Ms M M Printers vs CE & CGST Ghaziabad

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD

REGIONAL BENCH - COURT NO.I

Excise Appeal No.70385 of 2021

(Arising out of Order-In-Original No.01-Comm.-CEX-GZB-21-22, dated -
18.05.2021 passed by Commissioner CGST & Central Excise, Ghaziabad)

M/s M. M. Printers …..Appellant
(Lower Bazar, Ghaziabad-Meerut Road Modi Nagar
Ghaziabad, Uttar Pradesh 201204)
VERSUS
Commissioner, CGST, Ghaziabad ….Respondent
(C.G.O. Complex-II, Kamla Nehru Nagar,
Ghaziabad, Uttar Pradesh 201002)


AND
Excise Appeal No.70386 of 2021

(Arising out of Order-In-Original No.01-Comm.-CEX-GZB-21-22, dated -
18.05.2021 passed by Commissioner CGST & Central Excise, Ghaziabad)


Shri Sanjay Kumar Garg …..Appellant
(C/o M/s M. M. Printers
Lower Bazar, Ghaziabad-Meerut Road Modi Nagar
Ghaziabad, Uttar Pradesh 201204)
VERSUS
Commissioner, CGST, Ghaziabad ….Respondent
(C.G.O. Complex-II, Kamla Nehru Nagar,
Ghaziabad, Uttar Pradesh 201002)

A PPEARANCE :
Shri Rajesh Chhibber, Advocate for the Appellant
Shri Surendra Ram, Authorised Representative for the Respondent

CORAM:
HON’BLE MR. P. K. CHOUDHARY, MEMBER (JUDICIAL)
HON’BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)

FINAL ORDER NO.70540-70541/2026

DATE OF HEARING : 01.09.2026
DATE OF DECISION : 30.10.2026

E/70385 & 70386/2026
2
P. ANJANI KUMAR:
These appeals are directed against Order-In-Original dated
18.O5.2O21, passed in de novo proceedings, consequential to this
Bench’s Final order No.71198-71199/2019 dated 19.O6.2O19.
2. Brief facts of the case are that M/s M.M. Printers, the
Appellants are engaged in the manufacture of Printed Labels,
Printed cartons, cards, Booklet/ Leaflet/ Folder, pad/ Diary,
Poster/ Backing Sheet, Carry Bags falling under Chapter Heading
48211O2O, 48191090. 49099990, 49O11O2O, 482O1O9O,
4911102O and 48194OOO respectively of the First Schedule to
the Central Excise Tariff Act, 1985.
2.2 Acting on intelligence that the party was clearing Diaries,
Letter Pads, and Printed Carry bags under the tariff heading
49O11O2O, though the same appears to be correctly classifiable
under chapter Sub-Heading 4819 & 4820 attracting Central Excise
duty @l2%, the factory premises were visited on 27.01.2014 and
investigations were conducted and it appeared to the Revenue
that the Appellant evaded Central Excise duty of Rs.41,23,34O/-
on Diary, Letter Pads, and Printed Carry Bags during the period
01.04.2009 to 31.12.2013; Central Excise Duty of Rs.7,51,579/-
on Printed Calendar (CETI 49100010/ 49000090), printed Card
(CETI 49090010 /49O9OO90), Printed Envelope (CETI 48171000)
and printed Notebook (CETI 48201090) by paying duty at the rate
of 1%/2%, during the period 01.03.2011 to 31.03.2014, instead
of applicable rate of 5%/6%; failed to pay an amount of
Rs.88,69,844/-, during the period 01.04.2009 to 31.03.2014, as
they did not fulfil the requirement of Rule 6(3) of the CENVAT
Credit Rules, 2OO4, on the common input services utilized in the
manufacture of exempted goods.
2.3 Accordingly, a Show Cause Notice dated 05.05.2014 was
issued to the Appellants seeking to recover the above cited
duty/amount along with interest and penalties. Penalty was also
sought to be imposed on Shri Sanjay Kumar Garg, Director of the
Appellant. The Show Cause Notice was adjudicated by the
Commissioner, vide Order-In-Original dated 29.08.2O14. On an

