The Commissioner, June 13, 2006

Central Excise – Kolkata II,

Customs House, 15/1 Strand Road,
Kolkata – 700 001

Dear Sir,

Re: Show Cause cum Demand notice no. V Ch. 39 (15) – CE/ADJN/KOL-
II/2005/106 dated 26.04.06

Please refer to your abovementioned show cause cum demand notice wherein you have
required us to show cause with respect to the following:-
(i) Recovery of interest on delayed payment of differential duty to the tune of Rs.
6,00,695/- as per section 11A and 11AB of the Central Excise Act, 1944
(hereinafter referred to as ‘Act’) and violation of Rule 8 of Central Excise
Rules, 2002 (Hereinafter referred to as ‘Rules’) for the year 2002-03, 2003-04,
& 2004-05 on the ground that C.E. Duty in respect of price variation bills
have been paid at much later date than the actual date of clearance without
paying interest at appropriate rate. (As per Annexure – I to the Show Cause
Notice)
(ii) Recovery of irregularly availed and utilized cenvat credit to the tune of Rs.
25,02,691/- + Rs. 27,881/- (Education Cess) for the year 2003-04 and 2004-
05. It has been alleged in the show cause notice that we have send old printing
cylinders on which cenvat credit has already been availed of, to the job worker
for re-engraving / re-etching which was subsequently returned to us under
cover of Central Excise Invoice instead of job work challan. Job worker
discharged duty on the processing charges and base value of the old cylinders.
We have availed and utilised cenvat credit on the strength of said invoices
with the connivance of the job worker to transmit accumulated unutilised
cenvat credit at the job worker’s end in favour of the assessee. Therefore,
there is an availment of cenvat credit twice on the same capital goods (base
value of which had been included while discharging the C.E. Duty by the job
worker) which is highly irregular and inadmissible for violation of Rule 3, 4
and 7 of the Rule and as such demandable and recoverable from the assessee
under Rule 12 and Rule 14 of the said Cenvat Credit Rules read with Section
11A and Section 11AB of the Act. Further it has been alleged in the show
cause notice that said inadmissible cenvat credit of duty amount has been
irregularly availed/wrongfully availed and utilised by the assessee,
deliberately/willfully suppressing the material fact to the department by way
of not disclosing/suppressing fact in their submitted monthly returns. (As per
Annexure – II to the Show Cause Notice).
(iii) Recovery of irregularly availed and utilized cenvat credit to the tune of Rs.
12,15,467/- + 8, 294 (Education Cess) for the year 2002-03, 2003-04 and
2004-05. It has been alleged that debit notes were raised on the various parties
under the head of rejection, wastage, short receipt of material etc. on which
 appropriate cenvat credit has not been reversed by the assessee. It has been
further stated that the assessee took full cenvat credit against those inputs.
Since the price of the inputs got reduced by way of issue of such debit notes,
the differential cenvat credit on account of such reduction of price is required
to be reversed. Hence such wrongful credit of duty is sought to be recovered
alongwith appropriate interest under Rule 12 & 14 of the said Rules read with
Section 11A and 11AB of the Act and for violation of Rule 3, 4 & 7 of the
Rules.
Moreover it has been alleged that there is a contravention of provision of
Section 4 of the Act read with Rule 4, 5, 6 8, 11 & 12 of the Rules & Rule 6 of
the Central Excise Valuation Rules, 2000 in as much as the said assessee
thereby realized huge amount from different parties during the year 2002-03,
2003-04 and 2004-05 which is an additional realization and the same has not
been accounted for while computing the assessable value as required under
the provisions, sections and the rules made thereunder resulting in short
payment of excise duty for the aforesaid period in respect of finished goods
cleared. ( As per Annexure – III to Show Cause Notice).
(iv) Recovery of irregularly availed and utilized cenvat credit to the tune of Rs.
3,63,639/- for the year 2001-02, 2002-03 & 2003-04. It has been alleged that
debit notes on deduction under purchase head were raised on the various
parties under the head of rejection, wastage, etc. without reversing the
inadmissible credit of duty. Hence such wrongful credit of duty is sought to be
recovered alongwith appropriate interest under Rule 12 & 14 of the said Rules
read with Section 11A and 11AB of the Act and for violation of Rule 3, 4 & 7
of the Rules and Rule 3, 4 & 9 of the Cenvat Credit Rules, 2004. It has been
further stated that the assessee took full cenvat credit against those inputs.
Since the price of the inputs got reduced by way of issue of such debit notes,
