Jeet Ram Kait, - (1.)THIS appeal is directed against the Order-in-Appeal bearing No. CEX.XI/JMJ/433/916/NSK/APL/2003 dated 26.12.2003 by which the learned Commissioner (Appeals) has held that there is a suppression and the extended period is invokable, thus, attracting the provisions of Sections 11AB and 11AC of the Central Excise Act, 1944. The appellants have not challenged that part of the order of the original authority by which he has confirmed the total duty demand of Rs. 2,50,751/- (duty amount of Rs. 2,40,917/- + modvat credit of Rs. 9,834/-). Therefore, the challenge before me is a fairest invocation of the provisions of Sections 11AC and 11AB of the CESA, 1944.
(2.)Appearing on behalf of the appellants Shri S.P. Sheth, Advocate submits that in the books of account the value had been written down to show the present net value of the inputs. These inputs were lying in the factory at the time of issue of first Show-cause Notice dated 20.6.2000. Another Show-cause Notice dated 20.4.2000 superceding the earlier Show-cause Notice was issued. He further submits that on 17.8.2000, the inputs were cleared as such by reversing the credit of Rs. 9,834/-. As regards the amount of Rs. 2,40,917/-, he submits that M/s Prasant Khosla Pneumatic Ltd. was amalgamated with M/s Kirloskar Oil Engines Ltd. (KOEL) w.e.f. 1.4.98. This Prasant Khosla Pneumatic Ltd. had received certain components under Chapter X procedure without payment of duty and these components were to be used in the manufacture of 'MAN' diesel engine. Over a period of time, these components became obsolete and could not be utilized and became unusable for the intended industrial purpose. Their value was also written down in the balance sheet in July 2000. They had applied for remission of duty on these obsolete components but no action was taken by the jurisdictional Commissioner on this application which was submitted to the jurisdictional Commissioner under Rule 196B read with Rule 173P of the Central Excise Rules. On 2.10.2001 after waiting for a period of more than one year, they disposed of their components which were received under Chapter X procedure and paid duty under protest. In this connection, learned Counsel also invited my attention to the findings of the original authority at internal page 7 (unnumbered para 3) wherein the Additional Commissioner of Central Excise, Nasik has admitted that it was a fact that appellant was filing RT returns and other returns in respect of various components and the return for the quarter ending 30.6.2000 shows number of components lying in stock but no remark regarding obsolete item has been mentioned either on the return or informed to the Department even when balance sheet was showing the fact regarding the written down value of the goods/inputs under Schedule 17. He further submitted that since balance sheet of the present companies namely, Prasant Khosla Pneumatic Ltd. and Kirloskar Oil Engines Ltd. being publicly available documents, allegation of suppression of such information cannot be sustained and therefore, extended period under proviso (1) of Section 11A is not invokable and therefore, the penalty under Section 11C and interest under Section 11AB cannot be imposed on them. In this connection, he invited my attention to the judgment rendered by CEGAT, Norther Bench, Mew Delhi reported in 2003 (161) ELT 346 in the matter of Hindalco Industries Ltd. v. C.C.E, Allahabad wherein it has been held that (sic) demand has been raised on the basis of information appearing in the balance sheet extended period of limitation for such demand cannot be invoked inasmuch as the balance sheet of the companies being a publicly available documents, allegation of suppression of such information is not sustainable and extended period was held to be not invokable under proviso (1) to Section 11A of the Central Excise Act, 1944. He also invited my attention to the judgment of the Bangalore Bench of this Tribunal reported in 2002 (50) RLT 208 (CEGAT-Bangalore) in the matter of Bharat Heavy Electricals Ltd. v. C.C.E, Bangalore wherein it was held that if the inputs are still lying in the factory even though they have been written off in the books of account, the modvat credit cannot be denied on the presumption that inputs would be used when there was no time limit for such consumption.
Heard the learned JDR, Shri M.H. Shaikh who has heavily relied on the findings by the Additional Commissioner of Central Excise, Nasik, the original authority, and submitted that the assessee had discontinued production of 'MAN' diesel engine long back and they should have declared obsolete non-moving items to the department which came to the notice of the departmental officer at the time of scrutiny of the balance sheet for the year 1997-98 which indicates mat the assessee had written down the value of the goods as they had become obsolete. They have, therefore, suppressed this fact from the department as they have not made any remark in the RT-11 returns regarding the components being obsolete specially when their balance sheet was showing the fact regarding written down value of the goods/inputs under Schedule 17. He, therefore, submitted that the appeal of the appellants deserves to be rejected and the impugned order passed by the Commissioner (Appeals) deserves to be sustained.

(3.)1 have examined the records and heard both sides. From the records and overall submissions made by the learned Counsel today, I find thai in July 2000, they had applied for remission of duty under Rule 196B read with Rule 173P of the Rules ibid and they waited for a considerable period of more than one year for the permission to come from the jurisdictional commissioner. However, on 2.10.01 after awaiting a considerable period they disposed of their components which were received under Chapter X procedure and paid duty under protest. I find that these obsolete items were lying in their factory because Prasant Khosla Pneumatic Ltd. which was amalgamated with KOEL w.e.f. 1.4.98 had stopped manufacture of 'MAN' diesel engine during 1994. In view of this position, the judgment rendered by the Northern Bench, Delhi in the matter of Hindalco Industries Ltd. supra is fully applicable as this demand has been raised on the basis of information appearing in the balance sheet. In this connection, I respectfully follow this judgment by the Northern Bench, Delhi in the case of Hindalco Industries Ltd. supra. And since the balance sheet of the company being publicly available document, the allegation of suppression of such information is not sustainable. Therefore, extended period cannot be invoked under proviso to Section 11A(1) or the Act ibid. In my considered opinion, the provisions of Section 11AC for imposition of penalty and the provision of Section 11AB for demanding duty are not applicable to the facts of this case. Further, the inputs were still lying in the factory when the Show-cause Notice for demanding duty was issued to them, though the components were written off in the books of account. In such a situation, credit cannot be denied on the presumption that input cannot be used when there was no time limit for consumption. In this connection, I respectfully follow the judgment rendered by the Bangalore Bench in the matter of Bharat Heavy Electricals Ltd.(supra) I do not find any evidence whatsoever that there was suppression of facts and therefore have no hesitation in concluding that no penalty can be imposed under Section 11AC and no interest can be demanded under Section 11AB ibid. I, therefore, respectfully following the above said judgments of this Tribunal, allow their appeal and set aside the impugned order demanding penalty under Section 11AC and demanding interest under Section 11AB.
Operative part of the order was pronounced in open Court on 5.8.2004)