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TMI Blog2013 (11) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of law or costing is needed - The argument raised regarding wastages also is not properly explained and not understood - when the matter was pointed out during investigation, the second appellant immediately paid differential duty demonstrating that the second appellant was aware of the mis-declaration – there was no reason to interfere with the penalty imposed on the second appellant. The appeal filed by second appellant is rejected – Decided partly in favour of Assessee. - Appeal Nos. E/822/2004 & E/906/2004 - FINAL ORDER No.40424-40425/2013 - Dated:- 26-9-2013 - Shri P.K. Das and Shri Mathew John, JJ. For the Appellant : Shri K.S.Venkatagiri, Advocate For the Respondent : Shri M. Rammohan Rao, DC (AR) JUDGEMENT Per Mathew John During April 1994 to Feb 1997, the first appellant was engaged in processing of cotton fabrics and manmade fabrics. They were processing grey fabrics supplied by merchant manufacturers who were authorizing the appellant to pay excise duty as per the provisions of Notification 27/92-CE (NT). As per this notification, the merchant manufacturer would authorize the person doing the manufacturing activity (the appellant) to comply with al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracted above. On such reasoning Modvat Credit amounting to Rs.12,80,328/- is denied under Rule 57I of erstwhile Central Excise Rules, 1944 and demand for such amount is from appellant No.1 is upheld in the impugned order. There is a penalty of Rs. 5,000/- imposed under Rule 57I which has also been upheld by the Commissioner (Appeal). Aggrieved by the two demands and penalties imposed the first appellant has filed its appeal. 5. There is penalty of Rs. 25,000/- imposed on the second appellant under Rule 209A of Central Excise Rules and upheld by Commissioner (Appeal). The second appellant has filed appeal praying for setting aside such penalty. 6. The evidences relied upon by Revenue to establish suppression of value are the following: (i) On 13-02-1997 when the officers visited the factory by surprise, they found in possession of blank declaration forms signed by the merchant manufacturers; (ii) Officers verified records of merchant manufacturer, namely Ashoka Distributors and found that the prices declared were much lower when compared to prices in purchase invoices of Ashoka Distributors; (iii) In a statement recorded from Shri. Hemant Kumar, Power of Attorney holder of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f denial of deemed Modvat credit. 10. The Ld. Advocate submits that the first appellants responsibility was only to discharge excise duty liability based on cost factors declared by the merchant manufacturers and they were doing so. Since the appellant was processing fabrics from different merchant manufacturers and the cost varied from consignment to consignment there could be slight variation between the actual cost and the price declared to the department. In fact, in the case of four declarations, the prices declared were more than the actual cost. The department took only cases were prices were lower. None of the merchant manufactures stated that the appellant was aware of any mis-declaration in value. He submits that all duty payments were made based on approved price list and therefore extended period of time for demanding any short levy is not sustainable unless any suppression of information on the part of the appellant is proved and no such suppression is proved in this case. In the absence of any suppression, collusion or fraud on the part of the appellant it is not justifiable to invoke the extended period of time for demand and also for imposing any penalty on the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of wrong declaration given by the merchant manufacturer and not the appellant. This matter relates to the period when the system of filing of price list and getting its approval was still in vogue and the impugned duty payments were made against approved price lists. Further we note that the reasoning adopted in the various decisions (For example the decision of the Hon Apex Court in the case of Lajya Dyeing and Bleaching Works) quoted by the first appellant is to the effect that the extended period of time could not be invoked against the manufacturer for any mis-declaration on the part of the merchant manufacturer unless the collusion of the manufacturer is clearly established. Adopting this approach, we are of the view that suppression on the part of the first appellant cannot be held to be proved in this case. Consequently, the proposal to deny Modvat credit is not sustainable. So demand consequent to such denial is set aside. For the same reasoning the penalties imposed on the first appellant also are set aside. Since duty demand is not contested the same is confirmed. 14. None appeared on behalf of the second appellant. So we have gone through the records with the help of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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