the differential cenvat credit on account of such reduction of price is required
to be reversed. Further it has been stated that material fact of such irregular
availment of credit of duty were not disclosed by us in our monthly return or
otherwise and thus suppressed the material fact with intent to evade payment
of duty. (As per Annexure – IV to Show Cause Notice).
(v) Recovery of irregularly availed and utilized cenvat credit to the tune of Rs.
2,66,887/- + Rs. 1,588/- (Education Cess) for the year 2003-04 & 2004-05. It
has been alleged that debit notes were raised on the various parties under the
head of other deduction without reversing the appropriate cenvat credit. Hence
such wrongful credit of duty is sought to be recovered alongwith appropriate
interest under Rule 12 & 14 of the said Rules read with Section 11A and
11AB of the Act and for violation of Rule 3, 4 & 7 of the Rules and Rule 3, 4
& 9 of the Cenvat Credit Rules, 2004. (As per Annexure – V to Show Cause
Notice).
(vi) Recovery of irregularly availed and utilized cenvat credit to the tune of Rs.
4,01,476/- + Rs. 5,422/- (Education Cess) for the year 2003-04 & 2004-05. It
has been alleged that debit notes were raised on the various parties under the
head of External Processing Charges on account of rejection, wastage etc.
 without reversing the appropriate cenvat credit. Hence such wrongful credit of
duty is sought to be recovered alongwith appropriate interest under Rule 12 &
14 of the said Rules read with Section 11A and 11AB of the Act and for
violation of Rule 3, 4 & 7 of the Rules and Rule 3, 4 & 9 of the Cenvat Credit
Rules, 2004. Further it has been stated that material fact of such irregular
availment of credit of duty were not disclosed by us in our monthly return or
otherwise and thus suppressed the material fact with intent to evade payment
of duty. (As per Annexure – VI to Show Cause Notice).
(vii) Recovery of Rs. 17,83,133/- as cenvat duty and Rs. 1,265/- as Education cess
for contravention of provisions of section 4 of Act read with Rule 6 of Central
Excise (Valuation) Rules, 2000 and Rule 4,5,6,8,11 & 12 of Central Excise
(No.2) Rules, 2001/Central Excise Rules, 2002 for the year 2001-02, 2002-
03, 2003-04 and 2004-05 in as much as the we have realized by way of raising
debit notes under the head of cylinders from different parties, against sale of
finished goods without considering the said amount for payment of
appropriate duty though cenvat credit of duty has been wrongly availed and
utilised at the onset. Thus such duty are recoverable alongwith interest at the
appropriate rate from the said assessee under the provisions of section 11A &
11AB of the Act. (As per Annexure – VII to Show Cause Notice).
(viii) Recovery of Rs. 2,53,455/- as cenvat duty and Rs. 280/- as Education cess for
contravention of provisions of section 4 of Act read with Rule 6 of Central
Excise (Valuation) Rules, 2000 and Rule 4,5,6,8,11 & 12 of Central Excise
Rules, 2002 for the year 2002-03, 2003-04 and 2004-05 in as much as the we
have realized by way of raising debit notes under the head of Miscellaneous
Income from different parties, which is an additional realization in connection
with our goods and the same has not been taken into account while computing
assessable value as required under the provisions of the section. Thus such
short paid /non paid duty are chargeable and recoverable alongwith interest at
the appropriate rate from the said assessee under the provisions of section 11A
& 11AB of the Act. (As per Annexure – VIII to Show Cause Notice).
(ix) Recovery of irregularly availed and utilized cenvat credit to the tune of Rs.
3,12,246/- as cenvat duty and Rs. 4,085/-/- as Education cess for the year
2004-05. It has been alleged that debit notes were raised under the different
heads on account of (i) Carriage outward / Inward (ii) Price Variation /rate
difference, (iii) Labour charges (iv) interest on bill discount (v) material
written off (vi) repairing and maintenance without reversing the appropriate
cenvat credit. Hence such wrongful credit of duty is sought to be recovered
alongwith appropriate interest under Rule 12 & 14 of the said Rules read with
Section 11A and 11AB of the Act and for violation of Rule 3, 4 & 7 of the
Rules and Rule 3, 4 & 9 of the Cenvat Credit Rules, 2004. Further it has been
stated that material fact of such irregular availment of credit of duty were
suppressed with intent to evade payment of duty. ( As per Annexure – IX to
Show Cause Notice).
(x) Appropriation of reversal of cenvat credit amounting to Rs. 86,004/- and Rs.
19,009/- and interest amounting to Rs. 19,911/- on the cenvat credit of Rs.
 86,004/- and 5,446/- on the cenvat credit of Rs. 19,009/- under section 11A of
the Act.
