VARALAKSHMI PLASTICS Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) This appeal is directed against Order -in -Appeal No. 172/2002 (M -II), dated 29 -11 -2002 by which the learned Commissioner (Appeals) has upheld the confirmation of demand of Rs. 1,48,731/ - on the appellants under Section 11A(2) of the Act. He has also reduced the penalty under Section 11AC from Rs. 1,48,731/ - to Rs. 50,000/ -and also reduced the penalty from Rs. 15,000/ - to Rs. 5,000/ - under Rule 173Q of Central Excise Rules, 1944. He has also held them liable for payment of interest under Section 11AB of the Act.

(2.) Appellants are represented through Shri S. Venkatachalam, Advocate. Ld. Counsel submits that their request for abatement under Section 4(4)(d)(ii) has not been given to them in terms of the ratio of Larger Bench judgment rendered in the case of Srichakra Tyres Ltd, v. CCE Madras -1999 (108) E.L.T. 361 (T). They have also relied on the judgment rendered in the case of CCE Delhi v. Maruti Udyog Ltd. - 2002 (141) E.L.T. 3 (S.C.) wherein also it was held that cum -duty price when charged, then in arriving at the excisable value of the goods, the element of duty which is payable has to be excluded. Ld. Advocate has also submitted that they are also entitled to modvat credit, while confirming the duty, since Modvat credit has to be extended even no procedure or formalities in relation to Modvat is followed and Modvat benefit can still be extended if there are documents to show that duty was paid on the inputs used in the manufacture of final products because substantive benefit of Modvat credit cannot be denied. In this connection they relied on the judgment of West Zonal Bench of the Tribunal, Bombay in the matter of Gujarat Ambuja Cement v. CCE Rajkot, 1996 (85) E.L.T. 154 (T). They have also relied on the judgment rendered by the Principal bench, New Delhi in the matter of Chamundi Steel Re -Rolling Mills v. CCE Bangalore [1996 (81) E.L.T. 563 (T)] wherein also it has been held that Modvat credit is not deniable merely because the declaration was not filed. In this connection, learned Counsel submits that both these pleas were not raised before the adjudicating authority, though they were raised before the appellate authority and since this being legal plea, can be raised for the first time before the appellate authority and raising of such claim before the appellate authority is permissible in view of Supreme Court's decision referred in 1989 (43) E.L.T. 201 (S.C.) = 1989 (3) SCC 518 in the case of CCE v. Eastend Paper Industries Ltd. and Orient Paper Mills which has been followed by the Tribunal Special bench 'A' New Delhi in the matter of Orient Paper Mills v. CCE, reported in 1990 (50) E.L.T. 552 (T). He also invited our attention to the judgment rendered by the Special Bench 'C' New Delhi in the matter of Veena Organics (P) Ltd. v. CCE, 1992 (59) E.L.T. 87 (T) wherein also it has been held that additional ground can be raised before the Tribunal if a relief on that ground can be granted to assessee as held by the Supreme Court in the case reported in AIR 1968 (S.C.)lOl and 1990 (50) E.L.T. 592 (Tri.). In view of the above submissions, the learned Advocate submits that the case is required to be remanded to the original authority for giving the benefit of Modvat credit on the duty paid inputs and also to allow abatement of duty on cum -duty price in view of the judgments cited by him. 4. Heard ld. DR Shri A. Jayachandran, who defended the department's view. 5. We have considered the submissions made by both the sides and perused the various case laws relied upon by the learned Counsel for the appellants. We find that it is settled proposition of law that duty proposed to be demanded have to be abated from the cum -duty price actually received and liable to be received as a consideration for sale of goods as held by the Larger Bench in the case of Srichakm Tyres Ltd. v. CCE, Madras (supra). We, therefore, allow the plea of the appellants that the duty payable has to be excluded from the cum -duty price. So far as the other plea of the appellants that they are entitled to Modvat Credit inasmuch as there are documents to show that duty was paid on the inputs used in the manufacture of final products, in view of the judgment of the judgment of the Tribunal in the case of Gujarat Ambuja Cement v. CCE, Rajkot (supra) and in the case of Chamundi Steel Re -Rolling Mills v. CCE Bangalore (supra), we allow the plea of the appellants in this regard also subject to verifying the duty paying documents by condoning the formalities of filing declaration etc. With this modification, the impugned order is upheld. The appeal is thus partly allowed by way of remand to the original authority in the above terms. It is made clear that the original authority shall give a reasonable opportunity of being heard, to the appellants in accordance with law. They will also be allowed to bring in additional evidence, if any, if they so choose, in the de novo proceedings.