TMI Blog2007 (9) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... lutch plates, cover assembly etc. meant for supply to M/s. Tata Engineering Locomotives Company Ltd. (TELCO) (b) The officers intercepted a consignment on 21-7-2002 for which no entry with regard to removal of the said goods had been made in the excise records and seized the same. Duty involved on the seized goods worked out to Rs. 1,17,211/-. On follow-up, the officers commenced investigation regarding Cenvat credit taken by the appellant-company on the goods reportedly returned by M/s. TELCO and the investigation was in progress. (c) On 9-4-2003, the officers conducted physical verification of the finished products lying in the factory and the same did not tally with the daily account register, accordingly, seized the goods not accounted and valued at Rs. 40,91,769.86 involving central excise duty of Rs. 6,54,683/-. (d) The goods which have been dispatched to M/s. TELCO under 263 invoices relating to the period from February 2001 to January 2003 were shown to have been returned to the appellant-company after a delay of 2 to 3 months in each case. They have claimed that the goods have been returned by M/s. TELCO and they have received the same in terms of Rule 16 of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anned modus operandi of the appellant-company in taking Cenvat credit on fictitious documents without actual return of the goods. 7. We have carefully considered the rival submissions. It is noticed that the goods were meant for M/s. Telco. The appellant-company claimed that the goods were originally cleared by them on payment of duty and the goods have been rejected by M/s. Telco and the same have been returned back to their factory and therefore, credit has been taken under Rule 16. M/s. Telco has categorically denied to have received the consignment in the first place and also claimed that they have not rejected any of the consignments in question. M/s. Telco also has submitted that credit notes said to have been issued in their favour have not been received by them. The appellant-company has explained that they have prepared credit notes and these were not actually forwarded to M/s. Telco as the goods covered by these invoices were returned back to them under the cover of the same invoices. 8.1 Commissioner has clearly held that not even a single instance where the assessee has made payment for demurrage for abnormal stay of these consignments at Pune has been shown. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red that the burden of proving that the goods have been returned to the factory and they are eligible to take Cenvat credit is naturally on the appellant and not on the department. The clear admission that the goods have not been received in the first place by Telco. and it was not rejected by them and they have not received the credit notes prove the claim of the department that the goods have not been received back and the documents/accounts were only fabricated to show return of the goods with a view to take credit wrongly. Therefore, the findings of the Commissioner in this regard and denial of credit to the tune of Rs. 59,46,244/- and imposition of equal penalty under Section 11AC, demand of interest on the fraudulently taken credit are sustainable. However, as regards the penalty imposed on the Managing Director, as no direct or reliable evidence on his personal involvement in the manipulation of the records is found, the penalty imposed on him cannot be sustained, 10. In view of the above, the appeal filed by the appellant-company is rejected and the appeal by the Managing Director is allowed, (Pronounced in the open Court on . . .2-2007) Sd/- (M. Veeraiyan) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into by them with M/s. Telco. As such, it has come on record, in the shape of various statements of the appellant's representative that they were supplying the goods mainly to M/s. Telco. The second factor which uniformly emerges from the statements of various representatives of the appellant-company is that there has been rejection from M/s. Telco earlier also i.e. for the period prior to the period involved in the present appeal and the finished goods have been received back in the factory either due to rejection by purchaser or due to the delivery not being accepted by the customers, such rejected goods are sent directly to production section of the company for carrying out necessary repair/repacking etc. 14. The adjudicating authority has held against the appellant on the ground that M/s. Telco's representative Shri Prosen it Sengupta, in his statement recorded on 30-10-2002 had deposed that no excisable goods (disputed in the present appeal) were received by them and as such not rejected. Further, same doubts have been expressed by him as regards payment made to the transporter for return journey of goods, the time gap between original clearance and return of the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representative's statement that there is no record of receipt and rejection of the goods gets explained from the above statement of Shri Sheth read with statement of proprietor of M/s. Amin Transport Trading Co. when he deposed that sometime M/s. Telco refused to take delivery of the goods on the ground that there was no schedule for the delivery of the goods and as such, goods were taken back to the appellant's factory. In such scenario, the statement of Telco's representative cannot be made basis for arriving at a finding that the goods were not received back, 15. In any case, I find that the Revenue's case is that goods were originally cleared but the same were not received back and credit has been availed on the basis of forged document. If that be so, the statement of Telco's representative that the goods were not received by them at all, goes against the Revenue's own stand. It is not clear from the case made out by Revenue as to whether they are doubling the first clearance of goods to Telco under the cover of Central Excise invoices or the doubt is about the receiving back of goods as returned goods or a subsequent clearance of the goods by utilization of the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant on ground of "No schedule" as is also clear from Telco's representative's statement that such goods were not received by them. The said statement also stands relied by the Revenue. If the goods were not received by Telco, they have either to come back to the assessee's factory or there is a chance of same getting diverted in the open market. There is no evidence and according to, much less any allegation in Revenue's case that such goods originally cleared by appellant stands diverted in the open market. If that be so, the second route of return of the goods has to be accepted. 