(xi) Further penalty u/s 11AC of the Act read with Rule 25 and Rule 13of the
Rules and Rule 15 of Cenvat Credit Rules has been sought to be imposed.
(xii) Penalty under Rule 26 and 13 of the Rules and Rule 15 of Cenvat Credit
Rules, 2004 has been sought to be imposed upon Shri Giriraj Maheswari,
Director and Shri Dipak Kr. Chakraborty, Manager for their deliberate acts of
suppression of material fact with intent to evade payment of duty by way of
concerning themselves in transporting, removing, depositing, keeping,
concealing, selling or purchasing or in any other manner deals with the
excisable goods which they know and were instrumental to take wrong
inputs/capital goods credit or without taking appropriate steps to ensure that
appropriate duty on the said inputs / capital goods has been paid.
Our point wise reply to above is as follows:-
(i) Interest amounting to Rs. 6,00,695/- has been sought to be recovered on
differential duty on the ground that cenvat duty in respect of price variation
bills have been paid at much later date than the actual date of clearance. In this
regard we would like to mention that question of payment of differential duty
arose because of events subsequent to the actual date of clearance. Price
variation bills were raised on the parties based on negotiations which took
place much after the date of clearance. Cenvat duty on price differential bills
was paid within due date after raising of the bills. Since there was no delay in
payment of duty after raising of the price differential bill, so the interest is not
payable on the same. Interest is compensatory in nature and not penal. Penalty
ordinarily becomes payable when it is found that an assessee has willfully
violated any of the provisions of the taxing statute. Interest is ordinarily
claimed from an assessee who has withheld payment of any tax payable by
him and it is always calculated at the prescribed rate on the basis of the actual
amount of tax withheld and the extent of delay in paying it. Since in our case
there has been no withholding of payment of duty after raising of the price
variation bills, so the question of payment of interest does not arise.
Without prejudice to our above argument that no interest is payable by us, we
would like to point out that interest has been calculated @ 100% whereas rate
of interest prescribed under section 11AB of the Act is 15% upto 11.9.03 and
13 % w.e.f 12.9.03. Further we would like to point out that price variation
bills with respect to some of the clearances as indicated in Part III of
Annexure 1 of Show Cause Notice has been raised in the month of clearance
itself, hence there is no question of delay on those price variation bills. A chart
showing calculation of interest as per section 11AB is enclosed herewith
marked as Annexure A.
Note :
Relevant judgments
 (a) Motherson Sumi System Ltd. Versus Commissioner of C. Ex., Bangalore -
2005 (192) E.L.T. 402 (Tri. - Bang.)
(b) Hello Minerals Water (P) Ltd. Versus Union of India - 2004 (174) E.L.T.
422 (All.)
(ii) It has been alleged in the show cause notice that we have irregularly availed
cenvat credit to the tune of Rs. 25,02,691/- + Rs. 27,881/- (Education Cess)
for the year 2003-04 and 2004-05 on the old printing cylinder by conniving
with the job worker to transmit accumulated unutilised cenvat credit at the job
worker’s end in our favour and availing cenvat credit twice on the same
capital goods. Firstly your allegation of connivance with the job worker to
transfer accumulated unutilised cenvat credit at his end is baseless and without
any evidence to support your allegation. This allegation is based merely on
surmises and conjectures. Secondly there is no question of availing cenvat
credit twice on the same capital goods, as when a new printing cylinder is
purchased, it is duty paid and same amount is taken as cenvat credit.
Subsequently when old printing cylinder is send to the job worker it is re-
engraved and re-etched which is an activity of manufacture at the job worker’s
end and as such duty is paid by the job worker and send back to us under the
cover of Central Excise Invoice and cenvat credit is taken on the strength of
central excise invoice received from job worker. Old printing cylinder send to
the job worker is merely a scrap which is used by the job worker for
manufacturing a new printing cylinder by re-etching and re-engraving on it.
The printing cylinder which is received from the job worker after re-etching
and re-engraving assumes the character of a new capital goods and as such
duty is paid by the job worker for manufacture of a new goods and
consequently credit is taken by us on the same. Hence there is no question of
availing cenvat credit twice on the same capital goods.
Note :
Relevant Judgments

