Customs, Excise and Gold Tribunal - Tamil Nadu
Saachi Textile Ltd. And Shri Ashwin ... vs Commissioner Of Customs And C. Ex. on 22 September, 2000
Equivalent citations: 2001(73)ECC493
ORDER S.S. Sekhon, Member (T)
1. This appeal arises from Order-in-Original No. 13/97-CE dated 28.11.97 by which the Commissioner of Customs & Central Excise, Hyderabad has confirmed the duty demand of Rs. 1,01,17,322 towards BED and Rs. 15,17,598 towards AED in terms of Rule 9(2) read with proviso to Section 11A of the Central Excise Act, 1944 and Section 3 of the Additional Duties of Excises (Textiles & Textiles Articles) Act, 1978. He has adjusted the duty amount of Rs. 11,50,000 towards BED and Rs. 1,68,750 which had been paid by them. Further there Is an order of confiscation of seized goods and the same were given option to redeem on fine of Rs. 50,000 and Rs. 75,000 in terms of the order. A penalty of Rs 1,16,34,920 Under Section 11AC of the C.E. Act and Rs. 15 lakhs Under Rule 9(2), 52 A and 226 of Central Excise Rules, 1944 have been imposed on the appellant factory besides directing them for payment of interest under the Act in terms of Section 11AB.
2. On gathering intelligence that assessee were indulging in evasion of duty of excise, the Officers of Central Excise conducted simultaneous searches on 11.10.96 not only on the factory premises but also on the residence of the Managing Director and the transporter's office and the Commission agent's premises. A physical verification of finished goods were also conducted in the factory and seizures were carried out. Assessees were procuring the raw material, namely, POY (Partially Oriented Yam) falling under chapter sub-heading 5402.42 from M/s. Sanghi Polyester Ltd. in their name and in the name of other fictitious persons through the Commission Agent, M/s. R.R Agencies, Secunderabad. The POY so procured was subjected to texturisation in the texturisation plant and the texurised yarn was held to be classifiable under chapter sub-heading No. 5402.32 and chargeable to duty. Based on the requirement, texturised yarn is subjected to twisting in the twisting plant and the twisted yam is exempted in view of duty being chargeable only on textured yarn. It has been noted in the show cause notice that since POY itself cannot be woven into grey fabrics, textured yam and twisted yarn are required to be used at given proportions to weave grey fabric. The intelligence officers recorded the statement of various persons and in terms of said statements it was revealed mat appellants were in the habit of procuring POY in the names of various fictitious persons, texturised the same and cleared clandestinely without payment of duty. The details of statements and admissisions have been noted in the show cause notice and the same are reproduced in the Order-in-Original. On the material collected, it was alleged in the SCN dated 14.3.97 that as to why
(i) a amount of Rs. 1,01,17,322 Rs. 15,17,598 AED on the goods cleared between 12.9.94 to 23.3.96 should not be paid by them Under Rule 9(2) read with proviso to Section 11A of the Central Excise Act, 1944 and Section 3 of the Additional Duties of Excises ( T&TA) Act, 1978.
(ii) BED of Rs. 11,50,000 and AED of Rs. 1,68,750 totalling to Rs 13,18,750 already paid by them should not be adjusted towards duty payable by them.
(iii) Texured yam (80/0) weighing 1339.59 kgs. and twisted yam weighing 871.80 kgs. valued at Rs. 1,93,022 should not be confiscated to the Govt. Under Rules 173Q and 226 of Central Excise Rules, 1944.
(iv) POY of 4511.% kgs. valued at Rs. 3,06,794 should not be confiscated Under Rule 173Q and 226 ibid;
(v) BED of Rs. 1133 and AED Rs. 170 should not be paid by them Under Rule 9(2) of C. Ex. Rules on 46.25 kgs. of taxured yam (150/0) found short on 11.10.96.
(vi) Penalty should not be imposed on the assessees Under Rule 9(2), 52A, 173Q and 226 of Central Excise Rules, 1944;
(vii) Penalty should not be imposed on Shri Ashwin Modi, M.D. of the company Under Rule 209A of the Central Excise Rules, 1944.
