9911796707
TMI Blog2008 (11) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... lained below : (a) During the course of investigation, the Departmental officers found that in the case of some of the gate passes submitted by NRL evidencing the modvat credit taken, credit was taken on the basis of endorsement made on the back of the gate passes by the original manufacturer. The consignees in the gate passes as such were different. They also found in the gate passes in addition to the description of the goods H. Acid , Wet Cake was added by putting a rubber stamp. The investigation also revealed that in the corresponding duplicate gate passes submitted with RT-12 returns by the manufacturer (SCCI) to the Department, the rubber stamped words Wet Cake were not found. There was no endorsement on the back side of GPI also. A show cause notice was issued to NRL alleging wrong utilization of modvat credit of Rs. 10,92,824/- on the ground that gate passes were not in the name of the party nor there was endorsement made by the consignee but endorsed by the manufacturer himself. The Departmental officers investigated the case further and the investigations lead to detection of similar modus operandi on the part of SCCI and consequently, show cause dated 24-1-1996 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 5-3-1998 passed by the Commissioner was appealed and on remand by the Tribunal, the present order-in-original has been passed which is the subject matter of the present appeals. 4. Heard both sides. 5. Learned Advocate Shri J.C. Patel for the appellants fairly conceded that the demand of Rs. 1,03,450/- is not being contested. The learned Advocate on behalf of the appellants argued that credit has been taken correctly by both the units since H Acid supplied by them was rejected by the buyers. Because of absorption of moisture from atmosphere, they became lump and hence the words wet cake was put and sent to sister unit for further processing. He fairly admits that the required procedure may not have been followed even though the allegation that wet cake was not mentioned as one of the inputs has been denied. He also stated that out of the 30 vehicles used for transportation, verification has been done only in respect of 4 and out of which one driver admitted having carried the goods and in another case, there was contradiction between the statement of the owner and the driver. He also stated that the total value of the goods carried by the vehicles which was verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued on 26-7-1994 whereas the second show cause notice was issued on 24-1-1996 to NRL. The show cause notice issued on 26-7-1994 covered the gate passes on which credit was taken in March, 1994 only and the ground for issue of show cause notice for rejection of modvat credit was that the gate pass was not in the name of the party nor endorsed by the consignee but endorsed by the manufacturer himself. Apparently, no investigation was conducted but show cause notice was issued on the basis of scrutiny of documents submitted with Return filed by the party. In fact, the show cause notice specifically says that on verification of the original duty paying documents of inputs and accounts maintained by the assessee in RG 23A Part I and Part II, it was found that the assessee had wrongly availed the credit. However, the show cause notice dated 24-1-1996 was based on investigation conducted by the Department with regard to vehicles which transported the goods, the duplicate copies and gate passes submitted by the manufacturer to the Department, the investigation with the consignees etc. The show cause notice in 1994 was issued within four months of the availment of credit whereas, the subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question to be examined is whether the demands are barred by limitation. The defence taken by the appellants is that RT-12 returns had been filed with copies of gate passes on the basis of which credit was taken and copies of RG-23A Part I and Part II. Therefore, suppression cannot be alleged. At this stage, it would be convenient and proper to reproduce the findings of the Commissioner in his order while confirming demand : 23.5.1 In the light of discussions above, and particularly in view of the following reasons the contentions of the party with regard to Annexure A and Annexure E to the SCN are not acceptable (i) There was manipulation in the description of items as well as with regard to the endorsement to the other company in the gate passes (original copy) mentioned in the Annexures A to E to the show cause notice. Thus, in respect of Annexure A, while the gale passes (duplicate copy) filed by M/s. NRL along with the RT-12s did not contain any manipulation in the description of the items as H. Acid Wet Cake and also did not have any endorsement showing the transfer of goods to M/s. SCCI. the original copies of the same gate passes on the basis of which the Modvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on v. C.C.E., Pune - 2008 (224) E.L.T. 177 (S.C.) to support his argument that second show cause notice could not have been issued. We have already discussed this issue earlier but the judgment cannot be applied to the facts in this case since the second show cause notice issued to NRL is the result of the investigations conducted and the first show cause notice had been issued on the scrutiny of the documents submitted without any investigation whatsoever. In Geo Tech Foundations Constructions case, no further investigation was conducted on the same set of facts and the second show cause notice invoking suppression was issued. Therefore, this judgment is of no help to the appellants. 