(a) Doiwala Sugar Co. Ltd. Versus Commissioner Of Central Excise, Meerut -
2003 (162) E.L.T. 990 (Tri. - Del.);
(b) Commissioner of C. Ex., Meerut Versus U.P. State Sugar Corporation Ltd.
- 2004 (167) E.L.T. 45 (Tri. - Del.);
(c) Commissioner of C. Ex., Pondicherry Versus Chemplast Sanmar Ltd. -
2005 (180) E.L.T. 364 (Tri. - Chennai)
(d) Commissioner of C. Ex., Vadodara Versus Dinesh Pharmaceuticals - 2000
(117) E.L.T. 756 (Tribunal)
(e) Abhishek Auto Industries Ltd. Versus Commr. of C. Ex., Delhi-II,
Gurgaon - 2004 (175) E.L.T. 407 (Tri. - Del.)
(f) Commissioner of C. Ex., Vadodara Versus Dinesh Pharmaceuticals - 2000
(117) E.L.T. 756 (Tribunal)
 (g) Facit Asia Ltd. Versus Collector of Central Excise - 1991 (54) E.L.T. 347
(Tribunal)
(h) Maruti Udyog Ltd. Versus Collector of C. Ex., New Delhi 2002 (150)
E.L.T. 1279 (Tri. - Del.)

