2009 (2) TMI 652 - AT - Central Excise

Summary

The Appellate Tribunal CESTAT, Bangalore, comprising of S/Shri T.K. Jayaraman and M.V. Ravindran, heard an appeal against Orders-in-Appeal No. 50 & 51/2006 (H-IV)-C.E., dated 30-11-2006, passed by the Commissioner of Customs & Central Excise (Appeals), Hyderabad. The appellants, manufacturers of Aluminum Alloy Ingots, faced discrepancies in stock positions of finished goods and raw materials. Investigations by Anti-Evasion officers revealed diversion of materials received against Central Excise invoices in exchange for scrap. The Revenue alleged irregular credit availed by the appellants, leading to a show cause notice for recovery of Rs. 8,02,965/- lus education cess of Rs. 16,059/-. The Joint Commissioner ordered recovery of the demanded amount, interest, equal penalty, and confiscation of seized goods. The Commissioner (Appeals) upheld this decision, prompting the appellants to approach the Tribunal for relief.

During the appeal, the appellants contended that the Revenue's reliance on the "RM outside disposal book" was erroneous due to discrepancies, and that the inputs were properly accounted for in registers. They argued there was no suppression of facts, as monthly ER-I returns were submitted to the department. The Departmental Representative, however, highlighted the Managing Director's admission of diversion and irregularities in material accounting, referring to the "RM outside disposal book" as evidence.

After reviewing the case records, the Tribunal found the appellants had indeed diverted duty-paid inputs in exchange for scrap after availing Cenvat credit. The Managing Director's admission and the existence of the "RM outside disposal book" supported this conclusion. Consequently, the Tribunal upheld the demand of duty and longer time invocation, affirming the impugned orders but allowing adjustment of the amount already paid towards the dues. The judgement was pronounced on 25-2-2009.