TMI Blog2002 (11) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... of Zinc Oxide. They had opted for availing deemed Modvat credit, in respect of inputs viz. zinc waste and scrap falling under Heading No. 7902.00 of Central Excise Tariff Act, 1985 as provided under Rule 57G(2) of Central Excise Rules, 1944 and filed a declaration under Rule 57G on 27-1-1989 and the same has been acknowledged by the Assistant Collector of Central Excise, Kakinada on 2-2-1989. 3. (a) Investigations were conducted by Anti-Evasion Unit, Kakinada Division, Kakinada and during the course of investigation a sample of zinc waste and scrap used as input in the manufacture of Zinc Oxide by M/s. A.V.R. Chemicals (P) Ltd., Adavipolam, Yanam was drawn on 6-9-1990 and sent to Chemical Examiner, Customs House, Madras for test. They v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings - 7. From the returns and other documents submitted by the assessee, it is seen that the inputs have been purchased from M/s. A.H. Enterprises, Hyderabad on most of the occasions before the issue of show cause notice. After the detection of the case, i.e., since November, 1990, the assessee has not purchased any consignments from the said supplier. It is also seen that the inputs have been purchased at costs ranging between 4,000/- to Rs. 10,000/- except 4 consignments bought from February, 1989 to August, 1989 and one consignment in January, 1990. The recovery from the inputs having value ranging between Rs. 4,000/- to Rs. 10,000/- also ranged between 20% to 40%. However, after the detection of the case i.e. November, 1990, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actured from Zinc Ash/Residue. This does not appear to be tenable, since the deemed Modvat credit availed by the assessee is the same in respect of the cost of input whether it is Rs. 6,000/- or 40,000/- probably the relative margin of profit must be even higher in the case of low cost input. 8. I therefore do not agree with the assessee s contention that there was no suppression of facts since he has wrongly filed statutory declarations. It is seen that the Modvat declaration is that the inputs are hard waste and scrap while the chemical report states that the material tested was Ash/Residue. Not only from this, but also from the circumstantial evidence as discussed in the above paragraphs, the conclusion is inevitable that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cost and in which the Zinc content was very high have also been included in the show cause notice. Such consignments should be excluded for reversing of the Modvat credit. I have considered that the consignments received in the month of February, 1989 to August, 1989 and January, 1990 are zinc scrap waste as the value declared in the invoices are above Rs. 10,000/- and the recovery percentage is more than 40%. 10. The assessee also made a wilful misstatement as to the real input that was used in the manufacture of final product. Knowing that the cost of Zinc Ash/Residue in the guise of zinc scrap ranges between Rs. 4,000/- Rs. 10,000/- whereas the cost of Zinc scrap ranges between Rs. 14,000/- Rs. 46,000/- the assessee chose the former ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot be used to manufacturing Zinc Oxide of Zinc Ash/Residue. The finding by the adjudicator as to how and why low contents could be used by the appellants is only has presumption. The order omits to answer the evidence provided by the industries Officers HSN defines Waste Scrap of Zinc to be resultant waste out of working on material, etc. why the entity herein could not be so has not been arrived at. Investigation should have been done at suppliers end to establish the commercial understanding of the disputed product. Different percentages of Zinc content have been shown in test reports of other samples. Therefore we find no material to confirm the adjudicator s findings. (e) When we find no reason to deny the deemed credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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