TMI Blog2008 (8) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... E/505/03-NB(SM) raising the following substantial question of law: "Whether non-invoking/quoting of extended period of limitation and by not quoting the relevant section or rule vitiates the proposed action when the charges of fraud practiced and suppression of facts resorted to by the party in wrong availment of Modvat credit have been discussed clearly in detail in the Show-cause notice?" 4. Briefly, the facts are that a show-cause notices were issued to the respondent-assessees in all the aforesaid four appeals on 17-6-1999 with the allegations that they have contravened the provisions of rules 57A and 57G of the Central Excise Rules, 1944 (for short, 'the Rules') for having fraudulently availed Modvat credit to the tune of lakhs of rupees. The fraud came to the notice of the department during the course of inspection. On 22-7-1998, search was conducted on the premises of M/s. Shobhit Impex, Abohar, M/s. Gandhi Chem-fert Industries, Old Fazilka Road, Abohar and M/s. Gandhi Metal (P.) Ltd., Old Fazilka Road, Abohar on 23-7-1998. It was found that M/s. Shobhit Impex had a godown located at Chak Sidhu Complex, Malout Road, Abohar of the size of 12 feet X 18 feet where large q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, for violation of the provisions of the Act and the Rules, penalty was imposed on the assessees. The relevant part of the order is extracted below: "2. I impose penalty on the following noticees, as detailed against each, under rule 57-I(4) of Central Excise Rules, 1944 on noticee Sr. Nos. 1 to 3, 6 to 12; under rule 173Q of Central Excise Rules, l944 on noticee Sr. Nos. 4 and 5 and under rule 209A of Central Excise Rules, 1944 on noticee Sr. Nos. 13 and 14. Sr. No. Name of the party (M/s.) C.E. duty payable Amount of penalty imposed (Rs.) In words (Rs.) 1. Leader Engg. Works, Jalandhar 3,94,502.00 3,94,502 Three lakhs ninety four thousand five hundred and two only. ... ... ... 3. Vardhman India Products, Jalandhar 57,119.78 57,119 Fifty seven thousand one hundred and nineteen only. ... ... ... 6. Aman Engg. Works, Jalandhar 61,527.00 61,527 Sixty one thousand five hundred and twenty seven only. ... ... ... 12. V.K. Valv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sub-heading 8481.80 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) ** ** ** (vi) M/s. Aman Engg. Works, Jalandhar holding Central Excise Registration No. J-II/Ch.90/117/92, under rule 174 of the Central Excise Rules, 1944 and engaged in the manufacture of water meters falling under Chapter Sub-heading 9028.00 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) ** ** ** (xii) M/s. V.K. Valves (P.) Ltd., Jalandhar holding Central Excise Registration No. J-1/RBC/PBC/CH-84/l/95, under rule 174 of Central Excise Rules, 1944 and engaged in the manufacture of Valves Corks falling under Chapter Sub-heading 8481.80 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) have contravened the provisions of rules 57A, 57G of the Central Excise Rules, 1944 (hereinafter referred to the 'Rules') inasmuch as the aforesaid have wrongly/fraudulently availed/passed on Modvat credit to the tune of: ** ** ** 2. During the course of inspection of Central Excise Range, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11A(1) of the Act, which is extracted below, provides for recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded: Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded -( 1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ** ** ** I find that they have wrongly availed the Modvat credit amounting to Rs. 3,94,502/- and is recoverable from them under Rule 57I(1) and are also liable to penal action under Rule 57I(4) of Central Excise Rules, 1944. The amount of modvat credit of Rs. 40,000/- and Rs. 2,19,789/- has already been debited by M/s Leader Engg. Works, Jalandhar in RG-23A Part-II vide entry No. 1312 dated 26.7.98 and PLA entry No. 102 dated 27.7.98. The balance amount of Rs. 1,03,060/- and Rs. 31653/- taken as modvat credit by M/s Leader Engg. Works, Jalandhar have also been deposited by M/s Ruby Impex, Jalandharand M/s Satish Metal Co., Jalandhar on account of M/s Leader Engg. Works (Leader Valves), Jalandhar, through TR-6 Challan No. 1/98 and 2/98 both dated 1.8.98 and through TR-6 Challan No. 1/98 dated 1.8.98. ** ** ** (iii) M/s Vardhman India Product, Jalandhar have availed modvat credit to the tune of Rs. 57,119.78 on 1 (one) invoice issued by M/s Shobhit Impex, Abohar. However, as discussed in the previous paras, the goods of invoice no. 52 dated 22.12.97 have never reached M/s Vardhman India Product, Jal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. He further admitted the incorrectness of invoice issued by M/s Shobhit Impex, Abohar. Thus M/s Satish Metal Co., Jalandhar have wrongly passed on the Modvat credit to the tune of Rs. 43,746.00 to M/s V. K. Valves (P) Ltd., Jalandhar. I find that they have wrongly availed/utilized Modvat credit amounting to Rs. 43,746/- and is recoverable from them under Rule 57I(1) of Central Excise Rules, 1944. This amount of Rs. 43,746/- has already been debited vide RG-23A Part-II entry No. 221 dated 1.8.98. They are also liable to penal action under Rule 57I(4) of Central Excise Rules, 1944 for the contravention of aforesaid provisions of Central Excise Law." 12. In H. M. M. Limited's case (supra), Hon'ble the Supreme Court opined that in case the extended period of limitation is to be invoked by the department by placing reliance on the proviso to Section 11A of the Act, the same should be made out from the allegations made in the show cause notice. Relevant para thereof is extracted below: "......The mere non-declaration of the waste/by-product in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case...."(P.835) 14. It is a matter of common knowledge that those who resort to foul acts, ordinarily do so with a thick cover and camouflage. To locate the black spots and unravel the ugly aspects is not all that easy. It is only for this reason that extended period of 5 years limitation has been provided to bring such wilful defaulters to book. The discovery or detection of an unseemly act slyly carried out by these unscrupulous evaders would necessarily entail some time. 15. If the facts and circumstances of the present case are considered in the light of the enunciation of law, as referred to above, the inescapable conclusion would be that the impugned order passed by the Tribunal is not in conformity with the same. The only contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
