1999 (6) TMI 101 - AT - Central Excise

Summary

Issues Involved:
1. Demand of duty and alleged clearance of green tyres in the guise of tread rubber sheets.
2. Wrong availment of Modvat credit by M/s. Verma Tyres, M/s. Devi Tyres, and M/s. S.K. Tyres.
3. Invocation of the extended period of limitation under Section 11A.

Detailed Analysis:

1. Demand of Duty and Alleged Clearance of Green Tyres:
The case involves M/s. Wearwell Tyres allegedly clearing green tyres to M/s. Verma Tyres, M/s. Devi Tyres, and M/s. S.K. Tyres without payment of duty, disguising them as tread rubber sheets. The Central Excise officers found discrepancies such as the absence of essential raw materials and machinery in the premises of M/s. Verma Tyres, M/s. Devi Tyres, and M/s. S.K. Tyres. The officers alleged that M/s. Wearwell Tyres supplied green tyres instead of the declared raw materials. The Commissioner confirmed the demand of duty amounting to Rs. 68,07,347.58 against M/s. Wearwell Tyres and imposed penalties on all appellants.

2. Wrong Availment of Modvat Credit:
The appellants were accused of availing Modvat credit on inputs (tread rubber, rubber sheets, compounds with textile material, and beads) without actually receiving these inputs. They were alleged to have made false entries in RG 23A Part-I & II registers. The Commissioner disallowed the Modvat credit and imposed penalties on M/s. Verma Tyres, M/s. Devi Tyres, and M/s. S.K. Tyres.

3. Invocation of the Extended Period of Limitation:
The appellants contended that the demand for duty was time-barred as the show cause notice was issued on 12-12-1989 for the period 1986-87 to 1988-89. They argued that there was no suppression of facts or intent to evade duty, and the Department was aware of the clearances due to physical control and earlier show cause notices. The Tribunal agreed, citing various judgments, including Patson Transformers (P) Limited and SAIL, which established that if duty paid by the manufacturer is available as Modvat credit to the recipient, the longer period of limitation cannot be invoked. The Tribunal concluded that there was no intention to evade duty, making the demand time-barred.

Conclusion:
The Tribunal found that the Department's case was based on contradictions and insufficient evidence. The presence of 52 green tyres marked BCL was not enough to prove clandestine removal. The appellants maintained proper records, and the Department failed to prove false entries or verification. Consequently, the Tribunal held that the appellants succeeded both on merits and limitation, allowing the appeals and granting consequential relief in accordance with the law.