Customs, Excise and Gold Tribunal - Delhi
Gupta Pigments And Chemical P. Ltd. vs C.C.E. on 7 September, 1999
Equivalent citations: 2000(67)ECC258, 2000ECR513(TRI.-DELHI)
ORDER S.S. Kang, Member (J)
1. The appellants filed this appeals against the Order-in-Original dated 5.5.97 passed by the Commissioner of Central Excise (Appeal).
2. Brief facts of the case are that on 3.5.94, a show cause notice was issued to the appellants on the ground that they had wrongly availed of the benefit of deemed credit in respect of various inputs such as, pure lead, lead scrap, old battery scrap, unwrought lead ingots/wroughts and lead dross/ash, etc. as the inputs were clearly recognisable as being non-duty paid or wholly exempt from duty. In the show cause notice, a proposal for confiscation of 3450 kgs. of red lead, which was found in excess to their statutory record and imposition of penalty was also made. Thereafter on 1.11.94, another show cause notice was issued to the appellants for the period Jan., 90 to Oct., 93 on the ground that they had wrongly availed of the facility of deemed credit as the inputs used in the manufacture of final product are clearly recognisable as non-duty paid. After adjudication, the Commissioner of Central Excise, Meerut, passed the following order:
In respect of SCN No. C.No. IVCE(9) Prev/14/94/1141 dt. 3.5.94, I order as follows:
(i) I confiscated under Rule 173Q(1), 138 bags containing 3450 kgs. of red lead valued at Rs. 1,03,500, but allow the goods to be redeemed on payment of a fine of Rs. 25,000 (Rupees twenty five thousand only).
The goods after redemption should be accounted for in RG-I.
(ii) I impose a penalty of Rs. 50,000 (Rupees fifty thousand only) for contravention of Rules 53, 173Q (1) (b) r/w 226 for the offence indicated above.
(iii) I disallow the deemed credit amounting to Rs. 1,07,677 and order recovery of the same under Rule 57-I. In respect of SCN No. C.No. V(15) Off/Adj/72/94/32044 dt. 01.11.94, I order as follows:
(i) I disallow Modvat credit amounting to Rs. 28,21,211.87 and order the recovery of the same under Rule 57-I.
(ii) I impose a penalty of Rs. 10,00,000 (Rupees ten lakh only) under Rule 173-Q(1) for the offence cited above.
(iii) I drop the demand of Rs. 2,23,010.00 as barred by limitation.
3. Ld. Counsel, appearing on behalf of the appellants, submitted that in show cause notice dated 1.11.94 for the period Jan., 90 to Oct., 93, whole of demand is time-barred. He submitted that the appellants were regularly filing R.T. 12 returns and R.T. 12 returns were duly assessed by the Revenue authorities. He submits that the relevant invoices, in respect of the inputs, were produced with the R.T. 12 returns and in the invoices it was specifically mentioned that suppliers of inputs were manufacturers. He submitted that the purchase documents in respect of inputs were duly produced before the Revenue authorities and after the scrutiny of the documents, the R.T. 12 returns were assessed. Therefore, now the Department cannot take stand that the appellants mis-declared and suppressed the facts with the intention to evade duty.
4. In respect of show cause notice dated 3.5.94, he admits that the show cause notice was within six months from the date of taking credit. He submits that the burden to prove that the inputs were non-duty paid, lies on the Revenue and this burden had not been discharged by the Revenue. He, therefore, submitted that the demand is not sustainable. For this, he relied upon the decision of the Larger Bench of this Tribunal in the case of Machine Builders and Ors. v. Collector of Central Excise reported in 1996 (12) R.L.T. 817 (T).
5. In respect of 3450 kg. of red lead, he submitted that the said quantity was salvaged from the goods destroyed in fire. He submitted that in respect of destruction of goods in fire, the appellants filed an insurance claim with the insurance company. He, therefore, prays that the appeal be allowed.
6. Heard Ld. JDR on behalf of the Revenue, who submitted that the demand in the show cause notices are made on the basis of enquiries made from the suppliers of the raw-material in some cases. He submitted that the addresses, as shown on the invoices, could not be located and in some cases, the suppliers of the inputs were the manufacturers and the inputs were cleared at nil rate of duty under exemption notifications. Therefore, the appellants were not entitled for the benefit of deemed credit. He, therefore, prays that the appeal be dismissed.
7. Heard both sides.
8. In respect of show cause notice dated 1.11.94, in which duty was demanded for the period Jan., 90 to Oct., 93, we find that during this period, the appellants were filing relevant documents showing the receipt of the inputs alongwith R.T. 12 returns and the R.T. 12 returns were duly assessed by the Revenue authorities. At the time of assessment of R.T. 12 returns, no objection was made nor any enquiry was conducted in respect of duty paid on the inputs. When the appellants were supplying the documents to the revenue, under which inputs were received with the R.T. 12 returns and the R.T. 12 returns were duly assessed by the Revenue, it cannot be said that the appellants had suppressed that facts to evade payment of duty. In these circumstances, we find that the demand raised in the show cause notice dated 1.11.94, which was confirmed in the impugned order, is not sustainable. Therefore, the appeal in respect of show cause notice dated 1.11.94 is allowed.
9. In respect second show cause notice i.e. dated 3.5.94, the allegation is that the inputs were non-duty paid as the suppliers of the inputs were the manufacturers and they cleared the goods under exemption notifications. We find that the Revenue authorities made enquiries from the suppliers of the inputs and the suppliers of the goods admitted that the inputs were cleared under exemption notifications and no duty was paid on there inputs. Therefore, we find that the inputs were clearly recognisable as being non-duty paid. The Larger Bench of the Tribunal in the case of M/s. Machine Builders and Ors. (supra) held that if the goods were clearly recognisable, as being non-duty paid, the deemed credit is not available to the assessee. The Tribunal, further, held that in case of conditional notifications, the burden lies on the Revenue to show that the inputs were non-duty paid. In the present case, the enquiries were made from the suppliers of the inputs and it was found that the inputs were clearly recognisable as being non-duty paid. Therefore, we do not find any merit in the plea of the appellants in this respect.
10. Red lead weighing 3450 kg., valued at Rs. 1,03,500/ was found in the factory, which was not entered in the statutory record and no plausible explanation is given by the appellants in this respect. Therefore, we uphold the impugned order in this respect also. However, taking into consideration the facts and circumstances of the case, we reduce the penalty from Rs. 50,000 to Rs. 10,000 for contravention of the rules in respect of show cause notice dated 3.5.94. Otherwise the impugned order is upheld in respect of show cause notice dated 3.5.94. The appeal is disposed of as indicated above.