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SUPREME COURT OF INDIA
Arjan Kumar Sikri, Rohinton Fali Nariman, JJ.
Maruti Suzuki India Ltd. - Appellant
Vs.
Commnr. of Central Excise - Respondent
C.A. No. 8190 of 2003
Decided On: 12.03.2015
Central Excises and Salt Act, 1944 - Section 4 - Central Excise Rules, 1944 - Rule 57F - Jurisdiction - Payment of duty of excise - Appeal against conviction - Commissioner of Central Excise by its order set out show cause notice and reply in some detail and ultimately came to conclusion that on account of certain deductions duty that was evaded by Appellants herein instead as stated in show cause notice - As a result it proceeded to state in its order that duty evaded and proceeded also to impose an equivalent penalty of same amount with caveat that percent of penalty amount would be payable if it is paid within days of date of communication of order - Held, It was conceded by senior Counsel that for several reasons said Rules would not apply to facts here but that drift of these rules shows that where inputs are removed to a place outside factory when they are only partially processed then when they come back after process value addition made on account of such processing would be chargeable to duty under sub-Rule 3A - This argument cannot be accepted for two basic reasons - First court would be adding words to Rule 57F(1) to effect that value additions made to inputs covered by Sub-rule (ii) would also suffer duty even if there is no manufacture - Second, Sub-rule (3) and (3A) apply to an entirely different factual scenario as has been conceded by Counsel for Revenue and it is only after all conditions under said sub-rules are met that duty attributable to inputs contained in partially processed inputs would then become dutiable - Appeal allow
Judgment
Rohinton Fali Nariman, J.
1. Vide a show cause notice dated 30.08.2001 that was served upon the Appellant M/s. Maruti Suzuki India Limited (then known as M/s. Maruti Udyog Limited), the Department gathered, by way of intelligence, that the Appellant had cleared inputs/spares after processing, but duty was only paid equivalent to the MODVAT credit taken on these inputs before processing, and hence a substantial increase in the value of these inputs has escaped payment of duty on account of value addition in such inputs after processing. More specifically, what was alleged was that various spare parts relatable to motor vehicles that were manufactured by the Appellant and were procured by it in the form of bumpers, grills, etc., on which the process of Electro Deposition Coating, namely, EDC took place (which was in the nature of anti-rust so that the shelf life of the said bumpers, grills, etc., would be generally increased) have escaped duty on account of the value addition of EDC. The show cause demanded by way of differential duty a sum of Rs. 2,00,20,310.14/-. Since the period covered relates to August, 1996, to March, 2001, we need to see the provisions of Rule 57F of the Central Excise Rules, 1944 (hereinafter referred to as 'Rules') as it existed in three different periods. For the purposes of this appeal, however, there is no material change made post 20.02.1997 or post 31.03.2000 when this rule was twice amended. For the period in question, the said rule together with its amendments is set as hereinbelow:
"Rule for the period August 1996 to 28.2.1997
"57F(1) The inputs in respect of which a credit of duty has been allowed under Rule 57A-
(i) may be used in or in relation to the manufacture of final products for which such inputs have been brought into the factory; or
(ii) shall be removed, after intimating the Assistant Commissioner of Central Excise having jurisdiction over factory and obtaining a dated acknowledgment of the same, from the factory for home consumption or for export under bond. Provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty of excise shall be the amount of credit that has been availed in respect of such inputs under Rule 57A."
Rule for the period 1.3.97 to 31.3.2000
57F(1) The inputs on which credit has been taken may be used in or in relation to the manufacture of final products.
(2) The inputs may be removed, after intimating the Assistant Commissioner of Central Excise concerned, in writing, for home consumption or for export under bond.
(3) All removals of inputs for home consumption shall be made-
(a) on payment of duty equal to the amount of credit availed in respect of such inputs; and
(b) under the cover of invoice prescribed under Rule 52A."
Rules for the period 1.4.2000 to 28.2.2001
Explanation - When inputs or capital goods are removed from the factory, the manufacturer of the final products shall pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the said factory, and such removal shall be made under the cover of an invoice prescribed under Rule 52A."
2. By their reply to the show cause notice, the Appellant stated that there was no manufacture as understood in law, but only the process of ED coating which did not, in any manner, bring into being a new marketable commodity as such. The bumpers, grills, etc., continued to be bumpers, grills, etc., even after the process of ED Coating.
3. The learned Commissioner of Central Excise by its order dated 28.02.2002 set out the show cause notice and the reply in some detail and ultimately came to the conclusion that on account of certain deductions, the duty that was evaded by the Appellants herein was Rs. 1,68,07,499/- instead of Rs.2,00,20,310/- as stated in the show cause notice. As a result, it proceeded to state in its order that the duty evaded was Rs. 1,68,07,499/- and proceeded also to impose an equivalent penalty
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