Creative Written Submissions 25-4-06

Commissioner (Appeals - I), Central Excise, 4 Kiran Shankar Roy Road, Raja Chamber, 3rd Floor Kolkata – 700 001

20th June, 2005

Sir, Sub: Submissions with respect to Appeal filed by my client Creative Polypack Ltd. against order no. Order No. SCDN (3) 67/HWD-I/05 dated 5th January, 2006 1) For that the Learned Assistant Commissioner of Central Excise, Howrah West I Division have failed to appreciate the facts of the case in stating that assessee removed their goods from their factory only to transfer stock to other unit whereas the facts of the case is that M/s Creative Polypack Ltd have sold the goods to their unit at Kanpur operating independently from unit at Howarh as is evident from the sales tax records and invoices which shows that goods have been sold to unit at Kanpur. It was held in the case of COLLECTOR OF C.E. Versus MODERN FOOD INDUSTRIES (INDIA) LTD. - 1988 (37) E.L.T. 294 (Tribunal) that Sale between any one unit and another unit is enough to be considered as sale.

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.

3) For that Learned Assistant Commissioner of Central Excise failed to appreciate the fact that demands under all the show cause notices are barred by limitation under section 11A as the demands have been raised after six months. It has been held in recent judgment of Hon’ble Apex court in the case of Sarabhai M. Chemicals. - 2004 (65) RLT 879 (SC) that Willful suppression of material facts is a must for invoking extended period. The assessee was regularly filing the return.Further declaration under Rule 173C was made and all the sales bills were examined by the audit party. Hence there was no suppression of fact and as such demand is barred by limitation.

4) For that Learned Assistant Commissioner of Central Excise failed to appreciate the fact that 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 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.”

5) 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.

6) It has been held by Calcutta Tribunal in the case of NATIONAL ALUMINIUM CO. LTD. Versus COMMISSIONER OF C. EX. & CUS., BBSR-I - 2005 (180) E.L.T. 493 (Tri. Kolkata) that there is revenue neutrality in case transfer of goods from unit to other unit.

Thanking you,

Yours faithfully,

Vinay Kumar Shraff (Authorised representative)