Further it is to be noted that duty is required to be paid by the job worker on

the value of goods supplied to them plus the job charges as decided by the
Supreme Court in the case of Ujagar Prints versus Union of India and others -
1988 (38) E.L.T. 535 (S.C.).

(iii) Irregularly availed and utilized cenvat credit to the tune of Rs. 12,15,467/- +
8, 294 (Education Cess) for the year 2002-03, 2003-04 and 2004-05 has been
sought to be recovered with respect to debit notes raised on the various parties
under the head of rejection, wastage, short receipt of material etc., since the
price of the inputs got reduced by way of issue of such debit notes, the
differential cenvat credit on account of such reduction of price is required to
be reversed. In this regard we would like to mention that we have taken cenvat
credit only to the extent of duty paid by supplier of inputs and subsequent
reduction in price of inputs after removal of goods from the premises of
supplier cannot change the assessable value of goods for the purpose of
availing cenvat credit. Cenvat duty was paid by our supplier on the assessable
value indicated in the Central Excise Invoice at the time of removal of goods
from their premises. The debit notes were issued by us after removal of goods
from the premises of the supplier and were not known at the time and place of
removal of goods and as such value of the goods can not be re-assessed at our
end for reversal of cenvat credit when duty has already been paid on value
assessed at the end of supplier.
Moreover it has been alleged that huge amounts have been realised from
different parties which is an additional realization and the same has not been
accounted for while computing the assessable value resulting in short payment
of excise duty in respect of finished goods cleared. In this respect we would
like to clarify that debit notes have been raised on the supplier of inputs and
not on the customers of final product and as such there is no additional
consideration received from the customers. The assessable value of finished
product has no relation to any consideration received from the supplier of
inputs.
Further we would also like to state that these debit notes were issued by us for
various reasons like inferior quality of material supplied, quantity or special
discount received, production loss due to delay in delivery by the suuplier,
excess rate charged, etc. Details of debit notes raised for various reasons is as
per Annexure B. Some of the debit notes were raised on parties which had
supplied us non excisable goods like stationery, hence question of availing
cenvat credit and reversal of the same does not arise. Details of debit notes
raised to supplier of non excisable goods is as per Annexure C. With respect
 to debit note no. DN/VPPL/02-03 dated 31.3.03 amounting to Rs. 3,61,378/-
duty has already been paid as it was raised for return of goods rejected.
(iv) Irregularly availed and utilized cenvat credit to the tune of Rs. 3,63,639/- for
the year 2001-02, 2002-03 & 2003-04 has been sought to be recovered with
respect of debit notes raised on the various parties on deduction under
purchase head under the head of rejection, wastage, etc. on the ground that
since the price of the inputs got reduced by way of issue of such debit notes,
the differential cenvat credit on account of such reduction of price is required
to be reversed. In this regard also we reiterate our submission made with
respect to point no. (iii) above that we have taken cenvat credit only to the
extent of duty paid by supplier of inputs and subsequent reduction in price of
inputs after removal of goods from the premises of supplier cannot change the
assessable value of goods for the purpose of availing cenvat credit. Cenvat
duty was paid by our supplier on the assessable value indicated in the Central
Excise Invoice at the time of removal of goods from their premises. These
debit notes were issued by us after removal of goods from the premises of our
supplier and were not known at the time and place of removal of goods and as
such value of the goods can not be re-assessed at our end for reversal of
cenvat credit when duty has already been paid on value assessed at the end of
supplier.
In this respect we would also like to mention that these debit notes were
issued by us for various reasons like inferior quality of material supplied,
quantity or special discount received, production loss due to delay in delivery
by the suuplier, excess rate charged, etc. Details of debit notes raised for
various reasons is as per Annexure D. Debit note no. DN 102/2001 dated
30.10.01 amounting to Rs. 5,000/- was raised for supply of non excisable
goods, hence question of availing cenvat credit and reversal of the same does
not arise.
(v) Irregularly availed and utilized cenvat credit to the tune of Rs. 2,66,887/- +
Rs. 1,588/- (Education Cess) for the year 2003-04 & 2004-05 has been sought
to be recovered towards debit notes raised on the various parties under the
head of other deduction without reversing the appropriate cenvat credit. In this
respect no reason has been specified in the show cause notice for demand of
reversal of cenvat credit except stating that cenvat credit has been irregularly
availed. However in this regard also we reiterate our submission made with
respect to point no. (iii) above that we have taken cenvat credit only to the
extent of duty paid by supplier of inputs and subsequent reduction in price of
inputs after removal of goods from the premises of supplier cannot change the
assessable value of goods for the purpose of availing cenvat credit. Cenvat
duty was paid by our supplier on the assessable value indicated in the Central
Excise Invoice at the time of removal of goods from their premises. These
debit notes were issued by us after removal of goods from the premises of our
supplier and were not known at the time and place of removal of goods and as
such value of the goods can not be re-assessed at our end for reversal of
 cenvat credit when duty has already been paid on value assessed at the end of
supplier. Details of debit notes is as per Annexure E .
Some of the debit notes has been raised in relation to delivery charges, cost of
underutilized cylinders, differential quantity of material, cancellation of order
etc. recovered from our customers. Details of such debit notes is as per
Annexure F.
Some of the debit notes has been raised for Job work done by for HLL and has
no relation to cenvat credit. Details of such debit notes is as per Annexure G.
Note :
Relevant judgments

(c) Collector of C. Ex., Raipur Vs. Universal Cables Ltd. - 1997 (94) E.L.T.
185 (Tribunal)
(d) Cummins India Ltd. Versus Commissioner of Central Excise, Pune-I -
2003 (159) E.L.T. 342 (Tri. - Mumbai)
(e) Commissioner of C. Ex., Surat Versus Trinetra Texturisers Pvt. Ltd. - 2004
(166) E.L.T. 384 (Tri. - Mumbai)
(f) Kerala State Electronic Corpn. Versus Collector of C. Ex., Kochi - 1996
(84) E.L.T. 44 (Tribunal)
(g) Asahi India Safety Glass Limited Versus Union of India - 2005 (180)
E.L.T. 5 (Del.)

