2018 (9) TMI 1945 - AT - Central Excise

Restoration of appeal - denial of MODVAT credit - case of revenue is that the appellant had availed Modvat credit on the basis of invoices procured for HR/CR coils/plates/sheets of particular thickness which are not required for manufacture of their final product i.e. Front Axle - time limitation - penalty. HELD THAT - The show-cause notice dated 3rd November 2000 had enclosed the statement at Annexure-A mentioning the thickness / gauge of M.S. sheets procured by the appellant during the disputed period for the manufacture of final product. The said annexure confirmed that in some cases the thickness was not confirming to the required size of 6 mm and in some other cases it has been described that there is no mention about the thickness in the invoices. For ascertaining the correct position regarding the thickness of coils supplied by the dealers to the appellant I have perused some of sample copy of invoices available in the case records - it is evident from the invoice dated 19.11.1998 that the appellant had purchased H.R. Coils of below 5 mm in thickness which was not suitable for use in the manufacture of automobile axle. Extended period of limitation - HELD THAT - Upon proper investigation since the officers of DGCEI came to know about the actual requirement of thickness of H.R. Coils in manufacture of final product and thereafter proceedings were initiated against the appellant within the normal period prescribed under erstwhile Rule 57(1) of the Central Excise Rules 1944 read with Section 11A of the Central Excise Act 1944 I am of the considered view that the adjudged demands confirmed in the impugned order by invoking the extended period of limitation can stand for judicial scrutiny. Imposition of penalty on Shri Uday kumar Vinzanekar Director of the assessee Company - HELD THAT - The original authority has recorded the findings that Revenue had not made the said Director as respondent during the course of initial show cause proceedings and accordingly the Tribunal vide order dated 31.12.2004 had not specifically recorded any findings with regard to imposition of penalty on such Director - Further in the present appeal petition the Revenue has also not made such Director as party to the appeal. In absence of non-filing of any specific appeal by Revenue setting aside of proposal for imposition of penalty on the Director cannot be interfered with at this juncture. Appeal dismissed - decided against assessee.

Summary

Issues involved:
1. Restoration of appeal dismissed by Tribunal and subsequent disposal for merits.
2. Disputed Modvat credit availed by appellant for manufacturing automobile parts.
3. Adjudication order denying Modvat benefit and initiation of show cause proceedings.
4. Assailed order dropping penalty imposition on a director.
5. Contention on denial of Modvat benefit and limitation aspect by appellant.
6. Examination of case records and legal arguments presented by both sides.

Detailed Analysis:
1. The judgment addresses the restoration of an appeal dismissed by the Tribunal, noting the High Court's order for restoration, leading to the appeal being taken up for disposal on merits without the need for a separate order.

2. The case involves the appellant availing Modvat credit for Central Excise duty paid on specific materials for manufacturing automobile parts. The dispute arises from the alleged mismatch between the materials procured and the actual requirements for the final product, leading to show cause proceedings and subsequent adjudication.

3. The appellant contests the denial of Modvat benefit, citing the purchase of materials necessary for manufacturing the specific automobile part. Additionally, the appellant argues that the show cause proceedings are time-barred due to timely disclosures made to the authorities.

4. Revenue challenges the dropping of penalty imposition on a director involved in the alleged fraudulent Modvat credit availing by the appellant, invoking relevant provisions under the Central Excise Rules.

5. The appellant's legal consultant argues for the proper utilization of materials in manufacturing, challenging the denial of Modvat benefit and the limitation aspect. Citing precedents and court judgments, the consultant contends that the show cause notice exceeds the normal limitation period.

6. After hearing both sides and examining the case records, the judge delves into the specifics of the case, including the thickness of materials purchased, the knowledge of the department regarding requirements, and the initiation of proceedings within the prescribed time limits. The judge concludes that the adjudged demands are valid and dismisses both appeals filed by the appellant and Revenue.

This detailed analysis encapsulates the key legal issues, arguments, and the final decision rendered in the judgment by the Appellate Tribunal CESTAT MUMBAI.