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TMI Blog2005 (7) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... e relating to such vehicles which could not have transported the said quantities of scrap from the dealers to the assessees factory. They being non-existent or smaller vehicles i.e. other than trucks. (ii) Annexure B listed the demands on credits availed which were required to be claimed, as the enquiries made revealed (as per show cause notice Para 32 reproduced below) : "In view of the foregoing paras, it appears that noticee no. 1 had indulged in misuse of Modvat credit by adopting the modus operandi that the registered dealers were supplying the goods to the Noticee No. 1 which were not the goods as specified in the corresponding invoices which also is corroborated from the statements referred supra. The said registered dealers were showing in their statutory books and invoices that the said inputs are sold from the stock of the said inputs received by them in a particular purchase invoice. Whereas, investigations revealed that the goods documented on the Modvatable invoice were neither sent to nor received by Noticee No. 1. Although on the invoices issued to Noticee No. 1, it is shown that the total goods are sold to Noticee No. 1, as per the description given by origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings arrived at by the adjudicator, we find no merits in the plea of the registration numbers being incorrectly recorded in few cases, of the vehicles of the dealers, as made before us. We would therefore confirm the findings as arrived by the ld. Adjudicator as regards the reversal of credit being found not eligible. (b) As regards the finding on the credit reversals ordered as regards Annexure B, it is found - (i) Revenues case in this regard based on statements of dealers, which can be generalized as - (a) The dealers purchase duty paid scrap from original manufacturers under the cover of invoice issued under Rule 52A of erstwhile Central Excise Rules, 1944. (b) The scrap is received in mixed form. The dealers, in their premises, sort the mixed scrap. (c) After sorting, good quality scrap is sold at prices higher than purchase price, with or without passing, on the Modvat benefit to the customers. (d) Out of low quality melting grade scrap, some part is sold to the appellants. (e) The deficit stock in a particular consignment is made up from the duty paid scrap lying in the godown of the registered dealers. (f) Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n proceeded to vary the credit availed by the assessee. It is well settled that the route of 57E where applicable has to be resorted and not route of Rule 57-I to deny the credit. (vi) Perusal of the statements, as read before us, viz. Sh. Kelhen Choudhury of M/s. Royal Trading Co. dtd. 2-2-01 reveals the following - "(a) they purchase M.S. scrap from Press Metal Corporation, Automobile Corporation of Goa Ltd., Tube Investment of India Ltd., Telco, Bajaj Auto Ltd, Premier Automobile Ltd., and Balmer Lawrie Co. Ltd. (b) The appellants were either placing orders on phone or through broker named Sri Rajpal Chaudhary, Chembur. (c) The scrap was transported through their trucks and when necessary other transporters trucks were also arranged. He also gave vehicle number for 22 vehicles. (d) The sales of scrap to the appellants is ex-godown basis. Freight amount is paid to drivers in cash for which no separate bill of transport is raised on the noticees. Octroi formalities were looked after by the assessee. (e) The scrap received by them from original manufacturers consisted of mixed scrap which is sorted by them in their godown. After sorting, good quali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants. The department should then have enquired from Shri Abdul Mannan Khan as to how the wrong vehicle number has been mentioned in the excise invoice. Failure to enquire the relevant questions vitiates the entire proceedings. Shri Abdul Mannan Khan gave the address and phone no. of the broker namely Shri Sunil. The department failed to take any statement of Shri Sunil to verify the statements made by Shri Abdul Mannan Khan. This was important since Shri Abdul Mannan Khan has specifically stated that the transportation of goods was arranged by brokers. Failure of the department to take the statement of the broker vitiates the proceedings initiated by the show cause notice and confirmed by the Order-in-Original. In the statement, no question was asked to Shri Abdul Mannan Khan as to how the deficit scrap is made up after sorting of scrap. In other words, the department cannot rely on this statement to allege that the scrap mentioned in the invoice was not supplied to the appellants. This statement is entirely in favour of the appellants and no allegation can be made by the department from this statement. Statement of Shri Maqbool Hassan, Proprietor of M/s. M.H. Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement is also of no help to the department in forwarding their case. (ix) The statement of Sh. Aziz U.R. Rehman, proprietor of M/s. Mehboob Co., dtd. 10-4-02 clearly indicate that after segregation the deficit on a particular invoice quantity is replenished from same quality scrap lying in the godown. There is thus no material of deficit being retained or substituted by non-duty paid scrap. (x) There is no statement about non-supply of scrap material or and supply of an accommodation invoice to transfer duty only. 'The mention of one parent invoice on dealer's invoice will thus not invalidate the credit eligibility. (xi) FIFO principle has been accepted by Board (refer to Sr. No. 19 of Trade Notice No. 63/Mumbai-III/General/(33)/190 of Bombay III Collectorate Circular No. 261/6/5/84-CX.-8, dtd. 17-7-84 also accept the position for grant of such facility in deserving cases. We find that 'scrap' could be an eminently suitable commodity to be eligible to this benefit of Trade Notice No. 63. Commissioner should have considered these instructions of the Board and granted the benefit of credit. 2.2 In view of our finding on merits, we could find the liability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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