3. In reply to the Show Cause Notice, the assessee filed a letter dated 15.10.97 wherein, they have, inter alia, submitted that;
(i) the excess quantities noticed by the officers are due to non-accountal of day's production of 10.10.97 and the shortage is on account of accounting mistake and the seizure of finished goods alongwith 4511.961 kgs. of POY left over a period of two years is not justified and as per the decision (1979 ELT 402, J 406 and Garden Silk Milks Ltd. v. CCE the above seizures is not justified;
(ii) As per Annexure III among the entries pertaining to 2.1.95 to 7.12.95, there are only 4 to 5 entries in which Saachi Textiles were written in brackets and the entries in brackets do not prove that POY was received by Saachi Textiles;
(iii) Just because a few orders were placed by Saachi, the dept. cannot drastically conclude that the entire yam was received Under fictitous names. The Dept. has not produced an iota of evidence regarding any payment against these fictitious invoices to Sanghi Industries;
(iv) Some of the references made in para 6.4 of Show-cause Notice pertain to yam received for trading activity and Shri Ashwin Modi who was in a state of shock at the time of recording statement made some generalisations on the basis of which direct inferences cannot be drawn in respect of evasion of duty;
(v) The statement of Shri R. Ranjan, Manager (Tech) was only a tutored one since he does not (sic) anything about Excise and the reference made to payment of duty was period only Under protest;
(vi) Shri R.K. Tiwari's statement does not state that yam was received into factory and hence it is not correct to draw conclusions to that effect and duty had been paid on defects found in file No. 49 and 50 and all conclusions are based purely on surmises and conjunctures;
(vii) As regards para 14 of show cause notice, it is an accepted fact that some POY has been received on fictitious names as indicated earlier in the foregoing paras and the said yam has been used for trading;
(viii) As regards the invoices listed out in Annexure-I to the Show Cause Notice and purported to have been made out in fictitious names, these invoices were recovered from R.R Agencies and the statement of R.R Gupta alone cannot form the basis and the Dept., has not produced an iota of evidence that 1,70,390 kgs. was indeed received by them, not accounted and paid for.
(ix) Officers of the Preventive and Internal Audit Dept. visited the factory a number of times during the relevant period and if there was any clandestine activity, the same could not have been suppressed from these officers and hence extended period of limitation cannot be invoked as per the decisions of the Hon'ble Supreme Court in the following cases:
(a) CCE v. Chempar Drugs 1989 (4) ELT 276 (SC)
(b) Padmini Products v. CCE
(c) Tamilnadu Housing Board v. CCE
(d) Cosmic Dye Chemicals v. CCE 1995 (76) RLT 333 (SC)
(e) CCE v. HMM Ltd.
(x) In this case, the Department is arriving at conclusions on the basis of incomplete investigation and it is an accepted legal principle that on the basis of inconclusive evidence or enquiry no adverse findings can be arrived as has been rightly decided in the following judicial pronouncements.
(a) Embeco v. CCE 1991 (64) ELT 309 (T)
(b) Ebenezer Rubbers Ltd. v. CCE 1996 (26) ELT 997 (T)
(c) Eros Metal Works (P) Ltd. v. CCE
(d) Smt. Ayudayanmal v. CCE
(xi) Where sufficient evidence for clandestine production vis-a-vis removal of goods cannot be established duty cannot be demanded on mere suspicion as per the following decisions:
(a) J.A. Naidu etc. v. State of Maharastra
(b) Ambika Metal Works v. CCE 1990 (29) ECR 549 (T)
(c) R.P. Hussain v. CCE
(xii) In this case it is clear that inferences drawn by the department, are based on surmises and conjectures and in this case not a single instance of clandestine removal has been detected by the officers and the uncorroborated evidence in the form of certain alleged fictitious bills recovered from the Agent of Sanghi cannot form the basis.
(xiii) The burden of proving clandestine removal is clearly on the dept. as held in the decision of the Tribunal in the case of Roneo Vicker India v. CCE 1993 (47) ECR 632 (T) and ICY Cold Commercial Enterprises v. CCE .
