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TMI Blog2005 (3) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... f each of these allegations demanding duty foregone and imposing various penalties for the irregularities noticed and alleged in the show cause notice :- "(i) The Modvat credit of Rs. 28,83,432/- (Rupees twenty-eight lakhs eighty-three thousand four hundred thirty-two only) availed by Noticee No. 1 during the period from 1-4-94 to 31-12-94 is hereby disallowed. Consequently I confirm the demanded Central Excise duty of Rs. 28,79,290/- (Rupees twenty-eight lakhs seventy-nine thousand two hundred ninety only) which has not been paid on the clearances of finished goods by showing debits from the said inadmissible Modvat credit under rule 57-I of Central Excise Rules, 1944 read with proviso thereto, from Noticee No. 1. The aforesaid amount shall be paid forthwith. (ii) I also order that Noticee No. 1 shall pay interest under the provisions of Rule 57-I(5) of the Rules read with Section 11AB of the Central Excise Act, 1944 on the aforesaid amount of Rs. 28,79,290/-(Rupees twenty-eight lakhs seventy-nine thousand two hundred ninety only) from the first day of the month succeeding the month in which the duty ought to have been paid u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Rules as held herein above to have been contravened. (viii) I confiscate land, building, plant, machinery, materials, conveyance or any other things used in connection with the manufacture, production, storage, removal or disposal of the excisable goods in question, and belonging to Noticee No. 1, under sub-rule (2) of Rule 173Q of Central Excise Rules, 1944. However I give an option to Noticee No. 1 to redeem the same on payment of redemption fine of Rs. 1,00,000/- (Rupees One lakh only) in lieu of confiscation. This option should be exercised within one month of the receipt of this order by the Noticee No. 1. (ix) I do not propose to impose a separate penalty upon Noticee No. 2." The appeal arose out of the above order. 3. Heard both sides. 4. The allegation in regard to availment of deemed Modvat credit can be divided into two parts:- (a) The appellant took credit of Rs. 10,62,222/- for the scrap material purchased from M/s. Saurashtra Iron Foundry & Steel Works (SIFSW) through official liquidator. The appellant took credit in three instalments, all during the period April, 1994 to December, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying in stock on or after 1-4-1994. It is argued that the material purchased from the liquidator was scrap and was used in the manufacture of goods falling under Chapters 72 and 73 during the relevant period. The circular cited above allows the deemed credit of Rs. 920/- per ton without production of documents evidencing payment of duty. The circular, therefore, allows a manufacturer who satisfies the condition stated above to avail of deemed credit. He does not have to produce any duty paying documents. In the appellant's case, it is argued that it is a fact that they have purchased scrap from SIFSW, a company, which became bankrupt. The question of having a duplicate copy of invoice would not arise as Rs. 70 lakhs and odd towards purchase of assets of the bankrupt mill has been deposited with the liquidator. In view of the circular cited above, the only issue that has to be seen is whether the inputs were received in the factory of manufacture. It is not necessary that such inputs should be accompanied by duty paying documents. It is argued that the department at no stage had tendered any evidence to show that the material purchased from SIFSW was not received in the factory. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,432/- (Rs. 10,62,222 + Rs. 18,21,210) during the said period. 7. The Commissioner held that the appellant cleared goods from time to time availing of this credit instead of paying it through PLA. Such duty on the goods so removed has been worked out to be Rs. 28,78,290/-. The Commissioner, therefore, demands this amount on the ground that duty has been debited from inadmissible Modvat credit of Rs. 28,83,432/-. Since we hold that the above said amount of credit was rightly availed of by the appellant, the charge that the appellant had wrongly availed of the credit and, therefore, duty to the tune of Rs. 28,79,290/- is demandable has to be set aside. Consequently, the interest demanded on this amount also has to be set aside. The Commissioner also imposed a penalty of Rs. 28,79,290/- under Section 11AC of the Central Excise Act read with Rule 57-I(5) of the Central Excise Rules for the same reason. This penalty also does not sustain. 8. In regard to the confirmation of amount of Rs. 1,116/- short paid as a result of non-inclusion of loading charges and Rs. 3,189/- being duty not paid at the material time in invoice nos. 29/13-4-94 and 54/25-4-94 which was paid subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X
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