2003 (11) TMI 519 - AT - Central Excise

Issues Involved:
1. Availability of Modvat credit on PVC Resin.
2. Validity of the demand based on conjectures and surmises.
3. Reliance on test reports and technical literature.
4. Invocation of the extended period of limitation.
5. Use of emulsion grade PVC resin in manufacturing PVC compound.
6. Calculation of duty demand based on presumed percentage of PVC resin.

Detailed Analysis:

1. Availability of Modvat Credit on PVC Resin:
The primary issue in these appeals is whether Modvat credit of the duty paid on PVC Resin is available to the appellants. The appellants argued that they used varying proportions of PVC Resin in manufacturing PVC compounds for different applications. The Central Excise Officers drew samples and found differing percentages of PVC Resin, leading to a show cause notice alleging excessive use of suspension grade PVC Resin. The appellants contended that no evidence was provided by the Revenue to show the actual usage of 55% PVC Resin and that the demand was based on conjectures.

2. Validity of the Demand Based on Conjectures and Surmises:
The appellants argued that the entire demand was based on conjectures and surmises, as the Revenue did not provide tangible evidence of the removal of PVC Resin. They emphasized that the test reports showed varying percentages of PVC Resin, making them unreliable. The Tribunal observed that the Revenue did not provide any evidence showing how the alleged excess quantity of resin was disposed of, and thus, the demand based on conjectures and surmises was not sustainable.

3. Reliance on Test Reports and Technical Literature:
The appellants argued that the test reports were inconsistent and unreliable. They also contended that the technical literature and opinions from various companies were not credible as the technical qualifications of the individuals were not specified. The Tribunal noted that the test results varied and that no chemical test report was provided to show that emulsion grade PVC Resin could not be used in the manufacture of PVC compound. The Tribunal concluded that in the absence of concrete evidence, the Revenue's reliance on these reports and literature was not justified.

4. Invocation of the Extended Period of Limitation:
The appellants contended that the extended period of limitation was not invocable as they had been regularly filing RT-12 returns with the necessary documents, and the figures of production and utilization were always available to the Revenue. The Tribunal agreed that the extended period of limitation could not be invoked as the appellants had not suppressed any facts or manipulated records with intent to evade duty.

5. Use of Emulsion Grade PVC Resin in Manufacturing PVC Compound:
The appellants produced opinions suggesting that emulsion grade PVC Resin could be mixed with suspension grade for wire and cable applications. The Tribunal observed conflicting opinions on this issue and noted that no material evidence was provided by the Revenue to prove that emulsion grade PVC Resin could not be used. The Tribunal concluded that in the absence of definitive evidence, it could not be alleged with certainty that emulsion grade PVC Resin was unusable for manufacturing PVC compounds.

6. Calculation of Duty Demand Based on Presumed Percentage of PVC Resin:
The appellants argued that the demand of duty was calculated on the presumption that 55% PVC Resin was used, whereas technical literature and opinions suggested a range of 40% to 70%. The Tribunal noted that the Revenue had arbitrarily taken 55% as the norm without concrete evidence. The Tribunal emphasized that duty could not be demanded based on conjectures and surmises, and the Revenue failed to prove that the appellants used PVC Resin in excess of what was required.

Conclusion:
The Tribunal allowed all the appeals, concluding that the Revenue's demand was based on conjectures and surmises without tangible evidence. The Tribunal emphasized that duty could not be demanded based on unwarranted assumptions and that the extended period of limitation was not invocable.

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