(vi) Irregularly availed and utilized cenvat credit to the tune of Rs. 4,01,476/- +
Rs. 5,422/- (Education Cess) for the year 2003-04 & 2004-05 has been sought
to be recovered regarding debit notes raised on the various parties under the
head of External Processing Charges on account of rejection, wastage etc.
without reversing the appropriate cenvat credit. In this respect no reason has
been specified in the show cause notice for demand of reversal of cenvat
credit except stating that cenvat credit has been irregularly availed. With
respect to above allegation of irregularly and availing and utilizing cenvat
credit, we would like to clarify that above debit notes has not been raised on
the supplier of inputs and no relation to cenvat credit availed or utilised. These
debit has been raised on our job worker for various reasons like deficiency in
job work done by them. Further some debit notes has been raised on our
customers for doing job work on their behalf. Since these debit notes has no
relation whatsoever with regard to cenvat credit availed on inputs, hence the
question of irregularly availing cenvat credit and reversal of the same does not
arise.

Details of the debit notes is enclosed as per Annexure H.

(vii) It has been alleged in the show cause notice that we have realized by way of
raising debit notes under the head of cylinders from different parties, against
sale of finished goods without considering the said amount for payment of
appropriate duty though cenvat credit of duty has been wrongly availed and
utilised at the onset. Rs. 17,83,133/- as cenvat duty and Rs. 1,265/- as
Education cess has been sought to be recovered for the year 2001-02, 2002-
03, 2003-04 and 2004-05 for above reasons. In respect of the above allegation
we would like to point out these debit raised on our customer has no relation
whatsoever to the sale of finished goods. Printing Cylinders are used for
printing on the Polyster film and paper, paper board. The design to be printed
is etched into the surface of a printing cylinder. However the printing cylinder
has a limited life after which the design to be printed is required to be re-
etched. Per unit cost of cylinder calculated on the basis of expected life of the
cylinder is included in transaction value of the finished goods. For example
Rs. 1 per unit is included in the transaction value, if a cylinder is expected to
print thousand units and the cost of a cylinder is Rs. 1,000/-. However if the
design provided by our customer gets changed after printing say only 700
units than loss incurred by us towards cost of under utilised cylinder to the
extent of 300 units is recovered from our customers by raising debit notes.
Hence the debit notes raised by us is not towards goods already sold. Debit
notes are raised for partial cancellation of contract because of which we have
to incur loss towards the cost of under utilised cylinders. Amount received
from our customer under the head cylinder is in the nature of liquidated
damages and hence not includible in assessable value of past supplies.

Details of Debit notes is as per Annexure I

Further without prejudice to our above arguments we would like to mention

that some of the debit notes have been raised on Nepal lever Limited for
exports to Nepal. Even though we are exporting our goods to Nepal on
payment of duty however due to political treaty between India and Nepal,
whole of the duty paid on the excisable goods is passed on as rebate to the His
Majesty’s Government on their exportation to Nepal. Further to extent of
rebate passed on to Government of Nepal, customs duty on import is
exempted to the importer in Nepal. However if we had alternatively exported
the goods under bond without payment of duty than there would have been no
question of rebate being granted to the Government of Nepal and
consequently no exemption to that extent of customs duty on import in to the
Nepal would have been available to the importer. Which means payment of
excise duty in India flows back indirectly to us as in the case of payment of
duty in India allows us to recover more consideration to the extent of import
duty saved by the importer for import of goods into the Nepal. Hence there is
no loss to the Revenue of Government of India due to non payment of duty on
debit notes as to the extent of such non payment no duty is required to be
transferred to the Government of Nepal in form of rebate to the Government
of Nepal.
 Moreover we would like to point out that some of the debit notes has been
raised on supplier of cylinders for discount received from them towards cost
of inferior supply of materials. Details of such debit notes is as per Annexure
J.

