2002 (1) TMI 1071 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit on inputs for the manufacture of steel ingots.

Detailed Analysis:
The appeal filed by M/s. Mianji Steels Pvt. Ltd. challenged the disallowance of Modvat credit amounting to Rs. 6,19,331/- on inputs for the period 1-4-95 to 31-7-95 by the Commissioner (Appeals). The appellant failed to appear despite multiple notices, indicating a lack of interest in the case. The appellate tribunal examined the records and heard the arguments presented by the JDR, Shri V.K. Verma. M/s. Mianji was involved in manufacturing steel ingots and availed Modvat credit under Rule 57A of the Central Excise Rules, 1944. The issue arose when Central Excise officers suspected that the scrap, on which the Modvat credit was claimed, was never physically received in the factory and utilized for manufacturing steel ingots. Investigations revealed discrepancies in the transportation process of the scrap material to the factory. Statements from transporting agencies, suppliers, and company officials were recorded, highlighting inconsistencies and lack of evidence supporting the utilization of the claimed inputs in the manufacturing process.

The jurisdictional Dy. Commissioner initially dropped the proceedings, citing insufficient evidence to substantiate the charges. However, the Commissioner (Appeals) overturned this decision and allowed the department's appeal, leading to the present appeal by M/s. Mianji. The Revenue contended that the Modvat credit was inadmissible as the scrap material was not physically received and utilized in the manufacturing process of steel ingots, as required by Rule 57A. The evidence presented by the appellants failed to establish the receipt and utilization of inputs in the manufacturing process adequately. Suppliers confirmed selling the goods to M/s. Mianji, with transportation arranged and paid for by the appellants. The Managing Director did not personally oversee the material procurement process, which was handled by an employee. However, discrepancies in the transportation arrangement and lack of evidence supporting payment to suppliers through cheques/drafts raised doubts about the utilization of the claimed inputs. The appellants' failure to provide evidence of raw material issuance and correlate it with finished products further weakened their case. Ultimately, the tribunal rejected the appeal, emphasizing the necessity of establishing the receipt and utilization of inputs for claiming Modvat credit under Rule 57A.