, we direct the appellants to deposit an amount of Rs. 10 lac (rupees ten lack) as a condition of Section 35F of the CESA, 1944 within period of six weeks from today. Subject to deposit of the above amount the balance amount of duty stands waived.
5. In other Appeal, an amount of Rs. 5.71 lac (approx.) has been confirmed against then by denying the benefit of Modvat credit on the duty paid bulk materials. The appellants are repacking and relabelling their product. The said amount has been denied to them on the ground that the premises where the activity of repackings were being carried out by the appellants was not separately registered with the central excise authorities. It is the contention of the appellants that the entire factory premises including the premises where the activities were undertaken by the appellants were earlier registered with the Central Excise Authorities. As such the contention of the Revenue that with the introducing of Chapter Notes 3 to Chapter Note 32, the said premises should have again been separately registered by the appellants with the Central Excise Authorities cannot be held to be a justifiable ground for denying them the benefit of modvat credit. We agree with the above contention of the learned Senior Advocate that prima facie the said ground cannot be made the basis for denying them the credit of duty paid on the bulk products out of which repacking activities have been undertaken by the appellants. Accordingly, we dispense with the condition of predeposit of the said amount.
6. Matter to come up for reporting compliance in 1st Appeal on 14th January, 2002. Subject to ascertaining compliance, the appeals itself would be taken up for disposal on the said date.
(Dictated & pronounced in Court)