2002 (8) TMI 438 - AT - Central Excise

Issues Involved:
1. Demand for duty on acid slurry manufactured and cleared without payment.
2. Demand for duty on goods cleared for home consumption by wrong availment of exemption.
3. Confiscation of acid slurry and vehicle.
4. Imposition of penalties on individuals involved.
5. Consideration of rebuttal evidence and non-receipt of oleum.
6. Examination of electricity consumption for determining clandestine manufacture.
7. Grant of Modvat credit and cum-duty price treatment.

Detailed Analysis:

1. Demand for Duty on Acid Slurry Manufactured and Cleared Without Payment:
The Tribunal examined the allegations that the appellants clandestinely manufactured and removed acid slurry without paying duty. The department's case was based on investigations, documents recovered, and statements recorded, suggesting the appellants purchased Linear Alkyl Benzene (LAB) and manufactured acid slurry without accounting for it. The appellants denied these allegations, stating they lacked the means and facilities for such large-scale manufacture and that the department failed to provide evidence of receipt of oleum, a necessary ingredient, or any evidence of clandestine manufacture and removal.

2. Demand for Duty on Goods Cleared for Home Consumption by Wrong Availment of Exemption:
The Tribunal considered the confirmation of duty on goods cleared by wrong availment of exemption under Notification No. 1/93. The appellants contended that they were eligible for the exemption and that the department's calculations were flawed.

3. Confiscation of Acid Slurry and Vehicle:
The Tribunal reviewed the confiscation orders for acid slurry and the vehicle used for transportation. The appellants argued that the vehicle numbers mentioned in the show cause notice were incorrect and that the confiscation was unjustified.

4. Imposition of Penalties on Individuals Involved:
Penalties were imposed on individuals under various rules of the Central Excise Rules, 1944. The appellants challenged these penalties, arguing that the department had not established a case of clandestine manufacture and removal.

5. Consideration of Rebuttal Evidence and Non-Receipt of Oleum:
The Tribunal noted that the Commissioner had not adequately addressed the appellants' rebuttal evidence, particularly regarding the non-receipt of oleum. The appellants argued that the department failed to provide evidence of receiving both LAB and oleum, which are necessary for manufacturing acid slurry.

6. Examination of Electricity Consumption for Determining Clandestine Manufacture:
The Tribunal highlighted the importance of considering electricity consumption as evidence of manufacturing activity. The appellants argued that the department had not shown any evidence of electricity consumption corresponding to the alleged manufacture of acid slurry.

7. Grant of Modvat Credit and Cum-Duty Price Treatment:
The Tribunal agreed that the appellants were entitled to Modvat credit on inputs used in manufacturing acid slurry, as established by the Apex Court in Formica India Ltd. Additionally, the Tribunal held that the duty should be treated as cum-duty, following the Larger Bench's decision in Sri Chakra Tyres.

Separate Judgments:
- Member (J) (S.L. Peeran): Ordered a remand for de novo consideration, emphasizing the need to address rebuttal evidence, electricity consumption, and proper valuation.
- Member (T) (Jeet Ram Kait): Partly agreed but limited the remand to allowing Modvat credit and cum-duty price abatement, arguing that re-investigation would be impractical given the firm's dissolution.
- Third Member (C.N.B. Nair): Agreed with Member (J) for a complete remand, noting that the case was not argued on merits and required fresh adjudication considering all relevant evidence.

Majority Order:
The Tribunal, by majority, set aside the impugned order and remanded the matter for de novo consideration in line with the observations made by Member (J), S.L. Peeran.

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