Relevant judgments

(a) The Supreme Court Bench dismissed the Civil Appeal filed by Collector of
Central Excise, Kanpur against the CEGAT Order reported in 1991 (54) E.L.T.
333 (Tribunal) (Spring Fresh Drinks v. Collector);
(b) Commissioner Of C. Ex., Jamshedpur Versus Bhagwati Oxygen Ltd. - 2000 (117)
E.L.T. 647 (Tribunal);
(c) Faridkod Cooperative Sugar Mills Ltd. Vs. Commissioner Of Central Excise -
2004 (171) E.L.T. 174 (Tri. - Del.);
(d) Inox Air Products Ltd. Vs. Commissioner Of Central Excise - 2001 (134) E.L.T.
224 (Tri. – Mumbai);
(e) Collr. Of C. Ex., Bombay Versus Ram Decorative & Industries Limited - 2000
(124) E.L.T. 659 (Tribunal).
(viii) Rs. 2,53,455/- as cenvat duty and Rs. 280/- as Education cess has been sought
to be recovered for the year 2002-03, 2003-04 and 2004-05 in as much as the
we have realized by way of raising debit notes under the head of
Miscellaneous Income from different parties, which is an additional
realization in connection with our goods and the same has not been taken into
account while computing assessable value as required under the provisions of
the section. In this regard we would like to mention that In this respect we
would also like to mention that some of these debit notes were raised upon
supplier of input and upon our customers for various reasons like inferior
quality of material supplied, quantity or special discount received, production
loss due to delay in delivery by the supplier, excess rate charged, etc. Details
of debit notes raised for various reasons is as per Annexure K. Some of the
debit notes were raised on parties which had supplied us non excisable goods
like stationery, hence question of availing cenvat credit and reversal of the
same does not arise. Details of debit notes raised to supplier of non excisable
goods is as per Annexure L. As these debit notes were not raised on the
customers so the question of additional realization and consequently inclusion
of the for computation of assessable value does not arise. Some of the debit
notes raised on customers as listed in Annexure M is for various reasons such
cost recovered for conducting trial run, recovery of bad debt etc. and has no
relation to the assessable value. Some of the debit notes has been raised on the
job worker for deficiency in job work done by them. Details of such debit
notes is as per Annexure N.
(ix) Irregularly availed and utilized cenvat credit to the tune of Rs. 3,12,246/- as
cenvat duty and Rs. 4,085/-/- as Education cess for the year 2004-05 has been
sought to be recovered towards debit notes raised under the different heads on
 account of (i) Carriage outward / Inward (ii) Price Variation /rate difference,
(iii) Labour charges (iv) interest on bill discount (v) material written off (vi)
repairing and maintenance without reversing the appropriate cenvat credit. In
this respect no reason has been specified in the show cause notice for demand
of reversal of cenvat credit except stating that cenvat credit has been
irregularly availed. However In this regard also we reiterate our submission
made with respect to point no. (iii) above that we have taken cenvat credit
only to the extent of duty paid by supplier of inputs and subsequent reduction
in price of inputs after removal of goods from the premises of supplier cannot
change the assessable value of goods for the purpose of availing cenvat credit.
Cenvat duty was paid by our supplier on the assessable value indicated in the
Central Excise Invoice at the time of removal of goods from their premises.
These debit notes were issued by us after removal of goods from the premises
of our supplier and were not known at the time and place of removal of goods
and as such value of the goods can not be re-assessed at our end for reversal of
cenvat credit when duty has already been paid on value assessed at the end of
supplier. Details of such debit notes is as per Annexure O.
Some of the debit notes has been raised in relation to non excisable materials
purchased by us. Details of such debit notes is as per Annexure P.
With respect to some of the debit notes duty has already been paid. Details of
such debit notes is as per Annexure Q.
Some of the debit notes has been raised in relation to job work done by us.
Details of such debit notes is as per Annexure R.
Some of the debit notes has been raised in relation to delivery charges, cost of
underutilized cylinders, etc. recovered from our customers. Details of such
debit notes is as per Annexure S.
Some of the debit notes has been raised towards supply of labour by us and
has no relation to the cenvat credit. . Details of such debit notes is as per
Annexure T.
(x) Further we would like to bring to your kind attention that there is a totaling
error in calculation of total amount of debit notes relied upon for the purpose
of issuance of show cause notice. A list of error in totaling in the Annexures to
the Show Cause notice is enclosed as per Annexure U.
Hence we request you to kindly drop the aforesaid proceedings for demand of duty,
interest and imposition of penalty. Without prejudice to our arguments for recovery of
duty along with interest and penalty on the company we would like to state that no
penalty should be imposed upon Shri Dipak Kr. Chakraborty, Manager as he is an
employee of the company and he has acted in the course of performance of his duties for
the company and not for his own personal benefit. Further Shri Giriraj Maheswari being
Director of the company is not looking after day to day workings of excise department
and has already stated it the at the time of personal appearance in response to summon
issued to him.
We further request you give us an opportunity in person to be heard before the case is
adjudicated.

Thanking you,

Yours faithfully,

For Creative Polypack Ltd.

(Authorised Signatory)