1999 (12) TMI 356 - AT - Central Excise

Issues Involved:
1. Validity of subsidiary gate passes for availing Modvat credit.
2. Difference in thickness and quantity of goods received.
3. Alleged suppression of facts and applicability of extended limitation period.
4. Whether the show cause notice was time-barred.

Detailed Analysis:

1. Validity of Subsidiary Gate Passes for Availing Modvat Credit:
The appellants argued that the subsidiary gate passes and goods were received from different parties under Rule 57G(2), which does not necessitate the same parties. They relied on Trade Notice dated 1-3-1989 and case laws (1998 (104) E.L.T. 549 and 1994 (74) E.L.T. 319) to support their claim that the subsidiary gate pass is a valid document for availing Modvat credit. The Tribunal referred to the case of Hybrid Electronic Systems Pvt. Ltd. v. Commissioner of Central Excise, Mumbai, where it was held that the purchase of goods from one party and subsidiary gate pass issued by another party for the same goods is admissible for taking Modvat credit.

2. Difference in Thickness and Quantity of Goods Received:
The investigation revealed discrepancies in the thickness and quantities of Aluminium Sheets received by the appellant compared to those mentioned in the subsidiary gate passes. The appellant contended that the goods were the same, supported by conversion tables and certificates. However, the Tribunal found that the appellant failed to demonstrate that the thickness and quantities matched, particularly for items 14 and 15 in the show cause notice. The appellant's inability to establish the identity of the goods led to the conclusion that the Modvat credit could not be allowed for these items.

3. Alleged Suppression of Facts and Applicability of Extended Limitation Period:
The department alleged that the appellant suppressed facts to fraudulently avail Modvat credit, invoking the extended period of limitation under proviso to Rule 57-I(1)(i) of Central Excise Rules, 1944, read with proviso (1) to Section 11A of Central Excise Act, 1944. The appellant countered this by stating that they had disclosed all relevant documents to the Central Economic Intelligence Bureau on 13-11-1992, and previous show cause notices on similar issues had been adjudicated without adverse remarks. The Tribunal referred to case laws (1998 (100) E.L.T. 8 (S.C.) and 1996 (88) E.L.T. 726 (Tribunal)) which held that the extended period of limitation is not invokable when the department had prior knowledge of the facts.

4. Whether the Show Cause Notice was Time-Barred:
The Tribunal examined the timeline and found that the show cause notice issued on 3-1-1994 was beyond the permissible period, considering the department had knowledge of the appellant's activities from previous show cause notices and the documents submitted on 13-11-1992. The Tribunal concluded that the extended period of limitation could not be applied, rendering the show cause notice time-barred.

Conclusion:
The Tribunal upheld the appellant's contention regarding the limitation period, finding the show cause notice time-barred. However, on the merits, the Tribunal found against the appellant concerning the discrepancies in thickness and quantity of goods for items 14 and 15, thus disallowing the Modvat credit for these items. The appeal was allowed on the grounds of limitation, providing consequential relief according to law.

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