9911796707
TMI Blog2005 (5) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... GAE, Mumbai searched their premises and conducted enquiries. 2. Based on the investigation conducted, a Show Cause Notice was issued dated 20-1-2000 wherein it was alleged - (i) The assessee had received a total quantity to 11,58,018.50 kg. of AS304 grade steel (8% nickel) and availed Modvat credit whereas infact they have consumed only 98,537.07 kg. of AS304 grade in the manufacture of tiffins during the financial year, 1995-96 to 1999-2000 (up to October, 1999) and they had used only rolling grade SS Steel in Casseroles and lids/dish for containers for tiffins. (ii) This modus operandi of receiving AS304 grade superior steel from the dealers and substituting them with inferior quality steel known as tolling grade to avail impermissible excess Modvat credit on AS304 grade steel to the extent of Rs. 3 to Rs. 4 which were never used for the manufacture of containers for Casseroles and lids/dishes for tiffins. (iii) The notice proposed to deny and recover Modvat credit on SS coil for the period April, 91 to 99, on the ground that AS304 grade SS coils purchased from registered dealers/stockist and on which Modvat credit was availed and thereafter AS304 material was substituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inspect the relied upon records within the stipulated period of 15 days and delayed the matter for almost 1 year and 4 months. They do not make up their mind of which documents they wanted to inspect and were unnecessarily asking for inputs invoices against on which they had availed Modvat credit and their original copy meant for the buyer were available with them and copies of 57F(4) Challans i.e. Annexure-II challans, Annexure-III copies of the FSJWs and Annexure-VI of the SSJWs for the period of 1/95 to 10/99 & copies of Annexure-B & Annexure-IV registers for the period 1/99 to 10/99, were not relied upon for raising the demand. The assessee therefore, were advised to inspect the documents, but they had never responded or indicated or were serious about taking inspection and therefore wanted to put unwarranted blame on the department for violating the principles of natural justice and being inspected vide their letter dated 19-7-2002, 55% of the copies of invoices issued by the RDs and copies of invoices of original manufactures. (c) A Photostat copy of the duty paying documents issued by the manufacturer accompanies the modvatable invoices. There was no point of asking for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess Modvat credit by suppressing the facts established. (f) Considering that the statement recorded about the one of another grade of Steel have been recorded under Section 14 and retraction were belated made. The request for cross-examination of the deponents of the statement were rejected by the Commissioner as he arrived at a their no useful purpose could be served and also that after taking an inspection of 55% of the total documents, the assessee were not able to point out valid discrepancies with corroborative documentary evidence, their pleas are theoretical and no useful purpose have been served by simply delaying the adjudication proceedings only on the ground that all the relied upon documents should be supplied. (g) Shri C.I. Vaghani, Director of MPPL & Shri Satish Kulkarni, were found to have played an active role in the evasion of duty by substituting the duty paying documents of AS-304 grade steel of SAIL and rolling grade/other grade of steel in place of AS-304 grade steel & as such, they were found to be liable for imposition of penalty under Rule 57-I(4) of CER, 1944, & their active role has been established in aiding and abetting in the evasion of huge amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of incorrect account maintained for ulterior motive. That could not be a cause for penalty under Rule 209A. No penalty for non-existent goods under Rule 209A could be imposed. Therefore, the penalty imposed under Rule 209A cannot be upheld for incorrect accounting. The penalties on these two appellants i.e. Shri C.I. Vaghani & Shri Satish Kulkarni are to be allowed after setting aside the penalty imposed on them, irrespective of the allegations in the notice sustained or other more. (b) As regards the appeal of M/s. MPPL, and the plea made by the appellants as regards substitution of the Modvat Rules in Central Excise Rules, 1944, by Cenvat Rules and after considering the finding of the Commissioner on this plea as also the following submission of the ld. Jt CDR : (i) Power to make rules under Section 37 of the Central Excise Act, includes power to amend the rules. The rules can be amended by the express omission, insertion, substitution of any matter. Section 6A of the General Clauses Act clarifies that amendment can be by omission, insertion or substitution. (ii) As per Aiyer's Judicial Dictionary (Eleventh Edition) "Amended". The term "amended" in Section 1(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealed by substitutions. "We do not think the word substitution necessarily or always connotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps. Indeed, the natural meaning of the word. 'Substitutions' is to indicate that the process cannot be split into two pieces like this. " (vi) Section 38A in the Central Excise Act was introduced because of constitutional Bench decision in the case of Kolhapur Cane Sugar Works - 2000 (119) E.L.T. 257 (S.C.). The questions referred to the Constitutional Bench was whether provision of Section 6 of General Clauses Act could be made applicable to the repeal of rules and that the said provision are applicable only to repeal of a Central Act or regulation. In this case question was whether after omission of the old Rules 10 & 10A and its substitution by the new Rule vide Notification No. 267/77, dated 6-8-77 the proceeding initiated vide notice dated 27-4-77 could be continued in law. The Supreme Court held that section 6 of the General Clauses Act is not applicable to rule. The Supreme Court also state "It is our considered view that in such a case the court is to look t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SAIL) SSLN 4, SSLN 2 J4J2 etc. It is also a matter of record that of these kinds of steel have been supplied by the dealers on duty paying documents which has been confirmed by the registered dealers to have been supplied and sold. Delivery has been given to the 1st stage job worker and this job worker attend to all kinds of Steel coils. Therefore, the evidence required to substantiate the grave allegation of substitution of such large quantity of material has to be more convincing and direct in nature and no circumstantial as arrived at by the ld. Commissioner in the following words in Para 10.11 of the order impugned : "......Thus, there is strong circumstantial evidence of receipt of only duty paying documents for AS 304 grade steel (superior quality and high value item) by diverting it elsewhere and substitution of rolling grade steel (inferior quality and low value item) for fraudulent availment of excess Modvat credit by suppressing the facts...... " The charge on circumstantial evidence cannot be upheld. (e) The request for cross-examination of the various persons whose statements have been relied upon, to bring on record evidence of one of the varieties of steel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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