2000 (8) TMI 217 - AT - Central Excise

Summary

Issues:
Disallowed Modvat credit and imposition of penalties by Commissioner-II, Central Excise, Calcutta-I.

Analysis:
The judgment involves three appeals disposed of together arising from the same impugned Order disallowing Modvat credit of Rs. 79,57,289.00 to a company and imposing penalties. The company's factory was raided, incriminating documents were seized, and cash was confiscated. It was found that the company was showing purchased scrap from registered dealers without actual transactions, and stock descriptions did not match duty paying documents. A show cause notice was issued based on these findings, leading to the impugned Order by the Commissioner.

The appellant argued that reliance on dealers' statements without cross-examination was unfair, and there was no evidence of malice as they supplied 100% to Railways. They also raised a limitation defense due to defaced documents and previous audits. The Revenue countered with the appellants' admission in a letter offering to reverse wrongly availed Modvat credit, hindering further investigation.

The Tribunal noted unretracted statements from dealers admitting non-physical material movement, corroborating each other. The appellants' inability to prove procurement source for inputs was significant, and lack of cross-examination request weakened their defense. The Works Manager's statement and physical evidence supported the Revenue's case of malpractice. The appellants' voluntary admission post-seizure further incriminated them.

The Tribunal upheld the disallowance of Modvat credit and the Rs. 2.00 lakh penalty, considering the circumstances. However, it found no justification for the Rs. 10,000.00 personal penalties on two other appellants under Rule 209A, as the Commissioner did not discuss the rule's satisfaction.

In conclusion, the appeal regarding Modvat credit disallowance and the significant penalty was rejected, while the personal penalties on two appellants were set aside due to lack of justification.