Customs, Excise and Gold Tribunal - Bangalore
Ece Industries Ltd. vs Commissioner Of Central Excise on 8 June, 2006
ORDER T.K. Jayaraman, Member (T)
1. This appear has been filed against the Order-in-original No. 13/03-04-RP dated 19.06.2003 passed by the Commissioner of Central Excise, Visakhapatnam.
2. The brief facts are as follows :
The appellant manufactures and supplies transformers to Andhra Pradesh State Electricity Board (APSEB). They cleared 70 transformers during 1998-99 as replacements but under a wrong impression did not pay duty. On realising the mistake, they paid an amount of Rs. 11,93,210/-. This is as per their letter dated 31.5.1999. It was further stated by them that for servicing defective transformers, they cleared inputs to various field formations of APSEB without payment of duty or without reversing appropriate Modvat credit. They paid an amount of Rs. 5,47,759/- on 31.5.1999 and subsequently paid an amount of Rs. 1,97,445/- on 7.6.1999. Shri S.C. Rathi, General Manager, M/s APEEC (Appellant's company) gave statement on 29.6.1999 confirming the above position. There is corroboration in the statement given by Shri C.K. Krishnan, Boxing Department Supervisor. Later the appellants filed a refund claim for an amount of Rs. 5,47,759/- on the ground that there was no clearance of inputs at all to APSEB. On 19.7.1999, the appellant filed a refund claim of Rs. 11,93,210/-Another claim was filed on 24.11.99. Both the claims were rejected by the Assistant Commissioner, Division-1 after issue of show cause notice. A show cause notice dated 22.3.2002 was issued to the appellants proposing demand of duty on the 70 transformers and also for the inputs which had been cleared without reversal of Modvat credit. In respect of certain inputs which were cleared without reversing the Modvat credit, the liability came to Rs. 2,86,168/-. Penalty and interest were also proposed. The contention of the appellants was that in order to project a rosy picture to the Banks and financial institutions, more number of transformers were shown than actual production figures. When the company's auditors objected to it, fictitious delivery challans were prepared to satisfy them. The General Manager, Shri S.C. Rathi mis-took them to be genuine delivery challans and under a mistaken impression that new transformers have been sent to the customers in the place of old transformers, calculated the duty and paid the same on 31.5.1999. The top management questioned the above action and after thorough verification, it was found that no new transformers were manufactured or cleared against the delivery challans. Hence a refund claim was filed on 24.11.99. The General Manager conducted a thorough verification and they were satisfied that no transformers were removed under the said delivery challans. The delivery challans did not mention the name of transporters. The serial numbers of transformers shown in were bogus. It was pointed out that the investigating officers contacted the officers of the APSEB and were categorically informed that no new/old transformers were supplied against the subject delivery challans. It was urged that no duty can be demanded on incorporated charges as held by the CEGAT in the case of Chhota Lal Keshav Ram . The allegation of clandestine removal without statement of customers of the company is not sustainable as held by the CEGAT in the case of Embeco India . If any investigation has been done report of the investigation should have been made available along with the show cause notice. Delivery challans prepared by the staff are fictitious and based on these challans, it cannot be concluded that goods have been cleared in clandestine manner. Shri Rathi, General Manager has latter retracted his statement. The statement in respect of 70 transformers will also hold good in respect of components and spares as APSEB never purchased these items from the manufacturer. All the items on which Modvat credit was taken were duly accounted for in the RG-23A / RG-23D Part I. The extract of the above accounts were submitted with the monthly return along with duty paying documents. There is no allegation in the show cause notice that any amount towards transformers supposed to have been cleared without payment of duty were received from APSEB or any expenses towards the cost of components and spares. The unit was under production based control and was being frequently inspected by the departmental officers for verification of D-3s and the stock lying and at no stage the officers noticed any stock of transformers lying in the RG-1 register unaccounted for. After making the above statement, the appellant requested for refund of the amount already paid. The adjudicating authority confirmed the proposals in the show cause notice. He demanded duty proposed and imposed mandatory penalty under Section 11AC and also under Rule 173Q of the Central Excise Rules, 1944. Interest was also demanded. The appellants strongly challenged the adjudication order.
3. Shri K.S. Ravi Shankar, the learned Advocate appeared for the appellants and Shri Ganesh Havanur, the learned SDR appeared for the Revenue.
4. The learned Advocate took us through the various documents and urged the point that there is no evidence of receipt of transformers by APSEB as can be seen from the records. Only in order to project the rosy picture, fictitious challans were issued and Shri Rathi, General Manager wrongly paid the duty.
5. The learned SDR reiterated the Order-in-Original.
6. We have gone through the records of the case carefully. The adjudicating authority has relied on the statement of Shri Rathi, General Manager of the company. According to him, there is a clear admission of removal of transformers. The appellants by their unethical activities have created duty liabilities on themselves. It is deplorable that in order to project a rosy financial picture, fictitious delivery challans were created. In any case, the appellants paid Rs. 11,93,210/- as duty on 70 transformers. According to them there was no clearance of transformers and all the delivery challans were fictitious. They have produced documentary evidence to show that the transformers mentioned in the delivery challans were never received by APSEB. Hence, they filed refund claim of Rs. 11,93,210/- being the duty paid on 70 transformers. The refund claim has already been rejected by the competent authority. In that case, there is absolutely no need for issuing another show cause notice for confirmation and appropriation of that amount to the Government. Once the refund claim is rejected by the Assistant Commissioner, the appellant can go in appeal. As regards the amounts of Rs. 5,47,759/- and Rs. 1,97,445/-, a similar situation prevails as the Assistant Commissioner has rejected the refund claim in his Order-in-Original No. 3/2000 dated 29.2.2000. Since these matters have been decided by the Assistant Commissioner, the appellant has to follow the statutory route provided under the rules for appellate remedies. In this case also, there is no need for a separate appropriation order. As regards the demand of Rs. 2,86,168/- there is no proper finding by the adjudicating authority. In these circumstances, we have no other option but to set aside the impugned order and to remand the matter to the original authority for de novo adjudication with regard to the amount of Rs. 2,86,168/- after giving an opportunity of hearing to the appellants. In respect of other three amounts, the demands are set aside with a direction to the Original authority to decide the issue after the completion of Appellate proceedings with regard to the refund claims as the appellate for a will decide the issues in accordance with law. Since the Appellate authority has to take a decision based on the facts on record, we do not want to comment on the so called fictitious preparation of delivery challans. The Adjudicating authority is free to impose suitable penalty and demand of interest after examining the legality of demand for an amount of Rs. 2,86,168/- alleged to be duty on the inputs removed without payment of duty for repairs of transformers.
(Pronounced in the open court on 8 Jun 2006)