9911796707
TMI Blog2017 (7) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise registration certificate for the manufacture of "oval tin cans for Colgate Tooth Powder" falling under Chapter 73, subheading no. 7310.00 of Central Excise Tariff Act, 1985 ("CETA", for short). Respondent no.2 is the Director, respondent no.3 is the Manager (Commercial and HRD) and respondent no.4 is the Plant Manager of respondent no.1. 3. The required thickness of tin plates for manufacturing oval tin cans ranges between 0.14 mm. and 0.24 mm. Respondent no.1 was getting the said tin cans painted from M/s.Divecha Glass Company being a job worker of respondent no.1. It was noticed that the tin plates were directly delivered at the job worker's end i.e. M/s.Divecha Glass Company for printing. The printed tin plates received from M/s.Divecha Glass Company were inspected to check their thickness, width and print quality whereon, it was noticed that the printed tin plates were of the thickness ranging between 0.18 mm. and 0.26 mm. (inclusive of thickness of print i.e. 0.02 mm.). The tin plates having thickness over 0.26 mm. were not found to have been used for manufacturing oval tin cans. However, it was noticed that during the period 199394 to 199798, respondent n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no.1 to the extent of Rs. 23,87,575/and also imposing penalty of Rs. 50,00,000/on respondent no.1. The Tribunal further fully allowed the appeals of respondent nos.2 to 4 and set aside the order of the petitioner directing them to pay penalties. The part of the order of the petitioner directing respondent no.1 to pay duty of Rs. 14,50,994.34 on account of the MODVAT credit wrongly obtained, came to be confirmed. 6. The learned Counsel for the petitioner submits that the Tribunal erroneously set aside the part of order passed by the petitioner though it was evident from the statements of respondent nos.3 and 4 as well as other employees that the thickness of the tin plates used for manufacturing oval tin cans, was ranging between 0.14 mm. and 0.24 mm., while respondent no.1 availed of MODVAT credit on the tin plates having thickness of more than 0.26 mm. According to him, the Tribunal wrongly ignored the statements of respondent nos.3 and 4 and that of other employees. He submits that the Tribunal wrongly held that respondent no.1 was not required to pay penalty since Rule 173Q of the Rules was not applicable to the present case. He submits that wrong mention of the Rule would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties on earlier duties paid. It allows the manufacturer to obtain instant and complete reimbursement of the excise duty paid on the components and the raw materials. Under the said scheme, respondent no.1 is stated to have obtained MODVAT credit in respect of the material worth Rs. 17,86,655/as described in Anx.'B1', Rs. 23,87,575/on the material described in Anx.'B2' and Rs. 27,91,955/on the material as described in Anx.'B3' having total of Rs. 69,66,185/. According to the petitioner, respondent no.1 wrongly obtained the MODVAT credit of the said amount. Therefore, as per the showcause notice dated 05.09.1998, the said amount was proposed to be disallowed and recovered from respondent no.1 on account of wrong availment of MODVAT credit. 10. As seen from the order passed by the petitioner, the petitioner himself did not confirm the demand for Rs. 27,91,955/in respect of the material described in Anx.'B3' on the ground that the thickness of the tin plates was not mentioned in the record maintained by respondent no.1. The petitioner, however, disallowed the MODVAT credit in respect of the amounts mentioned in Anx.'B1' and Anx.'B2'. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for considering thickness of the tin plates described in Anx.'B2', the petitioner has referred to the statements of Sanjay Kurkute, StoreAssistant; Pradeep Vaishnav, Incharge of Production Department; H.T.Mahajan, Ex. Commercial Officer, K.L.Santosh, Incharge of Raw Material Purchase and that of respondent nos.2 to 4, recorded by the petitioner under subSection (2) of Section 14 of the Act. It is well settled that the statements of the persons recorded under the said provision, if not retracted subsequently, would be of binding nature and can be acted upon. 14. K.L.Santosh has stated that there was no documentary proof to show that the tin plates of thickness of 0.14 mm. and 0.24 mm. only were received vide bills of entry and invoices having description as 0.40 mm. and below. H.T.Mahajan deposed that tin plates were sold to M/s.K.P.Electricals, M/s.Shamwik Industries and M/s.Inamide Engineering, which were of more than 0.26 mm. thickness and were cleared from M/s.Divecha Glass Company. He deposed that the sale invoices were issued from respondent no.1. He admits that respondent no.1 availed of the MODVAT credit which was inadmissible as the tin plates were not received in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, which were having thickness below 0.24 mm. as well as above 0.24 mm. The petitioner has rightly held that respondent no.1 has deliberately suppressed the said information. If that be so, respondent no.1 cannot be allowed to take benefit of its own wrong and it will have to be held that the tin plates described in Anx.'B2' were of thickness above 0.24 mm. and were not used by respondent no.1 for manufacturing oval tin cans. 20. The Tribunal has totally ignored the statements of the persons referred to above recorded by the petitioner under subsection (2) of Section 14 of the Act, which have evidenciary value. The impugned order passed by the Tribunal is totally silent as to why the said statements were not accepted by the Tribunal. There is absolutely no reference of these statements in the impugned order passed by the Tribunal. The Tribunal has rejected the demand in the sum of Rs. 23,87,575/by giving a singlesentenced reason that the description as to thickness of the material described in Anx.'B2', can also cover the tin plates below 0.24 mm. The petitioner has given sound reasons for disallowing the MODVAT credit in the sum of Rs. 23,87,575/in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. Thus, mention of wrong Rule in the demand notice would not be an impediment in the way of the petitioner in inflicting penalty under the correct Rule though the said Rule was not quoted in the demand/showcause notice. From the contents of the showcause notice, it is clear that respondent no.1 was made aware that it would be liable to pay penalty for obtaining MODVAT credit wrongly. Respondent no.1 has put forth its defence against the demand for penalty and has got an opportunity to contest that claim. As such, no prejudice can be said to have been caused to respondent no.1 because of wrong mention of Rule in the showcause notice under which, penalty was sought to be imposed on respondent no.1 25. As stated above, the total amount of Rs. 38,38,569.34/was wrongly availed of by respondent no.1 on account of MODVAT credit. Therefore, we are of the view that respondent no.1 should pay penalty at least to the extent of this sum, though not in the sum of Rs. 50,00,000/as has been ordered by the petitioner. 26. So far as the order of the petitioner passed against respondent nos.2 to 4 directing them to pay penalty in the sum of Rs. 5,00,000/, Rs. 1,00,000/and Rs. 50,000/respectively ..... X X X X Extracts X X X X X X X X Extracts X X X X
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