17. The denial of credit on the basis of the Central Excise Invoices originally raised on the ground that there is no explanation about the storage of the goods for a period of 2-3 months in between or there being no proof of payment of transportation charges to the transporter for return journey, in my view, are not sufficient ground for holding against the appellant. In any case, it has come on record that the appellant had produced LR for return of goods, cash vouchers for payment of transport charges. As such, the discrepancies pointed out by the Revenue which in any case stands explained b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported in 2005 (189) E.L.T. 111 (Tri.-Chennai), has held that composite penalty under two different provisions of law can not be accepted without the requisite split up. Similarly, in case of Avdel (India) Private Ltd v CCE Mumbai reported in 2004 (171) EL.T. 201 (Tri-Mumbai), Tribunal set aside the personal penalty on the ground that a composite penalty under Section 1 IAC and Rule 173Q is not permissible. In case of Lauls Ltd. v CCE, New Delhi reported in 2003 (158) E.L.T. 711 (Tri.-Del.), it was observed that in case of composite penalty, it cannot be made out as to which part is imposed under section 11AC and what amount is under rule 173Q. The Tribunal further observed that apportion of penalty cannot be done in appeal and accordingly set aside the personal penalty. Similarly, in case of Punjab Recorder Ltd. v. CCE, Chandigarh reported in 2001 (132) E.L.T. 41 (Tri-Del.), penalty was set aside on the ground that a composite penalty imposed under Rule 173Q and under Section 11AC cannot be apportioned." 20. For the same reason, I find no justification for imposition of penalty of Rs 5 lakhs on M/s. Gujarat Setco Clutch Ltd. under the Rule 25 of Central Excise Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss found goods has to be set aside, as held by Member (Judicial) and not considered by Member (Technical)? Sd /- Sd/- M. Veeraiyan Archana Wadhwa, Member (T) Member (J) 26. [per : M.V Ravindran, Member (J)]. - This difference of opinion is placed before me to answer the following questions: (i) Whether the denial of Modvat credit of Rs. 59,46,244/- along with interest and penalty of equivalent amount imposed upon M/s. Gujrat Setco Clutch Co. Ltd. has to be upheld as recorded by learned Member (Technical) or the same has to be set aside, as observed by learned Member (Judicial)? (ii) As to whether the penalty of Rs. 5 lakhs imposed under the provi sions of Rule 25 of Central Excise Rules has to be set aside, as held by Member (Judicial), but not considered by Member (Technical)? (iii) Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the credit notes which were issued by appellant for all these invoices is for squaring the accounts at appellant's end, hence the credit notes were not sent to Telco. 31. Considered the submissions made by both sides and perused the records. The issue involved in this case is regarding the eligibility of availment of Cenvat credit by appellant on the finished goods received back by them. It is undisputed that the appellant had availed Cenvat credit on the 263 invoices as per annexure to the show cause notice. The appellant availed Cenvat credit on these 263 invoices, during the period July 2001 to March 2002 on the strength of their own invoices' a fact which is undisputed. Cenvat credit of the duty paid inputs an 1 capital goods is allowed to an assessee under the provisions of Central Excise Rules (No. 2), 2001 and Cenvat Credit Rules, 2002 during tho relevant period. Though the appellant is eligible to avail the benefit of Cenvat credit of the duty paid on inputs, an exception was created in form of Rule 16, which gave an option to the assessee to avail Cenvat credit of the duty paid on the finished goods originally cleared from his own factory. On this background, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that the appellant, and transporter both had categorically stated that the goods were not stored at any place. If that be so, then there seems no plausible explanation as to why there was so much delay in receiving back the finished goods back to the appellant's factory, which ranges from 40 days to 140 days from the date of clearance, This much, delay in receiving back the goods from the gate of the purchaser, and that also on the face of the statement of the transporter that goods are transported back in the same truck, does not instill any confidence in the submissions of the appellant that they have received back the finished goods dispatched by them. Further it is noticed and is on record that the appellant has not given any details of transportation documents nor tried to co-relate the goods dispatched from his factory to the goods received back. Another important aspect, which would go against the appellant, is that they have not explained how the finished goods dispatched by them to Telco, Bangalore and Jamshedpur, were returned back from Pune. Appellant is not able to co-relate the sequences that warranted the storage of these finished at Pune and also why there was so m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Member (Judicial) that the consequent penalty imposed under Rule 25(1) of the Central Excise Rules is also unwarranted. 36. The difference of opinion referred to me is answered accordingly and the registry is directed to place this file before the original Bench. Ordered accordingly. FINAL ORDER Sd/- M.V. Ravindran Member (J) In view of majority of the order, the appeals are being disposed of as Under (1) Denial of Modvat credit of Rs. 59,46,244/- along with, confirmation of interest and penalty of equivalent amount imposed upon M/s.Gujarat Setco Clutch Ltd. is upheld. (2) Penalty of Rs. 5 lakhs imposed upon the said appellant under the provisions of Rule 25 of Central Excise Rule is set aside. (3) Confiscation of the excess found goods is set aside. (4) Penalty imposed on the second appellant Shri Harish Sheth, Managing Director is set aside. Both the appeals are disposed of in the above terms. Sd/- Sd/- M. Veeraiyan Member (T) ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
