ORDER
S.L. Peeran Member (J)
1. These are Revenue appeals arising from Orders-in-Appeal No. 95 to 97/2004-CE. dated 30-8-2004 by which the Commissioner (A) has modified the Order-in-Original and has set aside the demands for the period prior to March 2000. The finding portion of the Commissioner (A)’s order is reproduced herein below.
6. Findings:
The show cause notice itself records that:
The appellant has admittedly submitted a letter dated 31-5-1999, requesting for Registration. The Range Officer has, vide letter dated 11-8-2000 (OC No. 1108/2000) clarified that in response to the May 1999 request of the appellant, the sector officers deputed had made an astounding discovery: That there existed no plant/machinery in the premises (Sought to be registered in May 1999) for manufacturing mineral water, and that a suggestion was made to the appellant (in 1999) to approach the Department for Registration, after obtaining the necessary plant and machinery. Subsequently, Registration has been granted to the Appellant, vide No. 7/2000 dated 8-8-2000. There is no finding recorded in the impugned order as to whether the plant and machinery were brought in before the Registration was applied for by the Appellant, in the year 2000.
That being the case, the Department has no locus standi to allege manufacture of the impugned goods and raise a demand with effect from 8-5-1999; and invoke proviso to Section 11A(1) of the Show Cause Notice. Therefore, the demand notice is time barred to that extent. The appellant consistently maintained that in the beginning, he had been undertaking only trading activity, that job workers had undertaken the actual manufacture and that he (Appellant) had only been affixing labels; and that they only started manufacture in their premises from March 2000.
The Department at any stage has not contested this. However, it is appalling that the Registration was only made on 8-8-2000, when the Department is well aware of the appellant’s intention right from the year 1999, to “manufacture” the impugned goods.
The question of eligibility to SSI exemption for the manufacture of “branded” goods by the appellant, as understood in terms of Paragraph 4 of either Notification No. 8/2000 (CE) dated 1-3-2000, or Notification No. 9/2000 (CE) dated 1-3-2000 arises only when such an option is so exercised in terms of paragraph 2(i) of either Notification cited above. It is obligator under the statute that every manufacturer manufacturing excisable goods obtains a registration. The authorities had informed the appellant even in 1999 that the Registration was to be taken, but only after crossing a turnover limit and “after obtaining the plant and machinery”, and not immediately (in 1999 itself). It is also pertinent to note that 1999, they did not place on record before the Department, the fact that they (appellant) were franchise holder of a brand for the mineral water intended to be manufactured in their premises. Therefore, the appellant’s contention that they were ill-informed in 1999 and taking it forward to events in March 2000 is not sustainable. The delay in applying for a obtaining a registration in the year 2000 has not been satisfactorily explained by them. To this extent, and only this extent, the invocation of extended period is sustainable.
Three time periods are involved: (a) When there was no manufacturing activity since no plant and machinery existed, and only trading occurred (prior to 1999); (b) when manufacture occurred at job worker’s premises, and only labeling occurred at the Appellant’s premises (1999-2000); and when both manufacture and clearance occurred from the Appellant’s premises, effective March 2000.
Insofar as (a) is concerned, Section 3 of the Central Excise Act does not apply, nor has any demand been confirmed. In respect of (b), the ratio of the decision in the case of Keyar Enterprises v. Collector of Central Excise, Cochin is relevant, wherein Hon’ble Tribunal held inter alia that:
Goods got manufactured from contractor on job work basis – Prima facie contractor to be treated as manufacturer of beedies and not the person who supplied the raw material (tobacco) for manufacture of such beedies -Authority should first decide who is the manufacturer of the goods in question and who is required to pay the duty before recording a finding about clandestine manufacture.
There is no finding substantiating the liability on the Appellant, which is important, especially since it has been put on record before the Department that the manufacture was at job-workers’ premises. Therefore, a demand raised for this period is not sustainable.
I therefore hold that proviso to Section 11A(1) is only applicable with effect from March 2000, “the of time” manufacture and clearance of branded goods actually occurred from the premises without registration. Duty shall be paid on the clearances effect from 1-3-2000 to 7-8-2000 in full, along with interest as applicable under Section 11AB. Malafide Intention has not been established in this case, though it has been admitted that duty liability exists. Therefore, penalty under Section UAC is not warranted and same is set aside. For non-Registration with effect from 1-3-2000, (purported date of manufacture and clearance of branded goods by them) they are liable for penalty under Rule 173Q of the Central Excise Rules, 1944. Considering the facts and circumstances of the case, it shall be reduced to Rs. 5,000/-. The individuals concerned have not been conclusively established to have knowledge and intent of duty evasion. In fact, it was sought to keep the Department informed of the activities in the year 1999, although not followed up in the year 2000. The personal penalties on the individuals named in the impugned order are hence set aside.
The ratio of the Tribunal decisions in the case of Haldi Ram Manufacturing Co. ; Plasopan Engineers ; Nirula and Co. ; and the Apex Court ruling in the case of Maruti Udyog, on the consideration of the price as cum-duty price is squarely applicable in the instant case. The duty and interest liability shall be recalculated on this consideration.
The appellants have sought modvat on Inputs and capital goods at para 27 of their written submissions made during the personal hearing. I have examined their request. In the case of Ajay Industrial Corporation v. CCE, Meerut 2002 (147) E.L.T. 786 (Tri.-Del.) wherein the Hon’ble Tribunal held “modvat/Cenvat – Assessee when required to pay duty subsequently, eligible to avail of Modvat credit of duty paid on inputs irrespective of non-following of procedure – However, assessee required to produce duty paying documents to the satisfaction of jurisdictional Assistant/Deputy Commissioner- Erstwhile Rule 57A of Central Excise Rules, 1944”.
The ratio of the above judgment is squarely applicable to the instant case. I therefore, find that the appellants are eligible to take Modvat credit on inputs and capital goods and discharge the duty liability calculated as directed supra. However, the interest and penalties shall be adjusted against the amounts already paid and the balances, if any refunded to the appellants.
The impugned order is modified to the extent discussed above. Revenue in this appeal contend that the demands have to be confirmed for the period earlier to this also. They are challenging that the findings is not legal and proper. It is also submitted that the assessee is not eligible for Modvat credit on inputs and capital goods including the finding that they are eligible for treating price as cum duty.
2. We have heard learned JCDR in the matter.
3. The Respondents have prayed for disposal of these appeals on merits.
4. On a careful consideration of the finding portion extracted supra, we notice that the Commissioner (A) has found that there was no existence of plant and machinery in the premises (sought to be registered in May 1999). He has also noted that the Department did not contest at any stage with regard to this aspect of the matter. In terms of the findings recorded by her, the demands for larger period cannot be invoked. We are of the considered opinion that the Commissioner (A) has examined all the aspects in light of the judgments noted in the impugned order, which is extracted supra. There is no infirmity in the same and the Revenue appeals are rejected.
(Pronounced and dictated in open Court)