38. Whether the process losses in respect of liquid gas transferred from tankers to cylinders would result in denial of credit to such quantity of storages ?

The shortages incurred while transferring carbon dioxide received in tankers, to cylinders were not allowed as credit by lower authorities. The Commissioner allowed the claim.
The department took the matter to Tribunal.

The Tribunal dismissed the claim of department and allowed the claim of the dealer assessee. They relied on the following decisions.

1. HPCC vs. CCE 136 ELT 943.

2. CCE vs. I.P.F. Vikram India Ltd. 150 ELT 175.

They further relied on the circular No. 267/136/87-CX.8 dt. 15-1-1988 of cbec wherein they have mentioned that "the losses occurred during the storage, when pressure increases and the safety valves opens, at the time of opening and closing of pressure valves, while filling cylinders through liquid pumps, while filling cylinders due to intermediate pressure venting, losses due to defect in cylinder valves and also because of excess pressure, during the operation losses occurred while reverting the gas for recycling and liquefying. All the above losses have been rightly termed as process losses occurred during use of inputs in or in relation to the final products. As such, keeping in view the peculiar nature of the commodity and process of manufacture, the invisible loss is unavoidable

CCE vs. Hydro Gas PLG (I) Pvt. Ltd. [196ELT 168 (Tri-Mumbai )]

39. Whether refund eligible to an assessee dealer can be appropriated towards appellant’s another liability of pre-deposit u/s 35F of Central Excise Act in an appeal relating to another demand u/s 11B

Held – No.

The assessee dealer was entitled to refund on the exports made on payment of duty. The lower authorities accepted their refund application but appropriated the amount against other demands which were pending before the appellate Tribunal. The Commissioner confirmed the appropriation.

The appellate Tribunal held that order is not legal and proper in law. The adjustment was inappropriate. They relied on the Tribunal decision in the case of CCE vs. Girdharilal Sugar Allied Ind. Ltd. 168 ELT 350 (Tri – Del). The lower authorities were directed to issue refund order within 3 months from the date of receipt of the order of Tribunal with interest.

Indian Aluminium Co. Ltd. vs. CCE Kochi 196 ELT 253 (Tri – Bang)

40. Whether seizure of goods for non-entry of goods in statutory record for a month, by itself, is sufficient to establish intention to remove goods clandestinely?

Held – No.

The dealer is engaged in the manufacture of moulded plastic goods for automobiles and electronic appliances. During the course of preventive check, the Central Excise Officers seized excess stock of finished goods valued at Rs. 10,43,615/- and Rs. 28,95,805/- found within and out side the BSR respectively, which was not entered in RG1 register, under the reasonable belief that the aforesaid goods were offending in nature and were liable to confiscation under provision of Central Excise Rule, 1944. The above seized goods were fully finished in ready for marketable condition. Also the goods were cleared by the party without debiting the Central Excise duty in RG 23A Part II/PLA and thus committed offence in this regard which has also been admitted by the Manager and the Chairman of the said unit. The Commissioner (Appeals) in his Order-in-Appeal dated 4-8-2003 has not appreciated the fact that the unrecorded stock was not entered in RG1 register for a month which clearly established the intention of the offender to remove excisable goods without payment of duty. Further if such violation is viewed leniently then it may endanger the revenue where the entire trust is placed on records mentioned by the assessee.

The appellate Tribunal after due consideration of the matter held that,

1. There is nothing on record to indicate that the dealer made any attempt to remove the goods under seizure, clandestinely with intent to evade duty. There should be independent evidence to show that there was an intent to remove the goods clandestinely.

2. The sole ground taken by the Revenue of the goods not entered for a month will not by itself call for establishing an intent. A person intending to clandestinely remove goods without payment of duty, would be quick to remove the same and not await the risk of detection by keeping the same in his factory for over a month unaccounted.

