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Central Excise - 2010 TMI - 76058 - CESTAT, NEW DELHI - SHIVALIK COTSYN LTD. Versus COMMISSIONER OF C. EX., MEERUT-I
Captive consumption- the assessee is a manufacturer of cotton yarn falling under Chapter sub-heading 5205 00 and they are also manufacturing sewing thread falling under Heading 5204. The assessee is clearing part of the cotton yarn manufactured by them as such on payment of duty; they are also using part of the yarn in their own factory for manufacture of sewing thread. The dispute relates to the stage at which duty becomes payable on the cotton yarn and the value to be adopted for the purpose of paying the duty on the cotton yarn. The original authority has held that the duty on yarn was payable at the time of clearance of waxed doubled cotton yarn which were used captively in the manufacturing of sewing thread and would be at 115% of Rs.74/- per kg. for 28 counts. On the above finding, the original authority has confirmed demand of duty of along with interest and imposed penalty under Section 11AC and also imposed a penalty of Rs.1 lakh under Rule 25 of the Central Excise Rules. Held that- Regarding the invocation of extended period of limitation, it is observed that the assessee no doubt filed classification list regarding manufacture of yarn and sewing thread. They have also not filed any returns relating to such production and clearances of yarn so used for sewing thread. We have not been shown that the Department was made aware of the fact that the assessee was clearing yarn without payment of duty and using it for the purpose of manufacture of sewing thread. In view of the above we hold that there is willful suppression of relevant facts and therefore the extended period is rightly invocable. On the same grounds, the penalty under Section 11AC is also sustainable. Therefore, we are in agreement with the submissions of learned DR that the Commissioner (Appeals) was not justified in reducing the penalty under 11AC to an amount lower than the duty short paid. However, in the facts and circumstances of this case we do not find justification for a separate penalty under Rule 25 of the Central Excise Rules.
05 June, 2010 by admin