TMI Blog2009 (3) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-2005 E/635/2005 M/s. Deepak Extrusions Pvt. Ltd. No. 14/2005 dt. 11-4-2005 E/636/2005 M/s. Plasto Paradise No. 14/2005 dt. 11-4-2005 E/637/2005 M/s. Nahata Products No. 14/2005 dt. 11-4-2005 E/639/2005 M/s. United Chemical Industries No. 14/2005 dt. 11-4-2005 Since all the above said appeals are raising a common issue and are in respect of investigations conducted simultaneously, they are being disposed off together. 2. The relevant facts that arise for consideration are appellant-company herein are manufacturers of HDPE/PP, woven fabrics, sacks. The appellant-company availed Cenvat credit of the duty paid on HDPE/PP granules purchased from various manufacturers like M/s. GAIL; M/s. Reliance Industries Ltd; M/s. HPCL etc. The officers of the DGCEI visited their factory and carried out various investigations. First show cause notice dated 4-7-2003 was issued directing one of the appellant-company herein to show cause as to why the 323 bags of plastic granules seized in the godown of M/s. Mahalakshmi Plastics be not confiscated. Further, investigations were carried out by the authorities a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 13 of the erstwhile Cenvat Credit Rules, 2001/Cenvat Credit Rules, 2002. 4. I impose penalty of Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand Only) each on Sri Vimal Sipani, Managing Director and Sri. J.K. Surana, Executive Director of the Company in terms of Rule 209A of the erstwhile CER, 1944/Rule 26 of the erstwhile Central Excise (No. 2) Rules, 2001/Rule 26 of the CER, 2002. 5. I order for confiscation of 323 bags of plastic granules valued at Rs. 3,39,150/- seized at the premises of M/s. Mahalakshmi Plastics, Erode in terms of Rule 13 of Cenvat Credit Rules, 2002. As the goods have already been released provisionally, I impose fine of Rs. 5,000/- (Rupees Five Thousand only) in terms of Section 34 of the CEA, 1944. 6. I impose penalty of Rs. 20,000/- (Rupees Twenty Thousand only) on M/s. Mahalakshmi Plastics, No. 64A, East Kongalamman Koil Street, Erode - 638 001, Tamil Nadu in terms of Rule 26 of the CER, 2002. 7. I order for payment of interest under Section 11AB of the CEA Act, 1944. (ii) Order-in-Original No. 14/2005 dt. 11-4-2005 : 1. I confirm and demand CENVAT credit/Central Excise Duty of Rs. 16,82,397/- (Rupees Sixteen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 2002 with an option to redeem the goods on payment of redemption fine of Rs. 25,000/- (Rupees Twenty Five Thousand only). 8. I order payment of interest under Section 11AB of the CEX Act, 1944. The appellants are in appeal against the above orders of the Adjudicating Authority. 3. The learned counsel appearing for all the appellants would submit that the entire adjudication order has proceeded on an assumption that the declared wastage of the appellant is more than the industrial norms of the wastage in respect of such products. It was submitted that the quantity of wastage as shown in the show cause notices and in the impugned order is not correct, since the Adjudicating Authority has not considered certain quantity of waste fabrics which was captively consumed for the purpose of packing of finished products. It was the submission that CBEC Circular dated 29-8-2000 clearly clarifies that Cenvat credit is admissible on the inputs used in the manufacture of packing materials which are themselves are an input. It was also submitted that the wastage in excess of 7.5% was taken to determine the confirmation of demand on the ground the granules were diverted without pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id bags which were confiscated were never purchased by the appellant M/s. Kleene Packs Ltd. In the absence of any evidence to show that the said purchases were made by appellant i.e. M/s. Kleene Packs, there is no reason for confiscating the same. It was also submitted that the said plastic granules could have been of some other party as has been indicated in the statement of Shri Shivanna of M/s. Shiva Transport Company. In view of the above submissions, he prayed for setting aside the impugned orders. 4. The learned SDR on the other hand would submit that the Adjudicating Authority has given detailed findings on each and every allegation refuted by the appellant. He would submit that the wastage shown in the records of the appellants is far more in excess than the industrial norms. It is his submission that the manufacturers of plastic granules have categorically stated that the granules purchased from them would be required for manufacture of final products i.e., HDPE sacks and no other granules can be used. It is also his submission that the representatives of primary manufacturers have categorically stated that companies recommended specific grades of plastic granules in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench in that case. We may reproduce the ratio of the case which went in favour of the assessee. 