ORDER
Gowri Shankar, Member(Technical)
1. The applications are for waiver of duty of Rs. 49.99 lakhs, penalty of equivalent amount under section 11AC of the Act on the manufacturer, redemption fine of Rs. 10 lakhs in lieu of confiscation of plant and machinery and penalty of Rs. 5 lakhs on G.M. Jain, administrative manager of the applicant.
2. We have heard both sides.
3. The manufacturer makes wood veneers at its factory at Gondia. It cleared this veneer after payment of duty to factory at Margarita for manufacture of plywood. The value of the veneers for assessment at Gondia was arrived at by application of rule 6B(2) i.e. on the cost of manufacture. In her order, the Commissioner finds that this cost that the applicant took for payment of duty was lower than it ought have been. That this is so is not disputed by the counsel for the applicant. He says that the cost of manufacture at the commencement of each financial years was approximately determined, and it is only after the close of the year the actual cost could be ascertained. he does not explain why in that situation provisional assessment was not sought. On merits therefore the applicant prima facie has no case.
4. The show cause notice demanding duty on clearance made between February 1995 to February 1999 was issued on 29.2.2000. It therefore invoked the extended period contained in the proviso under sub-section (1) of section 11 of the Act alleging suppression of actual cost of manufacture. It is the contention of the common counsel for the applicant that the extended period will not be available, because there has not been an intend to evade duty. Whatever duty was short paid at Gondia, would after it had been paid, be available as credit to be utilised towards payment of duty on the plywood manufactured in the factory at Margarita. He rallies for this purpose upon the decision of the Tribunal in paragraph 5a of Essel Packaging Ltd. vs. CCE 2000 (117)ELT 466.
5. The departmental representative reiterates the Commissioner’s answer to this claim made before him. This is that the ratio of the decision of the larger bench in Jay Yuhshim vs. CCE 2000 (119) ELT 718 has held to the contrary and that there is nothing to show that the factory at Margarita was entitled to take credit, was in fact taking credit, and that veneers for which duty was demanded, was utilised at Margarita. The last point is answered by the contents of the notice itself, specifying captive consumption of the veneer at the Margarita factory. It appears that material was not produced before the Commissioner to show that 57G declaration had been made for the veneers at Margarita;it is not produced before us either. However there is a specific averment in the appeal that credit was taken at Margarita on the duty apid on the veneers and total modvat credit taken in the factory exceeded Rs. 1.80 crores. It stands to reason that when a manufacturer takes credit of the duty on other inputs, it would not forego the credit of one particular amount.If the department has established to the contrary, may seek modification of this order.
6. It is not possible for us to accept, prima facie, that the larger bench decision has overruled the conclusion in paragraph 5 of Essel Packaging. In answering a reference made to it, the larger bench said that in clause (c) of paragraph 30 that “it has to be shown that the revenue neutral situation comes about in relation to the credit available to the assessee himself not by way of availability of credit to the buyer to the assessee’s manufactured goods.” It appears to us that this clause applies to the case before us and reaffirms paragraph 5 of Essel Packaging and other decision (Chloride Inds. 22 RLT 586; BPL Sanyo – unreported order of Chennai bench and others).
7. On this prima facie understanding, we waive deposit of the duty demanded and penalty imposed and also of the redemption fine and stay their recovery.