TMI Blog2017 (5) TMI 1452X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Appellant Shri A. Cletus, Addl. Commissioner (AR) for the Respondent ORDER Per: Madhu Mohan Damodar, Brief facts of the case are that the appellant are manufacturers of DG sets falling under Chapter Sub-Heading 8502.90 of the CETA, 1985. Pursuant to a visit by the officers of the department to the factory of the appellant on 5.12.2000, certain apparent discrepancies were noticed between the number of engines on which CENVAT credit has been availed by the appellant compared to the physical stock of engines available in the factory. Subsequently, a show cause notice was issued to the appellant alleging improper and irregular availment of credit of duty without actually receiving the inputs i.e. engines and alternators in their factory and, without maintaining proper records for their receipt and disposal. Notice proposed demand of CENVAT credit to the tune of ₹ 61,00,978/- alleged to have been irregularly availed along with interest thereon and imposition of equal penalty under Rule 57I(4) of Central Excise Rules, 1944 / Section 11AC of Central Excise Act, 1944 read with Rule 57AH(ii) of Central Excise Rules, 1944. Five Annexures were issued along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers. 4.5 Instances of engines and alternators cleared on payment of duty, but listed in Annexures D E, were brought out in Annexure K submitted by the appellant. Similar instances to establish errors in the Annexures to the show cause notice were also pointed by the appellant through Annexures F and G submitted by them. 4.6 In spite of all such evidences put forth by the appellant, the adjudicating authority has not adequately considered them and has confirmed the major part of the demand without any justification. 4.7 In the Annexures, the investigation officers have mixed the stocks of engines and alternators and therefore the tabulation made is faulty. Further, the department has no case that the invoices on which the appellant has availed credit was fake or that the inputs received were removed clandestinely. 5.1 On the other hand, learned AR Shri A. Cletus appearing on behalf of Revenue supports the adjudication. He contends that the quantum of irregular CENVAT credit allegedly availed by the appellant had been worked out in the Annexures to the show cause notice based on the appellant's own records. He also contended that the appellant's reply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexures F, G and K were reconciled and agreed to most of the entries therein. However, the discrepancies pointed out and found correct worked out only to ₹ 12 lakhs. It is seen from para 19 that in a meeting for reconciliation held under the ageis of the Commissioner, the investigating officer maintained that it is for the assessee to reconcile the remaining amount. 7.5 We find that in para 32.3 of the order, the appellants objections and contentions with regard to the discrepancies in Annexures have been largely considered in principle. The said paragraph is reproduced below:- Whereas the other Annexures are pertinent and it must be fairly conceded that the claims of the assessee through these annexures are very well found. In fact, most of the errors pointed out by the assessee stand admitted by the IO himself. The IO had been asked to verify the claims of the assessee through these Annexures who had vide his Note dated 15.10.2003 has stated that the Annexures F, G K have been reconciled and had agreed that out of the total demand, an amount of about ₹ 12 lakhs has been reconciled (i.e. the demand is incorrect to this extent). As far as the other entries are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovered any other evidence to corroborate their allegations. When this is so, the appellant is fully justified in seeking clarification from the department about the indecipherability of the data worked out by the Revenue and relied upon in the Annexures to the show cause notice. 7.7 One of the allegations put forward by Revenue is that the appellants have not been able to give one to one correlation of the inputs and the output. Needless to say, that while availing credit such one to one correlation is not necessary. 7.8 The main defense put forward by the appellant, as discussed above, that the Annexures appended to the show cause notice are faulty. The appellant draws support from the evidence adduced from the cross-examination of the investigating officer. Revenue, however, has not been able to explain the same nor it is brought out from the records also. 7.9 From the impugned order, it also emerges that the adjudicating authority has entrusted to the investigating officer to verify the correctness of the claim of the reconciliation statement submitted by the appellants, through Annexures F, G and K. 7.10 It is further evident that the adjudicating authority has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ie been made out against the appellant/writ petitioner which he can be required to answer. Under well settled principles if a show cause notice does not disclose any contravention or infraction of any provision of law the person or such show cause notice is a nullity. But, here, it is not such a case. The grounds made in the show cause notice allege that customs duty of ₹ 7,08,98,160/- is due but the reasons in support of such claim in the show cause notice are very ambiguous so much so it is impossible to understand anything else by reasonably any prudent person. Therefore, the appellant/writ petitioner, in our opinion, is not in a position to answer such show cause notice, which is against the rules of natural justice. 9.3 The Hon ble High Court of Madras, in the case of J.A.Motor Sport Vs. State of Tamil Nadu as reported in 2017 (345) ELT 205 (Mad.) has ruled that issuance of SCN is an empty formality but it is a statutory requirement which should be complied with to satisfy principles of natural justice and a requirement that should be complied with by the authorities to satisfy the principles of natural justice. The Court inter-alia held as follows:- 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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