9911796707
TMI Blog2000 (8) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant company and Rs. 20 lakhs on the General Manager (Finance) of the first appellant company. 2.The brief facts of the case are that the appellants are engaged in the manufacture of steel ingots and other re-rollable products falling under Chapter 72 of the Schedule to the CETA, 1985. During the period from May 1992 to December 1993, they received raw materials and availed Modvat credit on the same under Rule 57A of the Central Excise Rules. Based upon investigation, the Department was of the view that credit had been taken without actual receipt of the goods from various suppliers and hence show cause notice dated 2-7-1997 was issued to the appellants proposing denial of Modvat credit and proposing penal action against the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ths in question taking into account the opening and closing stock of raw materials, the raw materials received and consumed during the respective months and the production as per the RG 1 register. By this calculation, the appellants seek to disprove the allegation of the department that the quantities in question have not been received in the factory of the appellants. 3. For instance, in the month of June 1992, the opening stock of the raw material viz., scrap and which consists of both imported and indigenous scrap is 342.439 MTs. The appellants have received the total quantity of 2343.641 MTs of scrap during this month as per RG 23A Part I Register. The total quantity of raw materials consumed as per the RG 23A Part I Register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the factory of the appellants. 7. The above calculation has been made only for one month. Similar calculations are available for all the 16 months and the documents substantiating the calculations are submitted as an illustrative measure, for a period of six months. 8. The appellants submit that on the basis of the statements given by M/s. Chirag Ingots, the Income Tax authorities had initiated proceedings for the assessment year 1992-93. On the basis of this proceedings initiated by the Income Tax authorities, the Central Excise authority had issued the present Show Cause Notice. 9. The Commissioner of Income Tax vide his Order dated 28-9-1995, had set aside the Assessment Order dated 29-3-1995 passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gate passes/invoices from some other source. They submit that the difference between the raw materials consumed and the production of finished goods works to 256.824 MTs which is approximately 10.83% and that this differential quantity represents burning loss and that burning loss to the extent of 10% is an accepted norm in the iron and steel industry. They further submit that the Income-tax proceedings for the Assessment year 1992-93 which form part of the basis for issue of the notice by the Commissioner of Central Excise, have been dropped vide order dated 28-9-1995 of the Commissioner of Income-tax who has set aside the Assessment order dated 29-3-1995 passed by the Deputy Commissioner for Assessment year 1992-93, holding that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary and denial of cross examination of these persons has resulted in contravention of the principles of natural justice. Further the Commissioner has recorded a finding that the appellants have not filed any reply to the show cause notice in spite of lapse of a period of two years from the date of issue of the notice. This is factually incorrect. The appellants filed a detailed reply on 31-10-1997 in which they rebutted the allegations in the show cause notice and also challenged the notice on the ground of limitation. The Commissioner has obviously not taken into account the defence contained in the appellants reply to the notice. 6.For the above reasons, we hold that the impugned order is bad in law, set aside the same and remand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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