3. The penalty u/r 173Q of Rs. 2,000 /- the maximum prescribed for non-maintenance of correct stock book was confirmed.

CCE vs. Mutual Mecaplast Ltd. [196 ELT 327 (Tri – Mumbai)]

41. Whether Cenvat credit is available on the documents which mention plant II and III but is corrected by assessee as plants I and II, the material being used in the manufacture of final product in the factory?

Held – Yes.

The dealer has three manufacturing plants, I, II and III. During the period January to May, 1995, plant I took Modvat credit on input on the basis of invoices which were addressed to plant II and plant III and not to plant I. On the invoices issued by one of the input-suppliers, the consignee’s address was corrected plant II to plant I, the department did not accept any of the invoices as valid document for availment of input duty credit by plant I of the respondent-company. Accordingly, show-cause notices were issued.

The first appellate authority set aside the order passed by the lower authority, after holding that the input credit was not deniable to one manufacturing unit of a company on the ground that the relevant invoice had shown another unit of the company as the consignee, where there was no dispute of receipt of the input in the credit-taking unit and its utilization in the manufacture of final product in that unit. Learned Commissioner (Appeals) followed the Tribunal’s decision in the case of L & T Ltd. vs. CCE [72 ELT 948], wherein it had been held that Modvat credit was not to be denied to L & T Ltd., Kansbahal merely by reason of the fact that the duty-paying document showed the consignee’s name as "L & T Ltd., Calcutta". In that case also there was no dispute of the fact that the input had been received and used in the manufacture of final product in the factory of M/s. L & T Ltd., Kansbahal.

The Tribunal held that the Commissioner (Appeals) was right in applying the decision of L & T, as the facts of the present case are similar.

The Tribunal rejected the department’s argument that a reference of the case of L & T is pending and hence the case should not be made applicable. They observed that "pending of Reference Application is no reason to discount precedent value of the Tribunal decision".

CCE vs. Chemplart Sammar Ltd. 5 Service Tax Review page 18 [TRI-Chennai]

42. An agreement which provides rates of repair of transformers & also provides guarantee for transformers repaired. Whether exigible to service tax?

Held : No.

The Revenue contended that as per the agreement entered by the dealer with electricity Board, the dealer is providing maintenance and repair services. The dealer contention was that as per Board circular dt. 27-7-2005 prior to 16-6-2005 repair of servicing carried out under a contract other than maintenance contract are not within the preview of Service Tax.

The tribunal on pursuing the contract held that contract provides rates for repair of transformers providing guarantee for transformers repaired. They also agreed that the Board circular clearly laid out that repair service carried out under the contract was not within the purview of service tax till 16-6-2005. The Revenue’s appeals were dismissed.

CCE vs. Dusad Transformer & Switchgears (P) Ltd. Sales Tax Review p. 37 (Tri - Del)

43. Whether interest & penalty is leviable when the tax on capital goods cleared during the month on a particular date is paid on 5th of following month with normal excise duty?

Held - No.

The case of the department is that the assessee had availed Cenvat credit on capital goods and cleared the said capital goods, but the duty thereon is not paid at the time of removal of those goods as per provision of Rule 3(4) of Cenvat Credit Rules, 2002 but paid duly on monthly basis as per Rule 8 of Central Excise Rule 2002 on the 5th of next month. This act of the dealer resulted in loss of interest to the department to the extent of Rs. 24,189/-.

The Commissioner (A) went through provision of Rule 3(4) of Cenvat Credit Rules & Rule 8 of Central Excise Rules & Notification No 13/2003 dt. 1-3-2003. The said Notification is amended on
1-3-2003, the words "On the date of removal …. as the case may be" were deleted. Thus Commissioner (A) allowed the claim of the dealer.

The Tribunal dismissed the claim of the department and agreed with the claim and contentions of the dealer and relied on the decisions of K L R F Textiles vs. CCE 188 ELT 169 Grasim Industries vs. CCE 155 ELT 200 and held that there is no irregularity in the order of Commissioner Appeals and rejected Departments appeal.

CCE vs. Savita Polymers Ltd. Service Tax Review Page 22 (Tri – Mumbai)