Full Judgment
The facts of the case in brief are that the appellant manufactures various Bulk Drugs (organic and inorganic chemicals) falling under Chapter Nos. 28 and 29 of the Schedule to Central Excise Tariff Act, 1985. Superintendent Central Excise Range VI Division Kalyan issued a show cause notice on 3-5-1993 alleging contravention of Rule 57G of Central Excise Act, that raw material of 1510.70 kgs Iodine is received as inputs in the appellant's factory for the manufacture of final product Iodine IP/BP/USP and taken Modvat credit of Rs. 90,247.77 ps.
under Rule 57A without declaring the final product in the declaration and exported lodine/IP/BP/USP under bond of the quantity 500 kgs and 1000 kgs as 20-10-1992, and 29-10-1992 respectively, and calling .upon to show cause why the above amount should not be disallowed and recovered from them under Rule 57-I(1)(i) read with Rule 57A of Central Excise Rules, and why penalty under Rule 173Q(1)(bb) should not be imposed. Appellant replied it on 28-5-1993, personal hearing was held on 15-12-1993 attended by factory manager Mr. N.K. Bang and Mr. G.R.Menghani they were heard. They produced export documents, on going through all the material, Assistant Collector of Central Excise Kalyan Division confirmed the demand and imposed penalty of Rs. 16,000/- on 21-12-1993. In the appeal by the party, only penalty was reduced to Rs. 5,000/-. Hence the appeal.
2. Shri B.N. Rangawani, the Ld. Consultant for appellant has argued that though crude Iodine was declared as Modvat as per page 26 for manufacture of bulk drugs under Rule 57G, on 30-8-1988, but refined Iodine was not declared as final product. Classification list filed on 16-1-1992 was approved on 25-12-1992 at the time of receipt of Export order for refined Iodine. Crude Iodine was imported and Modvat credit was availed, and particulars are entered in R.G. 23A Parts I & II. On 4-11-1992 RT. 12 returns were filed along with their copies.
Declaration for refined Iodine was filed on 21-1-1993, on final product with a delay of couple of months. Prior to it refined Iodine was manufactured and exported. As per 1999 (106) E.L.T. 468 (T), if the lower authority is satisfied that the inputs have been utilised in the manufacture of refined Iodine, objection regarding non-filing of declaration under Rule 57G cannot be taken. Intermediate product was not declared. The ld. JDR has argued that admittedly the declaration was not filed and dated acknowledgement was not obtained from the Divisional Officer, before the availment of Modvat credit.
6. Regarding the question of time bar in issue of show cause notice on 3-5-1993 for the period October, 1992, the reason given in para 6 of impugned order that date of utilisation of credit is relevant. Even otherwise credit is taken on 4-11-1992 and show cause notice is dated 3-5-1993, which is within six months. So under these circumstances point raised is answered in positive on the merits of the case, and negative for time bar of demand, we pass the following order.
For the reasons discussed above, appeal is allowed in part and the impugned order is set aside regarding demand of Modvat credit. The matter is remanded to adjudicating authority to verify whether the inputs raw Iodine is utilised in the Modvat taken of final product Iodine IP/BP/USP, and hear the appellant and dispose off the case according to law in the light of case laws referred in para 5 of the order. The penalty of Rs. 5,000/- as per the impugned order is confirmed.