TMI Blog2009 (4) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable. But, however, we find that he had not given any allowance for the Modvat credit. According to him, the scrap is converted into Ingots and the Ingots, in turn, is used in the production of re-rolled products. So, while coming to the conclusion on demand of duty, he has not given the benefit of Modvat credit and also the cum-duty benefit. In terms of the Hon’ble Supreme Court’s decision in the case of CCE v. Maruti Udyog Ltd. - 2002 (141) E.L.T. 3 (S.C.), this also should be given. In view of this, while upholding the demand of duty on account of non-accountal of the scrap to the extent of 2602.500 MTs, we remand the matter to the Commissioner for re-determining the duty liability. - E/2-11, 1072/2006 and E/172-180/2008 - 284-303/2009 - Dated:- 1-4-2009 - S/Shri T.K. Jayaraman, Member (T) and M.V. Ravindran, Member (J) Shri B.V. Kumar and B. Venugopal, Advocates, for the Appellant. Shri P.R.V. Ramanan, Special Counsel, for the Respondent. [Order per: T.K. Jayaraman, Member (T)]. - All these appeals have been filed against the common Order-in-Original No. 21/2005, dated 18-10-2005/ 30-11-2005 passed by the Commissioner of Central Excise, Hyderabad-I Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 13,05,12,133/- as per Show Cause Notice Penalty : Rs. 1,11,18,697/- 2. E/172/2008 CCE, Hyderabad-I v. Sri. P. Mallikarjuna Reddy, Chief Executive, M/s. Sujana Steels Ltd. Penalty of Rs. 3,00,000/- 3. E/173/2008 CCE, Hyderabad-I v. Sri. Y.S. Choudhary, Chairman, M/s. Sujana Steels Ltd. Penalty of Rs. 5,00,000/- 4. E/174/2008 CCE, Hyderabad-I v. Sri. A Joseph, Stevedoring Supervisor Penalty of Rs. 50,000/- 5. E/175/2008 CCE, Hyderabad-I v. Sri. M.K. Chaturvedi, Sales Manager Penalty of Rs. 50,000/- 6. E/176/2008 CCE, Hyderabad-I v. Sri. N.S. Ayyangar, Finance Manager Duty of Rs. 13,05,12,133/-No Penalty 7. E/177/2008 CCE, Hyderabad-I v. M/s. M.R.K. Enterprises, Hyderabad Duty of Rs. 13,05,12,133/-No Penalty 8. E/178/2008 CCE, Hyderabad-I v. M/s. M.R.K. Enterprises, Chennai Duty of Rs. 13,05,12,133/-No Penalty 9. E/179/2008 CCE, Hyderabad-I v. M/s. Shree Trading, Hyderabad Duty of Rs. 13,05,12,133/-No Penalty 10. E/180/2008 CCE, Hyderabad-I v. M/s. Shree Trading, Chennai Duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also ordered recovery of irregular Modvat credit availed on HM scrap to the tune of Rs. 1,91,676/-. He had imposed interest on the amount of Rs. 67,87,021/- under Section 11AB and on the amount of Rs. 1,91,676/- under Rule 57-I(5). He had imposed a redemption fine of Rs. 10,00,000/- in lieu of confiscation of land, plants, building and machinery, etc. Further, he had imposed penalties on the Executives of the company which are indicated in the above Tabular column. The assessees seriously challenge the findings of the Commissioner. 4.2 The learned Counsel, Shri B.V. Kumar appearing for the party, stated that the impugned order has been passed, based on assumptions and presumptions to show that the assessee-company has manufactured 2342.250 MTs of Ingots, out of 2602.500 MTs of Scrap purchased from M/s. Pirani Steels and M/s. Mawani Co. during 1993-94; 1994-95 and 1995-96. Further, 2225.130 MTs of Re-rolled products were manufactured out of 2342.250 MTs of Ingots. He has referred to Table 1 at pg. No. 116 (internal page no. 37) of Show Cause Notice dated 17-1-1997 and (internal page 25, para 62) of the Impugned order dated 18-10-2005. The Commissioner has taken that 2342.250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Commissioner ignored the evidence given at the time of cross-examination by Mr. Murad and Mr. Azizuddin of M/s. Pirani Steels and M/s. Mawani Co. respectively. It was urged that in demanding the duty on account of the scrap alleged to have been received, the Commissioner has based his conclusion on assumptions and presumptions. He stated that there is no evidence to show that such quantities of Ingots were manufactured and re-rolled products were manufactured and cleared. It was also stated that the no evidence has been placed on record to show that:- * The excess production of ingots, by showing excess consumption of power. * Heat reports to show such excess production was from the only electric furnace installed. * The electric furnace installed in the appellant's unit has that type of rated capacity and the number of shifts they have worked would yield that type of excess production and these are supported by internal records such as daily production reports, etc. * The ingots so produced have been given to the rolling mill for being converted into re-rolled products. * Such excess production of re-rolled products is supported by internal records, such as dai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would come to Rs. 37,01,036/-. It was submitted that the value of goods is to be taken as cum-duty-price and an abatement is required to be given from this price for the duty element, for arriving at the assessable value. 