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570 011
OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE MYSORE COMMISSIONERATE ,S-1 & S-2, VINAYA MARGA, SIDDARTHA NAGAR , MYSORE 570 011. C.NO. V/63 /15/12/2013 SHOW CAUSE NOTICE
M/s.Rishi FIBC Solutions Pvt. Ltd., No.41, III Phase, Koorgalli Industrial Area, Ilawala, Koorgalli, Mysore 570 018 (hereinafter referred to as assessee ) holders of Central Excise Registration No.AADCR5130NEM005 are the manufacturers of Polypropylene Flexible Intermediate Bulk Containers (PP FIBC) falling under Chapter 63 of the Schedule to the Central Excise Tariff Act (CETA), 1985. The assessee avails credit of the Excise duty paid on the inputs, capital goods and also the credit of the Service tax paid on the services availed by them and utilises the same for the payment of Excise duty on clearances of their finished products. 2. Whereas, on verification of the records of the assessee it is observed that the assessee has availed credit on Inputs received from M/s.RISHI FIBC Solutions Pvt. Ltd., EOU, Ranu Village, Padra Taluk, Vadodara Dist. It appears that the assessee has availed the credit of Excise duty paid under proviso to Section 3(1) of the Central Excise Act and Education / Secondary & Higher Education Cess on the Excise duty paid under proviso to Sec3(1) of Central Excise Act. The assessee has availed the credit of Rs.58,75,385/- ( Cenvat : Rs.57,04,642/-, Ed. Cess : Rs.1,13,827/- & SHE Cess : Rs.56,916/- - as detailed in the Annexure-I enclosed) during the period from June 2012 to December 2012. 3. Whereas, in terms of Rule 3 of Cenvat Credit Rules, 2004;

Date : 25.06.2013

(1) A manufacturer or producer of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of (i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act; Provided that (ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act; (iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile ad Textile Articles) Act, 1978 (40 of 1978); (iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (40 of 1957); (v) the National Calamity Contingent duty leviable under Section 136 of the Finance Act, 2001 (14 of 2001); (vi) the Education Cess on excisable goods leviable under Section 91 read with Section 93 of the Finance (No.2) Act, 2004 (23 of 2004); (via) the Secondary and Higher Education cess on excisable goods leviable under Section 136 read with Section 138 of the Finance Act, 2007 (22 of 2007);

(vii) the additional duty leviable under Section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v), (vi), (via): (viia) the additional duty leviable under section 3(5) of the Customs Tariff Act . 4. Whereas it appears that as per notification No.13/2012 Customs dated 17.03.2012 and Notification No.14/2012 Customs dated 17.03.2012, the Education Cess and Secondary & Higher Education Cess on Countervailing Duty or CVD is exempted on the imported goods. 5. Whereas from the aforesaid Rule it appears that the assessee is eligible to take credit of the additional duty leviable under Section 3 of the Customs Tariff Act equivalent to the duty of excise ( i.e. CVD of Rs.31,44,933/-), (as detailed in the Annexure-I enclosed) during the above said period. 6. Whereas it also appears that Shri.Rajeesh.P, Works Manager of M/s.Rishi FIBC Solutions Pvt. Ltd. vide his statement dated 02.01.2013 recorded under Section 14 of the Central Excise Act 1944, has inter alia stated that he is overall in charge of the unit and Authorised signatory for Central Excise matters. As Shri.Rajeesh.P. continues in the same position, it appears that he was instrumental in availing the excess credit on the inputs received from EOU unit with an intention to irregularly utilize the same for payment of Central Excise duty and hence liable for personal penalty under Rule 26 of the Central Excise Rules, 2002.
7.

In view of the foregoing, it appears that:-

(a) The assessee has contravened the provisions of Rule 3 of Cenvat Credit Rules, 2004 by availing the excess credit on the inputs received from EOU; (b) The excess credit amounting to Rs.27,30,452/- (Cenvat-Rs.25,59,709/-, Education Cess Rs.1,13,827/- and Secondary & Higher Education Cess Rs.56,916/-) during the period from June 2012 to December 2012 availed in contravention of Rule 3 of Cenvat Credit Rules, 2004, is liable to be demanded and recovered from the assessee under the provisions of Rule 14 of Cenvat Credit Rules 2004 read with Section 11A of the Central Excise Act,1944; (c) Interest on the said amount of excess credit as at (b) above is liable to be charged and recovered under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11 AA of the Central Excise Act, 1944; and (d) The assessee is liable for penalty under the provisions of Rule 15(1) of Cenvat Credit Rules, 2004 for contravening the provisions of Rule 3 of the said Rules (e) Sri.Rajeesh.P. Works Manager of M/s.Rishi FIBC is liable for Personal Penalty under Rule 26 of the Central Excise Rules, 2002. 8. Now, therefore, M/s.Rishi FIBC Solutions Pvt. Ltd., Mysore, are required to show cause to the Additional Commissioner of Central Excise, Mysore Commissionerate, No.S1 and S2, Vinaya Marga, Siddhartha Layout, Mysore as to why: i) the excess credit of Rs.27,30,452/- ( Rupees Twenty Seven lakhs thirty thousand four hundred and fifty two only ) availed by them during the period from June 2012 to December 2012 on the inputs received from EOU as detailed in the Annexure-I enclosed should not be demanded & recovered from them under the provisions of Rule 14 of Cenvat Credit Rules 2004 read with Section 11A of Central Excise Act, 1944; interest should not be charged and recovered from them under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11 AA of Central Excise Act, 1944;

ii)

iii)

penalty should not be imposed under Rule 15(1) of the Cenvat Credit Rules, 2004 for contravention of the provisions of Rule 3 of Cenvat Credit Rules, 2004;

