2018 (2) TMI 367 - AT - Central Excise

Benefit of N/N. 6/2002-CE dt. 1.3.2002 - allegation is that M/s.Visaka Industries Ltd. intentionally resorted to accounting of bogus / excess fly ash receipts in their registers with a motive to inflate the percentage of fly ash used in the final products to be 25% or above in order to avail exemption under N/N. 6/2002-CE dt. 1.3.2002 - case of the department is mainly based on the variation in the figures of fly ash allotted / lifted for M/s.Visaka Industries Ltd. as shown in the records of MTPS and that of the appellant. Held that - The quantity shown to have allotted to appellant as per records of MTPS is much lower than that shown to have received in the records of appellant. The difference is quantified in Annexure-I and II of the SCN for respective periods 2002-03 and 2004-05. Accordingly, the bogus fly ash receipt accounted in excess by Vinayaka Industries for the year 2003-04 is 2251.311 MTs. The appellants have shown the use of 27.91% of fly ash in the various Forms and returns furnished to the department. According to department if the bogus receipts are deducted, the use of fly ash would be reduced to 24.54% for the year 2003-04. Similarly, the bogus fly ash receipt accounted in excess by Visaka Industries for the year 2004-05 is 7957.69. The appellants have shown use of 26.65% of fly ash for this year and when the alleged bogus fly ash receipt is deducted, the use of fly ash would be reduced by 16.27%, thereby the appellants would not be eligible for the benefit of N/N. 6/2002. Shri Santhosh Kumar, Proprietor of M/s.NEC has deposed that he is procuring fly ash from MTPS as well as from other sources and supplied to appellants. It is very much clear that the additional documents do not set up a new case or a new plea for the appellants. The matter requires to be remanded to the adjudicating authority who shall reconsider the whole issue after giving sufficient opportunity to the appellants to furnish documents and also reasonable opportunity of hearing - appeal allowed by way of remand.

Summary

Issues Involved:
1. Eligibility for Central Excise Duty exemption under Notification No. 6/2002-CE.
2. Alleged bogus/excess accounting of fly ash receipts.
3. Validity of additional documents submitted by the appellant.
4. Penalties imposed on the appellant and M/s. Natesan Engineers and Contractors (NEC).

Issue-wise Detailed Analysis:

1. Eligibility for Central Excise Duty exemption under Notification No. 6/2002-CE:
M/s. Visaka Industries Ltd. claimed Central Excise Duty exemption under Sl.No.158 of Notification No.6/2002-CE, which required the products to contain not less than 25% by weight of fly ash or phosphor-gypsum or both. The department alleged that the appellant did not use the stipulated 25% of fly ash in the finished products, thus making them ineligible for the exemption. The investigation revealed discrepancies between the fly ash quantities recorded by MTPS and those recorded by the appellant, leading to the issuance of a show cause notice demanding ?15,37,57,177/- towards Central Excise duty for the years 2003-04 and 2004-05.

2. Alleged bogus/excess accounting of fly ash receipts:
The department's case was based on the variation in fly ash quantities shown in MTPS records and those recorded by the appellant. The appellant was accused of accounting for bogus/excess fly ash receipts to inflate the percentage of fly ash used in the final products, thus availing the exemption. The department quantified the bogus fly ash receipts as 2251.311 MTs for 2003-04 and 7957.69 MTs for 2004-05. The appellant argued that they procured fly ash from multiple sources, including MTPS and other suppliers, and submitted additional documents to support this claim.

3. Validity of additional documents submitted by the appellant:
The appellant filed a Miscellaneous Application to submit additional documents, arguing that these documents were not available during the adjudication process. The documents included a Memorandum of Understanding between MTPS and various cement companies, indicating that fly ash was supplied to the appellant from these companies. The Tribunal found that these documents did not set up a new case or plea and were intended to support the appellant's consistent claim of procuring fly ash from multiple sources. The Tribunal allowed the submission of these additional documents and remanded the matter to the adjudicating authority for reconsideration.

4. Penalties imposed on the appellant and M/s. Natesan Engineers and Contractors (NEC):
The original authority confirmed a demand of ?13,23,85,374/- and imposed an equal penalty on M/s. Visaka Industries Ltd. under Rule 25 of the Central Excise Rules, 2002. A penalty of ?19,00,000/- was imposed on M/s. NEC under Rule 26 of CER 2002. The appellant contested these penalties, arguing that the entire case was based on presumption and assumption without concrete evidence. The Tribunal, considering the additional documents and the appellant's consistent claims, set aside the impugned order and remanded the matter to the adjudicating authority for fresh consideration.

Conclusion:
The Tribunal allowed the appeal by way of remand, directing the adjudicating authority to reconsider the entire issue, including the additional documents submitted by the appellant, and to provide a reasonable opportunity of hearing. The penalties imposed were set aside, and the matter was remanded for fresh adjudication. The Miscellaneous Application for receiving additional documents was allowed.