2005 (11) TMI 414 - AT - Central Excise

Summary

Issues:
- Disallowance of Modvat credit and confirmation of differential duty by the Commissioner of Central Excise.
- Imposition of penalties under various sections of the Central Excise Act.
- Challenge by the appellants against the impugned order.
- Allegations of manufacturing D.G. sets outside the factory premises.
- Denial of Modvat credit based on alleged assembly of D.G. sets outside the factory.
- Confirmation of differential duty on extra charges recovered from buyers.
- Dispute over the existence of manufacturing activity in the factory.
- Evidence presented by the appellants regarding receipt of inputs in the factory.
- Reliance on statements recorded from company partners and employees.
- Allegations of raising fake invoices by the appellants.

Analysis:
The case involved an appeal against an Order-in-Original disallowing Modvat credit and confirming a differential duty imposed by the Commissioner of Central Excise. The appellants challenged the order, arguing that the denial of Modvat credit was unfounded as there was no evidence of manufacturing D.G. sets outside the factory premises. They contended that the Commissioner's reliance on statements and allegations of no manufacturing activity was not supported by clear evidence. The appellants presented documents proving the receipt of inputs in the factory, supported by sales tax authorities' seals on job basis at check posts. They also highlighted the lack of dispute regarding the initial duty payment on D.G. sets, indicating assembly in the factory. The appellants emphasized that the confirmation of demand was based on non-coexisting situations, rendering the order unlawful.

The Tribunal noted inconsistencies in the Show Cause Notice, where allegations of raising invoices on fictitious firms conflicted with demands for differential duty, suggesting manufacturing activity. The Tribunal found the order-in-original unsustainable, as the appellants had already paid the demanded differential duty. The lack of clear evidence supporting the denial of Modvat credit without input receipt led to the decision to set aside the impugned order. The Tribunal concluded that the denial of Modvat credit and the demand for differential duty lacked a basis, especially considering the appellants' payment of the differential duty. The order was overturned, granting relief to the appellants based on the absence of substantial evidence supporting the Commissioner's decision.