E/70385 & 70386/2026
3
appeal filed by the Appellants, this Bench vide final order cited
above, remanded the issue back to the commissioner holding
that:
• Demand of Central excise duty of Rs 41,23,34O on Diary,
Letter Pads, and Printed Carry Bags during the period
01.04.2009 to 31.12.2013 is sustainable only for normal
period as extended period cannot be invoked in the facts
and circumstances of the case. imposition of penalty upon
them is not justified and the same set aside.
• Demands of Central excise duty of Rs 7,51,579 and Rs
88,69,844 are raised primarily on the issue of non-reversal
of credit availed on common inputs/input services; it is a
well settled law that the reversal of the credit would mount
to a situation as if no credit was availed; only the quantum
of reversal of proportionate credit needs to be verified; the
issue of limitation and any other issue that the Appellants
may like to raise in respect of these two demands are left
open for the adjudicating authority to decide.
2.4 Commissioner passed the impugned order, in de novo ,
proceedings confirming the Central Excise duty of Rs.6,82,796/-,
out of the original demand for Rs.41,23,34O/-, on Diary, Letter
Pads, and Printed Carry Bags during the period 01.04.2009 to
31.12.2013 and re-confirming the demands and penalties on
other issues as in the initial Order-In-Original dated 29.08.2O14.
Hence, these appeals.
3. Shri Rajesh Chhibber, Learned Counsel for the Appellants
submits in respect of the demand of duty on Diary, Letter Pads,
and Printed Carry Bags, during the period 01.04.2009 to
31.12.2013, that in the earlier Order-In-Original, at para 3.1(iii),
it was categorically mentioned that the Appellant did not clear any
goods in the name of Letter Pad; CESTAT directed the
Commissioner to quantify the duty for normal period; the value of
the goods, cleared under the invoices, was required to be
considered as inclusive of duty; the demand of duty is to be re-
quantified to that effect. Learned Counsel submits in respect of
the demand of duty on clearances at concessional rate of duty

E/70385 & 70386/2026
4
@1% or 2%, while availing CENVAT credit, that since the
Appellant had reversed proportionate credit taken, it amounted to
not claiming any credit, as held by this Bench while remanding the
case back to Commissioner; therefore, the demand was not
maintainable; further, as entire clearances were duly entered in
excise returns along with the evidence that the Appellant was
claiming CENVAT Credit, extended period could not be invoked, as
held by CESTAT in respect of other demand; at best demand for
the normal period can be sustained and benefit of cum duty price
needs to be extended; as already held in respect of other demand,
the penalty may kindly be set aside for entire demand.

4. Learned Counsel submits as regard reversal of amount in
terms of Rule 6(3), that from the beginning, it was the stand of
Appellant that they reversed proportionate credit along with
interest; Hon’ble CESTAT remanded the matter for verification of
the fact of claim of proportionate reversal made by the Appellant;
despite the same, the Lower Authority held again, in para 4.5.9,
that since the Appellant did not follow procedure prescribed under
Rule 6, the amount demanded in the Show Cause Notice was
correct; it is clear violation of directions of Hon’ble CESTAT; it is
seen from para 4.5.8 of the impugned order, that the Lower
Authority has not disputed the fact of reversal of proportionate
credit along with interest by the Appellant; the same was required
to be considered, verified and accepted by the Department; the
impugned order passed in defiance needs to be set aside.
5. Learned Counsel submits as regards the penalty for differential
demand of duty, that CESTAT had already set aside penalty for
entire period for the demand on the issue of difference in
classification; same ratio may kindly be applied here also. He
submits, as regard penalty for demand under Rule 6(3), that when
the lower authority has not followed the directions of Hon’ble
CESTAT, the demand itself is not sustainable and consequently,
no penalty is imposable; otherwise also, once the proportionate
credit along with interest was paid much before issuance of SCN,

E/70385 & 70386/2026
5
no penalty is imposable. Learned Counsel submits that there was
nothing on record to show that Shri Sanjay Kumar Garg, Director,
was aware of the so-called mis-classification and violation of Rule
6 so as to impose penalty upon him; moreover, when penalty upon
the main Appellant was set aside in first round of appeal on so-
called misclassification; no penalty can be imposed on him is
otherwise not warranted; it was wrong to impose same amount of
penalty on him in de novo proceedings.
6. Learned Counsel submits that it is an admitted fact that the
Appellant deposited certain amount during investigation which
was demanded and ordered for appropriation in the adjudication
order; CESTAT set aside certain demand beyond normal period
and remanded the matter; therefore, the amount paid is liable to
be refunded.
7. Shri Surendra Ram, learned Authorized Representative for
the Revenue reiterates the findings of the impugned order.
8. Heard both sides and perused the records of the case.
9. On going through the order dated 19.06.2019 passed by this
Bench we find that the Bench has remanded back the case
confirming the duty on Pads, and Printed Carry Bags for the
normal period and setting aside the penalty and with specific
directions that the Lower Authorities verify whether the Appellants
have reversed proportionate credit in respect of the CENVAT
Credit availed on common input/input services and to decide any
other issue including limitation in respect of demand on the goods
removed availing concessional rate of duty. The Bench has
observed as follows:-

“6. We agree that the fact of classification of the
disputed good under Chapter 49 and their clearance at
nil rate of duty was not with any suppression or mis-
statement but was with the consent and knowledge of
the Revenue. The Monthly returns being filed by the
assessee declared the description and classification of