(xiv) Charge of clandestine removal based on private records is not sustainable and the authenticity of the records must be proved by the revenue as has been held in the case of T.M. Industries v. CCE ;
(xv) Private records maintained by employees cannot be depended upon for establishing clandestine removal unless they are supported by other evidence such as required material concerned, goods manufactured etc. as per the decisions in the case of C.J. Patel Tobacco Products (P) Ltd., v. CCE 1994 (54) ECR 244 (T) and Kashmir Vanaspati (P) Ltd. v. CCE ;
(xvi) The department has to discharge the burden of proof of removal of non-duty paid goods as per the decision in the case of Sri Sitarama v. CCE 1994 (54) ECR 584 (T);
(xvii) In the absence of documentary evidence, allegation of clandestine removal of goods is not maintainable in law as per the decision in the case of Madhu Food Products v. CCE and six decisions relied in the case of Shakthi Chemical Industries;
(xviii) Evidence of excess production is not basic evidence, it can only be corroborative evidence and demand based on inadequate date not sustainable as per the decisions in the case of Padmanabh Dyeing and Finishing Works v. CE 1996 (67) ECR 131 (T);
(xix) For allegation of clandestine removal of 1,72,094 kgs. of texturised yarn there is no direct evidence for such removals and the conclusions have been drawn from half based circumstantial evidence and the demand is based on inadequate date and hence is not sustainable;
(xx) Third party records are not reliable when there is no direct link of transactions established as per the decision in the case of Rhino Rubbers (P) Ltd., v. CCE ;
(xxi) Statements of employees of the assessees unit not relevant to surreptitious production and removal as per the decision of the Hon'ble Tribunal in the case of LMT Ltd. v. CCE .
4. The Commissioner in the impugned order, after giving hearing and noting about all their submissions, has rejected their pleas and upheld the charges and confirmed the demands. As regards the records/documents cited in the notice, he has observed that scrutiny of 57 invoices issued by the M/s. Sanghi Polyester Ltd. indicated that they were issued on various dates during the period September '94 to March '96 in the names of M/s. Mahalaxmi Textiles, M/s. Vinod Textiles. These are all excise invoices containing details of goods, their values, quantities, amount of duty paid, dates of clearances. He has noted that POY was cleared through all these invoices. All these documents were recovered from the premises of M/s. R.P. Agency, who were procuring POY to the assessee and placing orders on their behalf. While the consignees are as per these documents, he has noted that, there is no reason why they should be available in a premises other than the consignees premises. He has noted that the relationship between M/s. R.R Agency and the assessees are that the former procures raw material to the latter. Some of these invoices namely, 5876, 2093, 6764 were recovered from the residence of Shri Dinesh Modi, father of Sri Ashwin Modi, Managing Director of M/s. Saachi Textiles Pvt. Ltd.; Shri Rajendra Kumar Tiwari, authorised signatory in his statement dated 28.10.96 admitted that the POY received in their factory on the above cited fictitious names was not accounted for in the statutory records at the instance of Shri Ashwin Modi. The Commissioner therefore has noted that Shri Aswin Modi being the authorised signatory was maintaining the various Central Excise records of the assessees. He had also admitted in his statement dated 5.3.97 that all the raw materials relating to the above-mentioned 57 invoices was received by them in their factory and was processed into textured yam and twisted yarn and subsequently cleared unauthorisedly. This statement was corroborated by the statement of Shri Rajendra Kumar Tiwari, Excise Incharge of the factory.
5. The Commissioner has thereafter examined the truck movement register of M/s. Sai Shri Transport containing details such as date, vehicle number, drivers' name consignor, consignee and particulars of goods. He has referred to the statement of Shri Venkatesh, Supervisor of the said transport company, who in his statement dated 11.10.96 stated that they maintain such a register and prepare monthly statements for the purpose of collecting transportation charges. When an entry dated 12.10.95 was shown to him in their Register, he explained that Rajesh Textiles was the consignee as per Way Bill, however, the goods were delivered at the premises of 'Saachi' (as indicated in the brackets against the entry as noted by Commissioner) and that was their practice. He had stated that deliveries were made at the places as suggested by the brokers/agents. The fact that the documents are in the name of Rajesh Textiles but delivery of goods was made in the assessee's premises is established by the above statement and following entries in the register has been noted by the Commissioner in para 10.3 of the order:
6.11.95 Rajesh Textiles (Saachi) 3960 kgs.
11.11.95 -do- 927.35 kgs.
2700.00 kgs.
16.11.95 -do- 2622.40 kgs.
60.00 kgs.
