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TMI Blog2009 (3) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... E/636/2005 M/s. Plasto Paradise No. 14/2005 dt. 11-4-2005 E/637/2005 M/s. Nahata Products No. 14/2005 dt. 11-4-2005 E/639/2005 M/s. United Chemical Industries No. 14/2005 dt. 11-4-2005 Since all the above said appeals are raising a common issue and are in respect of investigations conducted simultaneously, they are being disposed off together. 2. The relevant facts that arise for consideration are appellant-company herein are manufacturers of HDPE/PP, woven fabrics, sacks. The appellant-company availed Cenvat credit of the duty paid on HDPE/PP granules purchased from various manufacturers like M/s. GAIL; M/s. Reliance Industries Ltd; M/s. HPCL etc. The officers of the DGCEI visited their factory and carried out various investigations. First show cause notice dated 4-7-2003 was issued directing one of the appellant-company herein to show cause as to why the 323 bags of plastic granules seized in the godown of M/s. Mahalakshmi Plastics be not confiscated. Further, investigations were carried out by the authorities and statements of various persons like the officers, directors of the company and also the suppliers of raw materials were recorded. Investigations culminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sipani, Managing Director and Sri. J.K. Surana, Executive Director of the Company in terms of Rule 209A of the erstwhile CER, 1944/Rule 26 of the erstwhile Central Excise (No. 2) Rules, 2001/Rule 26 of the CER, 2002. 5. I order for confiscation of 323 bags of plastic granules valued at Rs. 3,39,150/- seized at the premises of M/s. Mahalakshmi Plastics, Erode in terms of Rule 13 of Cenvat Credit Rules, 2002. As the goods have already been released provisionally, I impose fine of Rs. 5,000/- (Rupees Five Thousand only) in terms of Section 34 of the CEA, 1944. 6. I impose penalty of Rs. 20,000/- (Rupees Twenty Thousand only) on M/s. Mahalakshmi Plastics, No. 64A, East Kongalamman Koil Street, Erode - 638 001, Tamil Nadu in terms of Rule 26 of the CER, 2002. 7. I order for payment of interest under Section 11AB of the CEA Act, 1944. (ii) Order-in-Original No. 14/2005 dt. 11-4-2005 : 1. I confirm and demand CENVAT credit/Central Excise Duty of Rs. 16,82,397/- (Rupees Sixteen lakhs Eighty Two Thousand Three Hundred and Ninety Seven Only) irregularly availed on the plastic granules diverted during the period from 7/99 to 3/2003 from M/s. Shanthi Polypack Limited, 7th Mile, Arake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the Adjudicating Authority. 3. The learned counsel appearing for all the appellants would submit that the entire adjudication order has proceeded on an assumption that the declared wastage of the appellant is more than the industrial norms of the wastage in respect of such products. It was submitted that the quantity of wastage as shown in the show cause notices and in the impugned order is not correct, since the Adjudicating Authority has not considered certain quantity of waste fabrics which was captively consumed for the purpose of packing of finished products. It was the submission that CBEC Circular dated 29-8-2000 clearly clarifies that Cenvat credit is admissible on the inputs used in the manufacture of packing materials which are themselves are an input. It was also submitted that the wastage in excess of 7.5% was taken to determine the confirmation of demand on the ground the granules were diverted without payment of duty/reversal of credit. It is his submission that there are no prescribed standard Input-Output norms under the Central Excise Law for the manufacture of woven fabrics and sacks from plastic granules. Revenue has not carried out any experiment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same. It was also submitted that the said plastic granules could have been of some other party as has been indicated in the statement of Shri Shivanna of M/s. Shiva Transport Company. In view of the above submissions, he prayed for setting aside the impugned orders. 4. The learned SDR on the other hand would submit that the Adjudicating Authority has given detailed findings on each and every allegation refuted by the appellant. He would submit that the wastage shown in the records of the appellants is far more in excess than the industrial norms. It is his submission that the manufacturers of plastic granules have categorically stated that the granules purchased from them would be required for manufacture of final products i.e., HDPE sacks and no other granules can be used. It is also his submission that the representatives of primary manufacturers have categorically stated that companies recommended specific grades of plastic granules in the manufacture of woven fabrics and sacks and the grades recommended for woven sacks were of low MFI grades. It was also the submission of the learned SDR that the standards of the SION clearly indicated that the Export-Import Policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates to the seizure of cash and proposes confiscation of the same on the ground that they are the sale proceeds of the granules on which Cenvat credit was availed by the appellants. After detailed investigation, another Show Cause Notice dated 19-7-2004 has been issued. This Show Cause Notice proposes demand of Rs. 50,05,465/- being the Cenvat credit irregularly availed by the appellant on the plastic granules diverted by them during the period between July 1999 to March 2003. Annexure-D to the Show Cause Notice indicates how the above amount has been arrived at. In order to appreciate the contention of the department we are reproducing the said Annexure-D to the Show Cause Notice below :- ANNEXURE 'D' WORKSHEET SHOWING THE CENVAT CREDIT IRREGULARLY AVAILED BY M/s. SIPANI FIBRES LIMITED BANGALORE, DURING THE PERIOD BETWEEN JULY 1999 TO MARCH 2003 YEAR Total quantity of granules consumed in Kgs. Total waste recorded in Kgs. Waste Percentage Excess waste claimed/ granules diverted Value per Kg. of granules Total value of granules diverted Rate of duty Cenvat to be rever-sed/C.Ex. duty to be paid 1999-2000 3228005 364842 11.30 105041 39.77 4177481 24% 1002595 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments have no evidentiary value, in confirming the demand as per Annexure-D, he has contradicted himself. After making an assumption that 1,05,041 Kgs. of granules were diverted in the year 1999-2000, the duty has been arrived at after taking the value of the granules per kg. Thus, the entire demand is based on theoretical calculation. Similarly, for the years 2000-2001, 2001-2002 and 2002-2003, the same method has been adopted. There is no other evidence. Not even a single customer who has purchased the so called diverted granules from the appellant is on record. Thus, we do not find any evidence for the diversion of the granules purchased by the appellant. 6.2 There is another allegation with regard to the blending of plastic granules for the manufacture of woven sacks. It is the contention of the Revenue that the suppliers of the raw materials have recommended only certain grades of granules. Therefore, it follows that the non-recommended grades of granules have definitely been diverted. On the other hand, the appellant contends that one could manufacture woven sacks of desired quality by suitable blending. The appellants have also produced certificate from M/s. GAIL. If i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-3-2001, and the duty has been confirmed for the period from 1-4-97 to 18-3-2001. The Appellants' contention that these reports did not reflect the waste which had arisen after tape/fabric production has not been rebutted by Revenue. Further no material has been brought on account as to whom the good quality goods, said to be removed in the disguise of waste, were cleared. Moreover, we find substantial force in the submissions of the learned Advocate that the duty cannot be demanded for the period the daily production reports are not available. The onus of proof regarding clandestine removal is on the Department and cannot be shifted to the Appellants without discharging its onus. We find no force in the finding of the Adjudicating Authority that "in the absence of said reports for the earlier period, the Department had been left with no other option but to calculate the quantity of wastage actually generated before November, 2000 on average basis arrived at from the Daily Production Reports resumed for the period of November, 2000 to 18-3-2001 when no other documents had been produced by the assessee relating to actual generation of wastage." It is for the Department to bring e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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