E/70385 & 70386/2026
6
the goods without any objection raised by the Revenue.
Otherwise also we note that the issue is a bona fide issue
of disputed classification and it cannot be said that there
was any mala fide on the part of the assessee, in the
absence of any evidence to that effect. As such we agree
with the learned advocate that the demand relatable to
the said issue is barred by limitation. However, a part of
the demand would fall within the limitation period which
the Appellant have consented to pay. The Original
Adjudicating Authority would quantify the said demand
falling within the limitation period.
As we have already held absence of any mala fide on
the part of the Appellant, imposition of penalty upon
them is not justified, the same is set aside.
7. As regards the other two demands, we note that they
have been primarily raised and confirmed on the ground
that the Appellant had availed cenvat credit of duty on
common inputs and input services. The Appellants have
taken a categorical stand that they have reversed the
cenvat credit proportionally. However on going through
the impugned orders, we find that the said fact i.e.
reversal of cenvat credit for the entire period in question
has not been examined by the Lower Authorities. Though
it is well settled law that the reversal of the credit would
amount to a situation as if no credit was availed but the
fact that the exact quantum of proportionate credit for
the entire period was reversed is required to be verified.
For the said purpose we remand the matter to the
Original Adjudicating Authority with directions to verify
the fact of reversal of appropriate proportionate credit
and to extend the benefit accordingly.
8. The issue of limitation for the said demands or any
other ground which the Appellant may choose to raise,
is left open for the Adjudicating Authority to decide.”

E/70385 & 70386/2026
7
10. However, we find that as submitted by the learned Counsel
for the Appellants, the Adjudicating Authority instead of verifying
the correctness of quantum of CENVAT Credit reversed by the
Appellants have gone into the issue again invoking the provisions
of Rule 6. We find that as observed by this Bench, Tribunal and
Courts have been consistently holding that Rule 6 only gives
option to the Appellants and does not confer any right on the
Department to recover duty; that reversal of CENVAT Credit
tantamount to non-availment of CENVAT Credit. In view of the
facts of the case and the observation of this Bench as cited above,
it is seen that the Appellants have reversed proportionate credit.
The Adjudicating Authority has not verified the quantum of credit
reversed and has gone on to decide the issue in terms of the Show
Cause Notice disregarding the directions of the Bench. Such an
approach is not acceptable following the principals of judicial
discipline and an order passed contrary to the directions of the
Bench cannot be upheld. The fact that the Appellant’s case stands
decided on merits in their favour is borne out by the order of this
Bench cited above. We further find that the decision of the Bench
is supported by the following cases
(i). Chandrapur Magnet Wires (P) Ltd 1996 (81) ELT3 (SC)
(ii). Bombay Dyeing & Mfg. Co. Ltd.2007 (215) ELT 3 (SC)
(iii). Hello Minerals Water (P) Ltd.2004 (174) ELT422 (All)
(iv). Link Well Telesystems Pvt Ltd 2023 (383) ELT 84 (Tri.
-Hyd)
(v). Tiara Advertising 2019 (30) GSTL 474 (Telangana)

11. Coming to the issue of limitation and penalties imposed in
the impugned order we find that the Appellants have been
regularly giving declarations and have been filing returns duly. It
is also on record that the Appellants were audited from time to
time. Therefore, the Bench held that extended period cannot be
invoked in respect of demand of duty on Diary, Letter Pads, and
Printed Carry Bags. We find that same logic is applicable in respect
of the demand on Printed Calendar (CETI 49100010/ 49000090),

E/70385 & 70386/2026
8
printed Card (CETI 49090010 /49O9OO90), Printed Envelope
(CETI 48171000) and printed Notebook (CETI 48201090). We find
that the demand in this respect is required to be confined to the
normal period. As there is no allegation of mens ria and evidence
to the effect penalties also cannot be imposed. Moreover, as
prayed by the Appellants cum-duty benefit is required to be
extended on the duty confirmed. For the reasons already cited
above, penalty cannot be imposed on Shri Sanjay Kumar Garg,
Managing Director.

11.1 In view of the above Excise Appeal No.70385 of 2026 is
partly allowed, with consequential relief, if any, as per law, in the
following terms:-
(i) All the demands are restricted to normal period.
(ii) Cum-duty benefit is required to be extended.
(iii) All the penalties are set aside.

11.2 Excise Appeal No.70386 of 2026 is allowed.

(Pronounced in open court on 30.10.2026)


Sd/-
(P. K. CHOUDHARY)
MEMBER (JUDICIAL)


Sd/-
(P. ANJANI KUMAR)
MEMBER (TECHNICAL)

Nihal