TMI Blog2014 (7) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... osition of penalty of identical amount under section 11AC. In addition a penalty of ₹ 2 lakh stands imposed under Rule 25. Penalties of ₹ 15 lakh and ₹ 10 lakh stand imposed on other applicants Shri R.K. Agarwal, Director of M/s. Mittal Pigments Pvt. Ltd. and Shri K.M. Sharma, Authorised Signatory of the appellant's company under Rule 26 of Central Excise Rules, 2002. 2. After hearing both sides, we find that the said demand stands confirmed against the manufacturing unit by denying the credit of duty availed in respect of various inputs on the following grounds: Description Credit in (Rs.) Physically short found 2100 Kgs of Arsenic Metal 20195 Physically short found 1693475 Kgs of Lead concentrate 5232213 Physically short found 214350 Kgs of Zinc concentrate 882485 Inputs not received on 18 invoices from Kathua 3547178 Credit taken on 9 self invoices where goods not returned 1108524 Credit taken without recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in the other side of the wall of the factory, finding shortage of modvatable inputs. He submits that this fact of availability of inputs in the adjacent plot is sufficient to hold the prima facie case in their favour. Accordingly, he prayed for granting unconditional stay of the balance amount. 4. Countering the argument, ld. DR appearing for the Revenue submits that admittedly the immediate next plot, though may be belonging to the appellant was not a part of the registered premises. If that be so, the goods lying at the place other than the registered place cannot be held to be a part of the stock of the appellant. As such the visiting officers have rightly refused to take into account the stock which according to the appellant was lying in the immediate next plot. He submits that inasmuch as the stock lying at the adjacent plot was not even considered and verified it cannot be said that the same was in respect of short found stock. As such, he submits that the appellant should be put to some terms of deposit. 5. After considering the submissions made by both sides, we find that the appellants have already deposited an amount of ₹ 35.67 lakhs. As regard balance am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval of inputs from the registered premises to the adjacent unregistered premises i.e. Plot No.11 without applying and obtaining permission for the same, is a procedural violation which cannot result in denial of substantive right to take Modvat credit. We therefore, set aside the duty demand under this heading . 8. The facts as available in the above decision of the Tribunal are also available in the present case inasmuch as adjacent premises is admittedly owned by the assessee though not registered with excise department. It may be technical offence to keep stock outside the factory premises in a adjacent plot but in our view the same would not result in denial of the credit. 9. Apart from the above, we find that there is virtually no evidence adduced by the department that the appellant had actually removed the said stock from the factory premises, after availing the benefit of credit. Otherwise also an assessee who has entered the stock of inputs in their RG-23A register is bound to show the use of the same in the manufacture of the final products. As such, at this prima facie stage, we are of the view that the appellants have been able to make out a case in their favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered for calculation for pre-deposit. I have examined the other issues relating to shortages found in factory premises and consequent reversal of credit, availment of credit on their own invoices by the appellant and reversal of credit amounting to ₹ 11,76,168/- as well as fraud committed against Revenue. 15. To appreciate the materiality of the issues to call for pre-deposit from appellants, Para 34 to 48 of the adjudication order needs appreciation and most particularly, Para 42 44 which brings out fraudulent design by appellant to evade duty are reproduced to appreciate the conclusion I have drawn by my separate order: Para 42- Regarding short found lead concentrate and zinc concentrate the notice have pleaded that the same were stored in another portion of land which was a part of their Plot No.A 203 on which factory is running. They have also submitted some documents to prove that the said portion of land was also allotted to them. They have contended that they had requested he visiting officers to take stock of the goods lying in that portion of land. I observe that no such request is available on the papers like panchnama or statement recorded o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any plausible reply in support of their defense therefore there remains no doubt about the allegation lavelled in the show cause notice that these goods were removed by the noticee without issue of invoice and without reversal of amount of Cenvat Credit taken on these goods which is liable to be recovered from the noticee. For having removed inputs without paying the cenvat credit taken on them in contravention of the Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Act. Para 44 - Regarding Cenvat Credit of ₹ 11,76,168/- taken on their own invoices, the noticees have submitted copies of vouchers showing the payment of Freight Service Tax, Copies of some GRs copies of challans of the consignees to prove that the goods under the cover of these invoices were returned to their factory. On examination of these documents it is observed that in respect of Invoices No.271 dated 21.8.2009, 293 dated 29.8.2009, 726 727 both dated 2.2.2010 and 31 dated 19.4.2010, the noticee have submitted copies of the GRs which prove that the goods were returned to them as such, therefore Cenvat Credit in respect of these invoices should not be denied to them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages indicating non-receipt of materials on which credit was taken. Their contention that materials on which credit was taken and found short during visit of officers were lying in adjoining premises had no basis or truth as is clear from threadbare analysis of facts and evidence by learned adjudicating authority. Storage of raw materials found remained uncontroverted without any evidence adduced by appellant to Investigation. Panchnama in the presence of Panchas does not show such afterthought plea of appellant as to existence of stock elsewhere designed after investigation. Tribunal should not be swayed away by such false pleas. Reliance on Tribunal's judgement in Munjal Showa Ltd. Vs. CCE New Delhi-2000 (116) ELT 684 is of no avail when there was premeditated fraud designed against Revenue with the conscious knowledge of appellants which was brushed aside in the order recorded by the learned Judicial Member. 18. Factual matrix of the case clearly indicated that appellants were involved in fraudulent activities of issuing fake gate passes and passing of illegal credit. Investigations revealed their ill design to defraud the revenue. Consequently they reversed the illegally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of convenience is in favor of revenue. There is prima facie case requiring reversal of credit. It is therefore ordered that pre-deposit of ₹ 40 lakhs to be made as a condition of hearing the appeal. 21. My direction for pre-deposit towards duty is therefore for ₹ 40 lakhs + ₹ 10 lakhs totaling to ₹ 50 lakhs (Rupees fifty lacs only) which is in addition to the amount of ₹ 35,47,178/- already reversed by the appellants. 22. So for as pre-deposit of penalties is concerned, my observation reasoning and directions are as under: (a) As manipulations and fraudulent invoices were issued without goods being delivered and credit of ₹ 35,47,178/- was illegally availed, but reversed later, and reversal of ₹ 11,08,442/- although was agreed, not done, followed by abnormal shortages of raw materials valuing more than ₹ 4.00 crores (Rs. four crores), M/s Mittal pigments are directed to make pre-deposit of penalty of ₹ 25 lakh. (b) Investigation brought out prima facie case of active involvement of Shri Ramesh Kumar Aggarwal, Director of the unit where large scale manipulations had undertaken. Balance of conv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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