SHRI RAM BEARING LTD. Vs. CCE

JUDGEMENT

(1.) M /s. Shriram Bearings Ltd. have filed the present appeal against the order dated 25.3.1998 passed by the Commissioner, Central Excise, Jamshedpur. Briefly stated the facts are that the appellants manufacture ball bearings and avail of Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules. They cleared ball bearings valued at Rs. 2,87,91,035/ - during the period from April, 1990 to July, 1993 for special industrial purposes at nil rate of duty. The Commissioner under the impugned order, disallowed Modvat credit amounting to Rs. 11,73,238.49 and imposed a penalty of Rs. 50,000/ -, holding that when final product is chargeable to nil rate of duty under an exemption notification, credit of duty paid on inputs is not available as per the provisions of Rule 57C of the Central Excise Rules. He relied upon the decision in the case of Shiv Industries, : 1996 (88) ELT 71.

(2.) SHRI Gopal Prasad learned Advocate, submitted that ball bearings were leviable to duty at the tariff rate and at no time the ball bearings were exempt from payment of duty at the time of receipt of inputs; that resultantly the Modvat credit was correctly availed of; that the ball bearings supplied to the buyers on the strength of CT2 certificate were not of any specific industrial design, specific to the use for specified industrial purpose. He also mentioned that most of the demand was barred by limitation for the reason that the show cause notice had been issued for period beyond six months from the date of taking the Modvat credit in RG 23 Pt. I & II in respect of the inputs concerned and the allegation of suppression and wilful misdeclaration was not sustainable. The learned advocate referred to paragraphs 1 and 4 of the decision in Khanbhai Esoofbhai v. CCE,, 1999 (107) ELT 557 (T) wherein it was mentioned that conflicting views were expressed by different Benches of the Tribunal whether Modvat credit once validly taken can be disallowed when the final product had been exempted, to show that no irregularity was committed by the appellants in taking the Modvat credit. He further mentioned that they were not required to file a new classification list before clearing the ball bearings at nil rate of duty under GP 2 as observed by the Commissioner; that the appellants filed a revised price list which was approved which showed that final goods were sent under Chapter X Procedure; that GP 2 shows duty payable; AR 3 Number was mentioned which go to show that the fact of clearing the final goods at nil rate of duty was not suppressed from the Department. He relied upon the decision in the case of Corned Chemicals v. CCE, Baroda,, 1998 (77) ECR 409. The learned Advocate also submitted that there was no mention of interest in the show cause notice and as such interest cannot be demanded; that as the amount pertains to the period prior to 1993; interest cannot be demanded as the provision for charging the interest has been inserted in the Rules subsequently. Finally, he submitted that the Commissioner did not hear them before quantifying the amount of Modvat credit to be disallowed; that once the quantification of disputed amount was sent to office by the Commissioner, they should have also been heard; that no penalty is imposable as no irregularity was committed by them.

(3.) THE learned D.R. also submitted that under Self Removal Procedure, it was incumbent upon the appellants to file a classification list before clearing the goods at nil rate of duty and non -filing of classification list has been held amounting to suppression in the case of Jaishree Engineering Co P. Ltd. v. CCE, 1989 (40) ELT 214 (SC) :, 1989 (21) ECR 177 (SC :, ECR C 1376 SC; Metal Box of India v. CCE,, 1995 (75) ELT 449 (SC) :, 1995 (56) ECR 625 (SC) and Pusphpam Pharmaceuticals Co. v. CCE,, 1995 (78) ELT 401 (SC) :, 1997 (71) ECR 329 (SC) Regarding quantification of amount of Modvat credit to be reversed, he submitted that the Commissioner has dealt with the aspect in details in the impugned order and no averment has been made by the appellants against the same. He read out the findings of the Commissioner in this regard as contained in the internal page 12 of the impugned order; that Commissioner had met all the points raised by the Appellants and his findings have not been challenged by the appellants.