Full Judgment
1.2 These appeals, emerging from different orders but on same common issue, being disposed of by the common order. Appeal No. 1483/02 Mum is filed by Revenue against order No. 32/2001 at 24.02.2001 by CCE, Mumbai. Appeal E/2967/00 is filed by the General Manager - M/s. Apar India Ltd., against order No. 36/2000 of CCE- Mumbai and E-2966/00 by Apar Rabale against order No. 36/2000 and E/1 702/01 is filed by Apar Mahul against order No. 32/2000 of CCE, Mumbai.
2.1 Both units manufacture Rubber Processing oils (hereinafter referred to as RPO) and avail MODVAT credit on the inputs and discharge duty on RPO at the rate of 15% advalorem on approval value of Rs. 13,000/- PMT.2.2 During the period July 98 to February 99, the unit Apar - Rabale cleared RPO on certain invoices by declaring the same as CBFS (CBFS is an input for RPO) and discharged duty on a value of Rs. 6,000/- PMT at the rate of 18% as applicable to CBFS. Such clearance were addressed to Apar Mahul and were removed from the premises of Apar-Rabale in tankers. The invoices, with RPO, misdeclared as CBFS, reached Apar Mahul, where credit was availed of duty paid at 18% on Rs. 6,000/- PMT less 10% as per modvat rules. However, the goods physically, in the Tanker never reached the Mahul Factory. The Tankers were waiting at the Road Side. Meanwhile at Apar Mahul, a corresponding duty payment invoice for same quantity, but on value of Rs. 13,000/- at the rat of 15%, as applicable to RPO was effected and the invoice was made in the name of the buyer, Tyre Manufacturers, this invoice then accompanied the Tanker, waiting on the road side, with the RPO removed form Apar Rabale, and delivery was effected at the premise of Tyre Manufacturers who took credit of the amount as shown in the invoices of Apar Mahul and utilised the RPO as per the MODVAT rules.
2.3 By this modus operandi, RPO manufactured at Apar Rabale was delivered on appropriate duty on Rs. 13,000/- at Rate of 15% delivered to various Tyre manufacturers. The Apar-Mahul premise never received the goods, yet they availed total credit of Rs. 16,16,578/-, on receipt of duty paying documents, showing CBFs, issued by Apar Rabale amounting to total duty of Rs. 17,01,659/-. Apar Mahul, issued duty payment invoices for duty of Rs. 25,83,204.21 for the quantity of RPO by payment of the differential amount between Rs. 9,66,628/- and credit of RS. 16,16,576/-availed on documents of Apar-Rabale's RPO declared on CBF.2.4 The appellants submit that by this modus, they have lost Rs. 85,083 as far as the Corporate body i.e. Apar International is concerned, due to mandatory restriction on credit at 95%. If they had issued direct clearance invoices to Tyre Manufacturers from Apar-Rabale, the buyers of the goods, the Corporate entity would not have lost this Rs. 85,083/-. This, strange, method was adopted, as submitted, due to the reason that Apar Rabale was not approved by Supplier the Tyre Manufacturer, the buyers of RPO as Apar-Mahul was. Therefore RPO documents/& routing via Apar Mahul for such RPO supplies were required to be effected.
(i) Apar Rabale, seeking duty on RPO on a value of Rs. 13,000 PMT at the rate of 15% required to be applicable and not as actual paid as CBFs value of Rs. 6,000 PMT at rate of 18% and penalties and consequent liability to confiscation etc.
(ii) To Apar Mahul, for denial of credit of Rs. 16,15,578/- availed on RPO invoices declared as CBFs and goods not received & penalties.
i) Apar Rabale ordered recovery of total duty of Rs. 25,83,204.21 and gave a redemption fine of Rs. 4 lakhs after ordering confiscation. A penalty of Rs. 25,83,204 under Section 11AC read with Rule 9 (2) S2A and 226. A penalty of Rs. 5 Lakhs on Shri. M.J. Shah, Manager and interest under 11AB. Proposal to corporate under 173Q(2) of Plant and Building was dropped.
ii) Apar Mahul, ordered recovery of Rs. 16,16,576 of credit and debited again. Dropped the demands on other items like TOBS etc which was found to be actually brought to the plant premises. Found no additional liability of penalty on Manager, under Rule 209A, as same has been imposed in Apar Rabale case. No reason were found to impose penalty with Rule 571(4) & 5711(b) or 173Q (2).
