2002 (5) TMI 147 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on capital goods.

Analysis:
The case involved appeals against the denial of Modvat credit on capital goods by the Commissioner Central Excise, Delhi-III. The appellants, a group of companies engaged in manufacturing motor vehicle parts, were raided by Central Excise Officers, who alleged irregularities in Modvat credit. The officers seized some goods, but those cases were separate. The appellants argued that each unit was a separate legal entity, registered independently, and the Commissioner's decision lacked natural justice principles. The Commissioner's order was based on the statement of a manager, lacking concrete evidence, panchanama, or independent witnesses. The appellants provided evidence of machine installation, but the Commissioner's decision did not consider their submissions. The order imposed penalties without substantial evidence or verification of authenticity, violating natural justice principles.

The learned Advocate cited legal precedents emphasizing the need for positive and tangible evidence in cases of clandestine removal. The Advocate argued that the goods in question were cleared duty-paid, machines were installed, and no objections were raised by the department previously. The Revenue's representative highlighted regulatory requirements for machine shifting and defended the Commissioner's findings based on the manager's statement. The Advocate refuted irrelevant show cause notices and emphasized the installation of goods in respective units, seeking the appeals' allowance.

After reviewing submissions, records, and legal precedents, the Member found the case solely reliant on the manager's statement, lacking technical expertise. The absence of panchanama, independent witnesses, or incriminating documents raised doubts on the case's validity. No substantial evidence or circumstantial proof supported the allegations in the show cause notice. The Commissioner's decision lacked basis in real facts and evidence, failing to meet the strict evidentiary requirements. Consequently, the Member set aside the impugned order, allowing the appellants' appeals.