4.7 The learned Commissioner has demanded the recovery of Cenvat credit amounting to Rs. 96,888/- in respect of 100.880 Mts. of Heavy Melting Scrap (HMS), which was supplied to M/s. L. Madan Lal Steels Pvt. Ltd., IDA, Bollaram, Medak District, A.P. In this connection, it was submitted that they imported 250 MTs of HMS through Madras Port under the cover of Bill of Entry No. 13327, dated 20-3-1995 during 13-5-1995. Out of this quantity of 250 MTs, a quantity of 149.120 MTs of HM Scrap was consumed by the appellant-company in their own unit, for which, an End Use Certificate was submitted. The appellants could not obtain an End Use Certificate for 100.880 MTS of HMS from M/s. L. Madan Lal Steels Pvt. Ltd., inasmuch as the said unit was closed. The learned Commissioner has demanded the recovery of Cenvat credit amounting to Rs. 94,788/- in respect of 100.450 MTs. of heavy melting scrap which was supplied to M/s. Southern Ferro Alloys Ltd., Hubli. However, the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mawani, have, in their statements categorically stated that they had all along supplied scrap to SSL (Bollaram) and SIL (Bollaram) and that they have supplied scrap in the name of SSL (TD) IDA, Bollaram only in the year 1996-97. (2) As may be seen from pages 11 and 13 of the paper Book, which shows supplies of scrap by Pirani and Mawani during the year 1996-97, the former had supplied only 469.850 MT and the latter 485 MT. The total of the two is 995 MT. Out of these, some quantity had also been supplied to SSL (CD). Thus, the submission that all of 2602.500 MT were supplied to SSL (TD) can never be the truth. (3) SSL (CD) is situated in Bollaram while the Trading Division is at Panjagutta. Both have stated that the goods were sent to Bollaram. There is no averment as to where the goods were received and stored. No explanation is given as to the disposal of the quantity i.e. the persons to whom sold, how transported, receipt of sale proceeds, etc. (4) Both, however, did not remember the date from which Bills were raised on SSL (TD). Nor were they or the appellants in a position to provide proof of the sale of scrap amounting to 2602,500 MT to SSL (TD). Further, nowhere they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gots and re-rolled products fall under different tariff headings and are dutiable. (12) In view of the pre-planned activity of suppression of production and clandestine clearance of steel ingots and rolled products, the confiscation of plant and machinery and imposition of penalties are fully justified. In view of the above, Shri Ramanan stated that the OIO is sustainable as the appellants have been given due benefit in respect of duty demand for want of corroborative evidence and after due consideration of all the factors, the decision has been accepted as fair by the Committee of Chief Commissioners. Accordingly, it was urged that the OIO may be confirmed and the appeals of the parties may be rejected. Revenue's appeals: 6. Revenue is also aggrieved over the impugned order No. 21/2005, dated 18-10-2005. As far as the demand on account of the unaccounted scrap is concerned, Revenue has accepted the findings of the Commissioner. But, with regard to the second Show Cause Notice, proposing recovery of Modvat credit irregularly availed of in respect of 12362 MTs of imported scrap and imposition of penalty, Revenue is highly aggrieved because the Commissioner has accepted the E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph, Stevedoring Supervisor Rs. 50,000/- 4. Shri M.K. Chaturvedi, Sales Manaoer Rs. 50,000/- Looking into the role of the persons concerned in the commission of the serious offence, the penalties on them should be suitably enhanced. (3) In respect of the Respondents viz: (i) Shri N.S. Ayyangar, Finance Manager; (ii) M/s. M.R.K. Enterprises; and (iii) M/s. Shree Trading, no penalties have been imposed. Therefore, Revenue has prayed for imposition of suitable penalties. (4) In view of the foregoing, it is felt that the order passed by the Commissioner is not legal and proper and needs an appeal to the Hon'ble CESTAT with regard to the sustainability of the demands at para 1 above. (5) The Committee, therefore, under the provisions of Section 35E(1) of the Central Excise Act, 1944 directs the Commissioner of Central Excise and Customs, Hyderabad-I Commissionerate, Hyderabad, to apply to the Customs, Excise and Service Tax Appellate Tribunal for correct determination of the following points arising out of the said order : (a) Whether, after taking into consideration the facts of the case and the grounds referred above, the Order-in-Original passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence indicating the disposal of the said scrap from Chennai itself. * Realisatibn of sale proceeds in cash and deposit the same amounts in the accounts of the front companies. * Written statements showing transactions of accounts for the sales of the said scrap. * Lorry and weighment receipts confirm transport of the said scrap to local dealers, after weighment. * The transport of the said scrap and delivery in Chennai itself was confirmed by the transporters. * Delivery Challans/Invoices confirm the delivery and sales to parties. This fact has been confirmed by the buyers of the said scrap. * Statements of S/Shri A. Joseph, N.S. Ayyangar and P. Mallikarjuna Reddy, all employees of the Group, who had dealt with the aforesaid consignments of imported scrap on behalf of the respondents confirmed the disposal of the said scrap from Chennai itself. It is pertinent