9. The appellants have argued that the Department s contention that this is only paper transaction and no goods have moved according to them. Enquiries regarding vehicles covered only four vehicles out of 30 vehicles and in terms of percentage of credit involved, this is negligible. They also pointed out that in one case, the driver admitted that he transported goods between the two units and in other case, there are divergent statements between the owner and the driver. It was also argued that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Advocate submits that it is not his duty to provide evidence but it is for the department to prove the case against the party that and all he had to do was to show evidence relied upon by the department is not sufficient. In this case, the Department has been able to show after conducting enquiries that a Tempo No. GJ 6T 3078 had transported some goods two to three months before 19-9-1994 and at that time, no documents other than security pass were provided; that the tempo driver-cum-owner had stopped transporting goods since on one occasion, 80 bags were loaded instead of 40 bags; that the statement of driver of GJ 6T 3306 was recorded on 29-1-1994 and his owner said that their vehicle was never used; that the two vehicles viz. GRU 5702 is a Tipper and registration No. GCU 2122 was not allotted to any vehicle. None of the statements have been retracted. The show cause notice also states that other vehicles were not verified since they were registered in other districts. This much evidence produced by the Department has to be held as sufficient to reach the conclusion that goods were not transported by the vehicles shown on the gate passes since the evidence required in any quasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants other than what has been reflected in the accounts. This would mean whatever has been ordered has been received by him. Unlike vehicles, it is noticed that in the case of buyers, 5 consignees namely, M/s. Bijal Agencies, Ahmedabad, M/s. Anand Associate, Ahmedabad, M/s. Adinath Chemicals, Ahmedabad, M/s. Jitesh Trading, Ahmedabad and M/s. Sweta Chem Ind., Ahmedabad had purchased H Acid Wet Cake involving duty of Rs. 12,02,857/- from show cause notice out of the total of Rs. 13,59,618/- in the case of SCCI which works out to 88% of the total modvat credit involved. In the case of NRL, these 5 buyers had accounted for 70% of the total duty involved in the disputed gate passes. The buyers who accounted for such large quantity from the two appellants in this case and who had regular transactions with them would have easily supported. All the appellant was to do to produce a letter or affidavit from one person who had given the details to the department on behalf of 5 firms, who accounted for 88% and 70% of the total modvat credit involved. The department s case would have taken a different turn altogether. Instead of doing this, they requested the departmental adjudicating au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sister unit instead of bringing it back to the same factory; that no evidence has been produced by the appellants to show that the goods were received back by producing transporters bill, etc. We think that this is enough to show that the credits taken by the appellants were irregular, there was suppression of facts and therefore, the extended period is invocable and the demand has been rightly confirmed by the Commissioner. 13. Once the suppression is upheld and the Commissioner s order is valid, penalties imposed on the director and the employees has to be upheld since there is no dispute about the role of the director and the employees. The penalties imposed are not excessive and reasonable and therefore, we do not see any reason to interfere with this aspect of the order. 14. In view of the above discussion, the appeals filed by the appellants are rejected. (Pronounced in the open Court on 2008) 15. [Per : Archana Wadhwa, Member (J)]. I have gone through the orders proposed by my learned brother, but I proceed to record a separate order. The facts already stand detailed in the order proposed by learned Member (Technical) and as such are not being repeated. 16. Adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not correct. In any case, neither the customer nor the transporter or driver, were offered for such cross examination, and their statements being in the nature of co-accused, cannot be made sole basis. Duty paid by one unit is taken as Modvat credit by the other unit, thus leading to revenue neutral situation, in which case, the demands of duties are not justified. 18. I further find that admittedly the inputs shown to have been received by either unit must have been reflected in their raw material account and shown to have been utilized in the manufacture of the final product, cleared on payment of duty. In this scenario also, there can be no motive of the appellant to pay duty from one unit, take credit for the same in their other unit and then again pay duty on the final product manufactured out of the said raw material in that unit. 19. In any case, I find that M/s. NRL was issued show cause notice on 26-7-1994 also in respect of the same very goods covering the same gate passes and same period. I find that the law on the issue stand settled by various decisions of the Tribunal that when the first show cause notice is issued raising demand on a ground, issuance of second s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals are required to be rejected as held by learned Member (Technical) or the same are to be disposed off in manner as held by Member (Judicial)? 22. [Per : P.G. Chacko, Member (J)]. M/s. Shreeji Colourchem Industries (SCCI, for short) and M/s. Nandesari Rasayanee Ltd. (NRL, for short) are the main appellants in this batch of appeals. The other appellants are functionaries of these companies, who are aggrieved by the penalties imposed on them. Coming to the main parties, the facts of the case are interesting, but I would not like to reiterate the same as the essential facts are already contained in the orders recorded by the learned Members of the regular Bench. The impugned order of the Commissioner is in adjudication of a show-cause notice dated 24-1-1996, wherein varied demands of duty were raised against M/s. SCCI and M/s. NRL, out of which the adjudicating authority confirmed demand of duty of Rs. 13,59,628/- against M/s. SCCI, being equivalent to the MODVAT credit found to have been irregularly taken by them on the strength of the gate passes issued by M/s. NRL and, further, confirmed demand of duty of Rs. 11,56,282/- against M/s. NRL being equal to the amount of MOD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies who are said to have rejected the goods received from M/s. SCCI and M/s. NRL. The appellants seek to rebut this case of the Revenue by submitting (a) that no oral evidence was gathered by the department from many of the buyers (third parties), (b) that the few buyers, who wrote letters to the department to the effect that any gate passes issued by M/s. SCCI and M/s. NRL was not in their possession, had ordered for only a small part of the goods cleared by M/s. SCCI and M/s. NRL, (c) that no statement was recorded by the department from other buyers and (d) that the few persons whose submissions were allegedly against M/s. SCCI and M/s. NRL were not cross-examined. 25. Apart from reiterating the above case of the appellants, the learned counsel invites my attention to certain findings recorded by the learned Member (Technical) of the regular Bench. One of these findings is that there is no evidence to show whether the goods were cleared or not and that it is quite possible that the goods were cleared illegally and sold elsewhere and credits were taken by the other units by manipulating documents but that will be only assumptions. The learned counsel claims support from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand made against them in the second show-cause notice to the extent of Rs. 10,92,824/- is not enforceable against them under the proviso to Section 11A(1) of the Central Excise Act. In this connection, the learned counsel has relied on the Tribunal s decision in Commissioner of Central Excise, Indore v. Siddharth Tubes Ltd. [2004 (170) E.L.T. 331 (Tri.-Del.)] wherein, after taking note of an earlier show-cause notice having been issued to the party on the same facts as alleged in the subject show-cause notice which invoked the larger period of limitation for demand of duty, the Tribunal held the demand to be time-barred. This case of the learned counsel is quite acceptable. 27. He has also pointed out that the difference between the above two amounts was paid by M/s. NRL. 28. the As regards both M/s. SCCI and M/s. NRL, the contention of the learned counsel is that the Revenue has not brought on record cogent evidence to show that the goods were cleared on payment of duty by either of these parties was not received by the other party. The fact remains that what was availed by each party was the benefit of MODVAT credit of the duty paid by the other. In other words, the duty-pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