2.6 Apar Rabale is aggrieved by the order of confiscation of goods, penalty and recovery of duty.
2.7 Apar Mahul is aggrieved against the ineligibility of credit of Rs. 16,5768.
2.9. Revenue is aggrieved by the order in case of Apar-Mahul as the commissioner did not appropriate certain amount of Rs. 25,53,685/-.
Also, dropping of demands on TOBS etc and non imposition of penalty.
3. After hearing both sides and considering the issues, it is found that - a) total duty liability on the quantity of RPO, manufactured and removed from the premises of Apar Rabale is Rs. 25,83,204.21. This liability was discharged by payment of Rs. 17,01,659/- when those goods were removed from the factory of Apar Rabale addressed to and meant for Apar Mahul. At Apar Mahul, credit of only Rs. 16,16,576/- was availed and the remaining amount of Rs. 9,66,628.34 was discharged when documents for the Tyre Manufacturer buyers showing total duty of Rs. 25,83,204.21 were prepared & debited. Thus from the corporate body i.e. Apar International Ltd., the assessee at Rabale & Mahul, no further amounts towards duty are required to be demanded or paid on RPO cleared and eventually supplied to the Tyre Manufacturers. Duty of Rs. 25,83,204.21 cannot be demanded, separately, from the two assessee i.e. Apar Rabale & Apar Mahul for the same goods.
b) By following this modus, Revenue has gained Rs. 85,083/- which represents the ineligible restricted to 95% amount of credit on documents of Apex Rabale.
c) The penal consequence in not following the procedure, of bringing the goods along with duty paying documents, misdeclaring the goods would call for penalty. However penalty under 111 AC is not called for since no further duty demands are to be upheld. There is a case to order penalty under Rule 173Q and liability to confiscation of the misdeclared goods at Apar Rabale, Keeping in mind that the Corporate body has gained, only in passing off goods manufactured at Rabale as goods manufactured at Mahul, there being no Revenue loss in reality. The confiscation fine of Rs. 4 Lakhs is excessive. It is reduced to Rs. 1 Lakh under Rule 173Q. The penalty on the Manager vide Rule 209A is upheld but restricted to Rs. 1 Lakh and on the assessee i.e. Apar Rabale is fixed at Rs. 1 Lakh under Rule 173Q read with Rule 52 (A) and 226. The appeal are to disposed in above terms.
c) As regards Apar-Mahul, the credit is availed and utilised by debit cannot be again asked to be reversed. The credit was in eligible since goods never reached the factory and the same was reversed by the debit of duty by preparing invoices of RPO. The penalty on Apar Mahul for having for having violated the MODVAT rules is arrived at and revenues appeal to that extent is allowed.
Penalty for the same is fixed at Rs. 1 Lakhs. Since there is a clear cut finding of receipt of TOBS etc and the ground taken by Revenue in appeal on his account are found to be not sufficient, to set aside that finding. Revenue appeal on that score fails, since Manager has been adequately penalised in the case of Apar Rabale, there is no reason to penalise him once again.
i) No further demands of duty can be sustained on the RPO cleared from Apar Rabale.
ii) Credits taken are Apar Mahal need no further reverse. Credit amount of Rs. 85,083/- on documents of Apar Rabale, not taken at Apar - Mahul lapses.
iii) Fine is lieu of confiscation Apar Rable reduced to Rs. 1 Lakhs.
Penalties on Apar Rabale, Apar Mehul and the Manager reduced to Rs. 1 Lakhs each. All other orders o penalty and interest set aside and appeals to be disposed in above terms.