to note that these statements have not been retracted. * In his statement dated 19-11-96, Shri A. Joseph, the stevedoring Supervisor of Sujana Steels at Chennai has averred that dummy Lorry receipts and consignments notes of 4 transport companies were used to show that the scrap was sent to Hyderabad. * State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mak Holdings) has got his case settled by filing an application before the Settlement Commission, Additional Bench at Chennai, while another opted for KVS Scheme. In view of the above, it was urged by the Special Counsel that the Commissioner ought to have taken all the above points into consideration, but, he has solely relied upon the so called End Use Certificates based on created records. Revenue's appeal may, therefore, be allowed by setting aside the OIO in so far as the dropping of the proposal for recovery of irregular availment of Modvat credit is concerned. Findings: Assessees' appeals: 8. The assessee is aggrieved over the confirmation of demand on account of non-accountal of the quantity of scrap to the extent of 2602.500 MTs. The Commissioner, in his findings, in paragraph 62 has stated that "Hence, it is proved beyond doubt that the quantity of 2602.500 MTs of scrap was procured, which was not accounted for and, therefore, the only inference that can be drawn is that the same was converted into Ingots totally weighing 2342.250 MTs. after allowing melting and burning loss of 10%, by the Noticees." The learned Advocate has made several submissions that the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suitable penalties in accordance with law. Therefore, with regard to the assessees' appeals, we allow it partially only in terms of the above orders. Revenue's appeals: 9. As regards Revenue's appeals, we find that the investigation has unearthed enormous evidence for the diversion of the imported scrap. The Commissioner has not considered all of them. He has simply gone by the End Use Certificate and dropped the proceedings. He has restricted the irregular Modvat credit to simply 201.330 MTs and has ordered for reversal of the credit to the extent of Rs. 1,91,676/- on the ground that End Use Certificates had not been produced. In any case, we find that his finding with regard to the irregular availment of Modvat credit to the tune of 12,362 MTs of scrap is not correct. He has not given a speaking order in this regard. He has only gone simply by the production of the end use certificate when there is enormous evidence. It is clearly seen that the party could not have transported all these scrap in Hyundai, in cycle or in other vehicles, which are not normally used for sending the scrap. So, he has not applied his mind to the evidences produced by the Revenue. In other words, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on computation of the duty liability, the penalty has to be arrived at. Therefore, the penalty in respect of Sl. No. (iv) in the Order portion is set aside for re-determination. Similarly, interest will also be different. Hence, all these things have to be modified by the Commissioner. 11.2 The confiscation of land, plants, building, etc. is upheld. Considering the facts and circumstances of the case, the redemption fine is reduced to Rs. 1,00,000/- (Rupees one lakh only). 11.3 With regard to the confiscation of two vehicles of Shri Ranu, the same is upheld and the redemption fine is reduced from Rs. 20,000/- to Rs. 5,000/-. 11.4 As regards the penalty on Shri Ranu, the Commissioner would decide afresh after determining the duty liability. Therefore, in view of this, in the order portion, Sl. Nos. (i), (iv), (vii), (xvi), (xvii) get modified. 11.5 The other Show Cause Notice relates to the irregular availment of Cenvat credit on account of diversion of imported scrap. The Commissioner's finding with regard to the irregular availment of Modvat credit wherein recovery of Rs. 1,91,676/- is demanded is upheld. Therefore, the Sl. No. (iii) of the order is upheld. As regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion fine reduced from Rs. 20,000/- to Rs. 5,000/-. After determining the duty liability, the penalty has to be decided. [Paras 11.3 and 11.4] Revenue's appeals: 1. E/1072/2006 Remanded to the Commissioner for de novo adjudication in terms of findings given in para 12. 2. E/172/2008 to E/175/2008 As the Revenue's appeal is allowed by way of remand, the personal penalty on these persons may be decided in terms of the remand order. Therefore, these penalties are set aside with a direction to the Commissioner to decide them after the issue of irregular availment of Modvat credit is decided. These appeals are allowed by way of remand. 3. E/176/2008 to E/180/2008 In respect of these cases, the Commissioner had dropped the proceedings against them. Penalties have not been imposed. However, we are allowing the Revenue's appeal by way of remand. Therefore, the question of imposition of penalties on these respondents will be decided by the Commissioner based on the de novo findings with regard to irregular availment of Modvat credit. Thus, these appeals are allowed by way of remand. (Pronounced in open Court on 1- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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