7.12.95 -do- 1200.00 kgs.
1800.00 kgs.
6. The Commissioner has also taken support from the statement of Shri Rajendra Gupta, Managing Partner of M/s. R.R Agency, Commission Agent for POY of M/s. Sanghi Polyesters Ltd. who in his statement dated 6.2.97 had stated that M/s. Saachi Textiles Pvt. Ltd. (appellants) were receiving POY in the names of M/s. Rajesh Textiles, Saibaba Textiles, Mahalaxmi Textiles, Vinod Textiles by placing orders in the name of the above firms and that the payments in those cases were made by way of pay orders.
7. The Commissioner has also noted that lorry receipts issued by Hyderabad VLT Co. and the statement dated 11.10.96 of Shri Anil Kumar, who looks after the receipts and despatches of the said transporting Co., indicated that textured yarn as indicated in Annexure-V to the notice was removed illicitly from the factory of the assessees. The Commissioner has noted that all the 69 lorry receipts were recovered from the premises of the factory of the assessee. Shri Anil Kumar's statement was relied upon by the Commissioner wherein he confirmed that such receipts were issued in token of receipt of goods from the assessees for the purpose of transportation to the consignees. He had further admitted and confirmed that they had transported the textured yam of the assessee. His statement was further relied to show that the goods were sometimes received with Central Excise Documents and sometimes not received with such documents. Therefore, the Commissioner noted that a comparative study of these statutory records/documents with the lorry receipts was made which revealed that the lorry receipts indicated in Annex-V were these which related to the unauthorised removals. Further, reliance was placed on the statement of Shri Anil Kumar to show that the description of goods and consignor details were not recorded in lorry receipts because they recognise the goods by the name of the consignee as they were the regular customers so also they did not record the consignor's name as he was their regular customer. He has noted that almost all these consignments were destined to Sircilla as seen from the receipts and the said Company also run daily services to Sircilla which fact is available on the receipts themselves. The statement of Shri Ashwin Modi, MD; and Shri Rajendra Kumar Tewari were also recorded wherein they had given the names of the firms/persons to whom illicit removals were made from the assessee's factory. The Commissioner noted that these names tallied with the names available in the lorry receipts. The statements recorded from Shri Vasam Srinivas and Shri Hanumala Ram, both belonging to Sricilla, revealed that they had received textured yarn from the assessee through Hyderabad VLT Co. and processed it to the assessees Shri Ashwin Modi, M.D., and Shri Rajendra Kumar Tewari who admitted the fact of illicit removals. The Ld. Commissioner has also noted about the Direct Invoices/Gate Passes, 30 in number recovered from the assessee's factory and indicated in Annex-VI to the notice which contained details such as number and date, consignee's name and place, particulars and quantity of goods and the 'Out' (time of removal) particulars. The time of removal of these goods is also indicated on these documents. Therefore, the Commissioner concluded that these documents were from the factory premises, Shri Ashwin Modi and Shri Tewari having admitted the illicit removal of textured yam under the cover of these documents and the SCN indicated that comparative study of the statutory documents with these documents revealed and confirmed the utilisation for removal of goods illicitly.
8. The Commissioner has also noted several invoice numbers in para 10.7 of the order which were recovered from the residential premises of Ashwin Modi. These invoices and way bill issued by SPL for transport of POY are in the names of M/s. Saibaba Textiles and M/s. Vinod Textiles. He has noted that there was no need for these documents to be in the residence of Shri Ashwin Modi, when the consignees are somebody else, unless he has something to do with the documents. Therefore, it clearly showed the relationship of Modi with these documents. He has also noted that Shri Rajendra Kumar, Managing Partner of RP Agency had confirmed the despatch of a copy of the letter dated 11.7.96 of SPL addressed to RP Agency to the assessee. He had also confirmed the then receipt of POY by the assessee, which was received in the names of M/s. Rajesh Textiles, M/s. Mahalaxmi Textiles, M/s. Vinod Textiles, M/s. Saibaba Textiles. Therefore, in para-11 the Commissioner has concluded as follows:
(i) assessees were in the habit of receiving raw materials in fictitious names and were not accounting for the same in the statutory records.
(ii) Raw materials so received were proceeded into textured yarn and twisted yam and the same was declared unauthorisedly.
