Assisstant Commissioner of Central Excise October 28, 2005

Howrah West Division – I ,

25, Princep Street,
Kolkata – 72

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