6. We have gone through the records of the case carefully. There are two Show Cause Notices. One Show Cause Notice relates to the seizure of cash and proposes confiscation of the same on the ground that they are the sale proceeds of the granules on which Cenvat credit was availed by the appellants. After detailed investigation, another Show Cause Notice dated 19-7-2004 has been issued. This Show Cause Notice proposes demand of Rs. 50,05,465/- being the Cenvat credit irregularly availed by the appellant on the plastic granules diverted by them during the period between July 1999 to March 2003. Annexure-D to the Show Cause Notice indicates how the above amount has been arrived at. In order to appreciate the contention of the department we are reproducing the said Annexure-D to the Show Cause Notice below :- ANNEXURE D WORKSHEET SHOWING THE CENVAT CREDIT IRREGULARLY AVAILED BY M/s. SIPANI FIBRES LIMITED BANGALORE, DURING THE PERIOD BETWEEN JULY 1999 TO MARCH 2003 YEAR Total quantity of granules consumed in Kgs. Total waste recorded in Kgs. Waste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fabric as per POs 67764 106833 93881 103197 Total waste claimed for use in packing in Kgs. 172805 489137 393775 124351 Actual usage of waste for packing 67764 106833 93881 103197 Excess waste material claimed to have been used in packing but allegedly diverted for local sale 105041 382304 299894 21154 6.1 A perusal of the Annexure-D clearly indicates that the Department has not accepted the waste declared by the appellant. For example, for the year 1999-2000, the appellant has claimed for use in packing a waste of 1,72,805 Kgs. According to the Department, the actual usage of wastage for packing is 67,764 Kgs. The difference between the above figures comes to 1,05,041 Kgs. Revenue holds that this represents the raw material diverted for local sale. There is also an indication that the packing material required is at the rate of 15 mtrs per roll per bale as per statement of Shri Aravind Acharya. It was pointed out by the appellant that the statement has been retracted. Even though the Commissioner has recorded that the retracted statements have no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of M/s. Abhinandan Petropack Pvt. Ltd. Ors. v. CCE in Final Order dated 22-2-2007. 5.3 Yet in another case i.e., Nutech Polymers Ltd. v. CCE (supra), the coordinate Bench of this Tribunal, considered the submissions made by the learned SDR as regards the input-output norms mentioned in the EXIM Policy and came to the following conclusions. 7. Regarding charge of clearance of fabrics in the disguise of waste, we observe that no direct material or evidence has been brought on record by the Revenue in support of the charge. It is well settled law that duty cannot be demanded merely on the basis of assumptions and presumptions. It has been held by the Supreme Court in Oudh Sugar Mills that the findings on the strength of a show cause notice, issued on the basis of average production is without any tangible evidence and is based on inference involving unwarranted assumptions. The Supreme Court has further held therein that the finding is thus vitiated by an error of law. In the present matters the demand has been computed on the basis of wastage reflected in the Daily Production Reports available for a limited period i.e. November, 2000 to 18-3-2001, and the duty h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced from the above reproduced ratios of the various decisions of the Tribunal that an assumption as to by showing excess wastage, the assessee have cleared the duty paid inputs clandestinely cannot be held as a correct proposition of law. Respectfully following the same, we hold that in all these cases before us, the revenue has not discharged its burden of proving that there was a clandestine removal of the inputs on which Cenvat credit was availed. 5.5 As regards the confiscation of the goods, we find that the said confiscation is also not correct in view of the fact that there is nothing on records to indicate whether the said goods were procured by the main appellant-assesses in this case. In view of this, we find that the confiscation as ordered by the Adjudicating Authority is incorrect and is liable to be set aside. 5.6 Since we have disposed off the appeals on merits Itself, we do not wish to record any findings on other submissions made by both sides. 5.7 Accordingly, respectfully following the decisions of the coordinate Bench and this very Bench in an identical issue, we hold that the impugned orders are liable to be set aside and we do so and the appeals are allow ..... 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