Cpl Ac Written 28-10-05

Assisstant Commissioner of Central Excise Howrah West Division – I , 25, Princep Street, Kolkata – 72

October 28, 2005

Dear Sir, Sub: Submissions with respect to Show cause –cum-Demand Notice No. Further to the reply submitted by my client Creative Polypack Ltd. in response I submit as follows: 1) For that the learned Additional Commissioner (Central Excise), Kolkata II have sought to invoke the extended period of five years under the proviso to section 11A(1) of the Central Excise Act, 1944. However there is revenue neutrality in view of the fact that assessee is clearing goods to their own unit on payment of duty which is being taken as cenvat credit, therefore, there was no justifiable reason for the assessee to suppress fact. Hence even if for argument sake, the contention of learned Additional Commissioner (Central Excise), Kolkata II regarding addition of freight and insurance is accepted, the demand becomes time barred in view of the Hon’ble Apex Court Judgment in the case of Amco Batteries Ltd. v. Colletor of C.E., 2003 (153) E.L.T. 7 (S.C.) which states that extended period of limitation is not invocable in case of revenue neutrality. Relying on the above Apex Court judgment it was decided in a recent case of Kores (India) Ltd. - 2004 (65) RLT 930 (CESTAT-Ban.) that “Appellants clearing goods to their own Unit on payment of duty by taking average value. The duty paid by them is being taken as credit in their other Unit. Therefore there is Revenue neutrality despite the fact that the appellants have not determined the correct value. In this circumstance, where there is Revenue neutrality, the intention to evade payment of duty cannot be alleged. Therefore extended period under Section 11A cannot be made applicable.” Similar views were expressed in the case of Kitply Industries Ltd.- 2003 (157) E.L.T. 110 (Tri-Mum.) that entire amount of duty payable by the assessee at their Gondia factory being available as Modvat credit to be utilised towards payment of duty in their Tinsukia factory and thus resulting in revenue neutral situation, extended period of limitation is not available. 2) For that the learned Additional Commissioner (Central Excise), Kolkata II have erred in law in by not allowing deduction of freight and insurance from the assessable on account change in definition of place of removal from 1.10.96. It has been decided by the Hon’ble Apex Court in the case of VIP Industries Ltd. vs. Commissioner of Cus. & C.Ex., 2003 (155) E.L.T. 8 (S.C.) that amendments to section 4 of Central Excise Act, 1944 have made no difference to the earlier position as settled in the case of UOI vs. Bombay Tyre International Ltd. – 1983 (14) E.L.T. 1896(S.C.) & GOI v. MRF Ltd – 1995 (77) E.L.T. 433(S.C.). It was

decided in the above two landmark cases that cost of transportation including insurance charges from factory to the depot are excludible from the assessable value. Further it was decided in the case of P.T.C. Industries Ltd. – 2003 (159) E.L.T. 1046 (Tri-Del.) that demand is unwarranted in a case of movement of goods from one unit to another of the same assessee under modvat scheme as the whole issue is revenue neutral in as much as whatever duty is paid in one unit is available in the next unit. In case the assessee were to pay the differential duty as demanded, the same amount would be available as credit in the second unit for utilization for payment of duty on goods manufactured there.

Thanking you, Yours truly, Vinay Kumar Shraff Authorised Representative.

2004 (176) E.L.T. 146 (Tri. - Kolkata) IN THE CESTAT, EASTERN BENCH, KOLKATA Smt. Archana Wadhwa, Member (J) and Shri V.K. Jain, Member (T) UTKAL ALLOYS (P) LTD. Versus COMMISSIONER OF C. EX. & CUS., BBSR-II