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TMI Blog2013 (9) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs and clearing such final products without payment duty - But revenue had not found any evidence of instances of any such activity - The Show Cause Notice mentioned only the first type of possibility and not the second and third type of possibilities. On the whole the entire calculation gives the impression of a very raw method was adopted by interpreting figures in the balance sheet and account books of appellants without taking the help of the appellants or an accounting professional, muddling through making even totaling mistakes on the way. This type of case made by Revenue deserves to be dropped without further examination. The whole case was made in a very casual manner - During stock taking or immediately thereafter the Revenue did not discuss with the appellants what their doubts were and seek clarification from the appellants - Thereafter they issued Show Cause Notice making a case of shortage of inputs based on the stock statements given by the appellants to the banks - Order set aside – Decided in favour of Assessee. - E/Appeal No.858/2006 - A/585/2012-EX(DB) - Dated:- 17-5-2012 - Archana Wadhwa And Mathew John, JJ. Appellant Rep by: Shri Z.U Alv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants submit that the show cause notice was issued on the basis that the stock statements given to their bankers for availing credit limits showed receipts far in excess of what was accounted in their books. They pointed out that the stock for each month declared to the bank included the stock received in the previous months and lying un-utilized. The stock statements were given to the banks for each month, to show value of assets lying in factory and hypothecated to the bank. The Department counted the same stock in each month and thus many times over and that has resulted in the alleged shortage of inputs in the factory. They pointed out that they had taken credit of Rs. 1,29,31,823/- on materials purchased by them during the period whereas the show cause notice demanded reversal of Cenvat credit to the extent of Rs. 1,69,51,548/-. As far as material supplied by their customers like BHEL it is the contention of the appellants that such material is high valued items for which the customer does close monitoring and there is no scope for clandestine removal of those items. 7. After considering the submissions made by the appellants, the adjudicating authority gave a finding that de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Transformers Divn), the Appellant supplied finished gods to CGELIN, Central Railways, N.E Railways, EMCO which have not been considered in the SCN/O-I-0. (d) Wastages and burning loss has not been accounted which varies between 2-3% of input material. (e) On the face of record, Panchnama dt 20.12.2002 does not mention that the Central Excise officers took any stock of work in progress (WIP) i.e. steel contained in the jobs partially worked upon and lying at shop floor in various stages of manufacture. Also the panchnama did not consider quantity of cuts and material sent for job work u/r 57F(4) and lying with appellant's job worker (material with job worker). Thus, it is clear that purported calculation based on such incomplete data of raw material found short during the period is fundamentally and basically incorrect. The ground for rejection of appellant's plea of non-inclusion of the WIP, off cuts and material with job worker (MWJW) in O-I-0 by learned Commissioner, CE (vide para 28 of O-I-O page 50) that the said objection was raised later and not immediately after the panchnama dt. 20.12.2002 or in reply dt. 26.6.05 to SCN is totally flimsy and untenable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the above arguments. The allegation of procuring steel on CENVATABLE invoice by payment through bank and disposing such steel as such, surreptitiously does not stand to reason and common sense for the following reasons:- (a) The prospective buyers of such surreptitiously removed steel would not be in the organized sector of industry who would procure their inputs by payment through bank and only cenvatable invoice. Such transaction for obvious reasons are conducted through cash payments only. (b) The buyers of such disposed steel would not get cenvat credit. Accordingly, unless the market value of such material claims a premium of 20-25% (allowing for a loss of credit @ 16%) no one in the open market would buy such steel. There is no evidence that appellant's procured steel (average value Rs. 14.65 kg) which was not abundantly available in market and claimed a premium of 20-25% in the open market. (c) The very alleged modus operandi, entails payments by appellant of white money from bank account to authorized dealers of Sail or MP Laghu Udyog Nigam for material sold under cenvatable invoices while receipts towards alleged surreptitious removals of the very same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f inputs on which Cenvat credit was taken. This situation, if true, could be on account of clandestine removal of inputs on which Cenvat credit was taken. The situation could also arise due to bogus credits on the basis of documents without receiving goods covered by such invoices. It could also be due to clandestine manufacture of final products using the impugned inputs and clearing such final products without payment duty. But revenue has not found any evidence of instances of any such activity. The SCN mentions only the first type of possibility and not the second and third type of possibilities. 15. We find that the whole case is made in a very casual manner. During stock taking or immediately thereafter the Revenue did not discuss with the appellants what their doubts were and seek clarification from the appellants. Thereafter they issued Show Cause Notice making a case of shortage of inputs based on the stock statements given by the appellants to the banks (para 4 of SCN). But the SCN had a fall back calculation based figures in balance sheet as on 01-04-2000 and receipts and issue thereafter as seen from paras 11 and 12 of SCN. When the obvious errors in the first approac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em. That is why the appellant is raising the issue that the Revenue's case suggests that the appellants were converting their accounted money into unaccounted money. That is to say the finding in the impugned order is to the effect that they had accounted raw materials but the accounted material was sold without accounting to generate unaccounted money. This is totally at variance with their financial position as reflected in their balance sheet. It is also submitted that they had paid total excise duty of Rs.2,85,31,963/- during the impugned period and the total Cenvat credit taken was of Rs.2,15,62,497/-, showing payment of duty on value addition of about 32% i.e. [(2853l963/21562497)*100-100]. If inputs involving duty element of Rs. 95,26,238/- is considered as clandestinely removed as inputs itself then the value addition becomes 137% i.e. [(28531963/(21562497-9526238))*100-100]. This according to them is absurd. 18. We have not been able to understand whether the arguments given in para 25 of the order is the arguments of the appellants or the findings of the adjudicating authority. Since this para figures under the heading "Discussion and Findings" before para 22, we consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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