9. Shri.Rajeesh.P., Works Manager of M/s.Rishi FIBC Solutions Pvt. Ltd. is also required to show cause to the Additional Commissioner of Central Excise, Mysore Commissionerate, No.S1 and S2, Vinaya Marga, Siddhartha Layout, Mysore as to why penalty should not be imposed on him under Rule 26 of Central Excise Rules, 2002. 10. The Noticees are further directed to produce all the evidences upon which they intend to rely in support of their defence at the time of showing cause to the notice. 11. The Noticees are requested to indicate in their written explanation as to whether they wish to be heard in person before the case is adjudicated. If no mention is made about the same, it will be presumed that they do not desire for personal hearing. 12. If no cause is shown against the action proposed to be taken within 30(Thirty) days from the date of receipt of this notice or if they do not appear before the adjudicating authority when the case is posted for hearing, the case will be decided EX-PARTE. 13. This notice is issued without prejudice to any other action that may be taken in future against the assessee or any other person connected with the subject of this notice under the provisions of Central Excise Act/ Rules or any other law(s) for the time being in force in India. Further, this notice is issued without prejudice to the right to support it with any material evidence, which may and which may be considered relevant to the proceedings in this matter. Further, this is issued reserving the right to amend, add, modify or delete any part of this notice and such amendment, addition, modification or deletion shall have the effect as if they were part and parcel of the original notice. 14. This notice is issued on the basis of the following documents : 1) Statements enclosed to the monthly ER1 return for the period from June 2012 to December 2012. 2) Copies of relevant input invoices on which excess credit availed, as detailed in the Annexure-I enclosed to draft SCN. 3) Statement dated 02.01.2013 of Sri.Rajeesh.P., Works Manager, M/s.Rishi FIBC Solutions Pvt. Ltd.

ADDITIONAL COMMISSIONER
Encl: Annexure - I To, M/s.Rishi FIBC Solutions Pvt. Ltd., No.41, III Phase, Koorgalli Industrial Area, Ilawala, Koorgalli, Mysore 570 018.

(BY S.P.A.D.)

Copy to the Superintendent of Central Excise, Mysore West Range, Mysore.

CHECK LIST FOR SHOW CAUSE NOTICE

Whether any previous Show- Cause Notice against the party on the same issue has been issued or not. If any previous SCN has been issued the details thereof and result of adjudication, if adjudication should be furnished. 1.Last date of service of Show Cause Notice 2.Whether extended period invokable. If so, the facts and allegations of fraud, collusion or any willful mis-statement of suppression of fact or contravention of any of the provisions of the Central Excise Act or the rules made there under with intent to evade payment of duty, should be mentioned in specific and precise terms. 3.Relied upon documents, whether enclosed or not Yes. SCN C.No.V/15/63/2012 Adjn. Date 08.01.2013 issued by the Assistant Commissioner of C.Ex., II Dvn., Mysore, for the period December 2011 to May 2012. 09.07.2013 No.

Cenvat credit statement for the period from June12 to December12 and relevant input invoices on which excess credit availed are enclosed. 4.Duty calculation chart and annexure duly Yes. authenticated enclosed or not 5.If Show Cause Notice is based on audit No. objection, copy of the audit objection and compliance report thereof enclosed or not. 6.Confirm whether appropriate rules, section and Yes. penal provisions correctly quoted. 7.If breach of any notification/Circular/trade notice NA is alleged, whether copy of the same enclosed for ready reference. 8.If demand relates to irregular availment of Yes Cenvat credit 9.Whether ER 1 is being submitted monthly or ER-1 filed in ACES monthly. quarterly and whether returns for the relevant period have been finalized. 10.Date on which ER1 filed. ER 1 for the month of June12 filed electronically on 10.07.2012. 11.If demand relates to classification dispute whether declaration filed under Rule 173P checked and copy enclosed for ready reference. 12.If demand relates to valuation issue, whether price data enclosed. 13.Whether all information and evidence relevant Yes for sustainability of the SCN have been furnished. 14.Whether there is any case law relating to the issue involved in the SCN either in favour of the department or against. If so, details thereof. a.Name of the party b.Reporting page No. and volume of the ELT/ECR etc. c.Brief of the case and order thereon SUPERINTENDENT OF C.EX. MYSORE WEST RANGE.