(iii) Commission agent of SPL for POY confirmed the Modus Operandi at SI. No. 1 above.
(iv) LRs of Hyderabad VLT Co., direct invoices/Gate passes of the assessee support the fact of illicit removals of finished goods.
(v) Truck Movement Register recovered from M/s. Sai Shri Transport Co., also confirms the scheme at serial No. 1 above.
(vi) Shri Ashwin Modi stated that they got POY from SPL and placed the orders for the same through R.R Agency.
(vii) Consignees at Sircilla confirmed receipt of finished goods from the assessee.
(viii) Assessees were getting grey fabric manufactured on job work basis for which they were supplying textured and twisted yarn.
After further discussion on the evidences and arguments, on the appellants' pleas, the Commissioner has rejected their pleas. The Commissioner in para-12 to 19 of his order has given the reasons as to why he does not accept the arguments of the assessee.
9. We have heard Shri R. Raghavan, Ld. Counsel for the appellants and Shri S. Kannan, Ld. DR for Revenue.
10. Ld. Counsel submitted that the Commissioner has already come to the conclusion that raw material POY as referred to in Annexure-I (to SCN) had been received by the appellants. There is nothing on record to show that the 57 consignments referred to in Annexure-I (to SCN) had been received by the appellants or that the same were recovered from the appellants' factory or the R.R Agencies or the transporters' premises. He contended that the show cause notice had been issued covering 57 invoices referred to in the said annexure merely on the basis of an averment in the statement of Shri Rajendar Gupta that consignments relating to third parties namely M/s. Mahalaxmi Textiles, Sai Baba Textiles, Rajesh Textiles and Vinod Textiles in fact relate to M/s. Saachi Textiles (appellants). Therefore, he contends that there is nothing on record to link these 57 invoices to the appellants. He contended that no statement had been recorded from Sanghi Polyester Pvt. Ltd. to the effect that the goods meant for M/s. Saachi Textiles (appellants) were being invoiced in the name of four parties mentioned supra. He also contended that the investigation officers had not recovered any evidence to show that appellants had paid for all the 57 invoices relied on by Revenue. He contended that there cannot be payment in cash for these 57 consignments and it had to be either through Claque or Demand Draft and no such source has been detected for payment. Therefore the allegation pertaining to purchase of these 57 consignments to the said invoices is not proved in this case. He contended that only account books and records had been seized from R.R Agencies and there is nothing on record to show that the said referred invoices had been recovered from R.R Agencies. There is nothing in the statement of Shri Rajendra Gupta to link the 57 invoices referred in the Annexure-1 to SCN to the appellants. He further pointed out that copies of invoices as made available to them in terms of Annexure I to the SCN were only photocopies of triplicate copies of invoices meant for Central Excise purposes and these had been taken from RT-12s filed by the appellants. This point had not been looked into by the Commissioner and he had failed to note that from the statement recorded from M/s. Sai Shri Transport, Hyderabad there is nothing to suggest that consignments relating to 57 invoices referred to in Annexture-I to SCN had been transported by them from the appellants. He further submitted that there is no evidence found to show that appellants had paid for the transport charges to transport these goods from M/s. Sanghi Polyester Pvt. Ltd. to appellants. He pointed out that most of the 57 invoices had been consigned to Biwandi, Maharashtra. In such circumstances, there is no possibility of the goods being delivered to Saachi Textiles, Hyderabad. This point had not been answered to by the Commissioner in his order. He pointed out that even the statement of Shri Venkatesh of Sai Sri Transport would only refer to the transport during November and December '95 whereas alleged receipt of unaccounted POY is between September '95 and March '96. He pointed out that there is no other evidence from the appellants factory with regard to manufacture or alleged clandestine manufacture. There is no other statement from any importer or any other person excepting Shri R.K. Tiwari and Shri Rajan as regards the date of unaccounted POY or unaccounted manufacture. Further, there was nothing from their statements that can be said to be implicated the date of receipt of POY or manufacture and removal of goods. The statement of both of them was general in nature and no conclusions can be drawn with regard to manufacture or removal of the goods. He further submitted that the statement of Shri Anil Kumar of Hyderabad VLT & Co. also is not conclusive proof of transport of twisted yarn/texturised yarn from M/s. Saachi Textiles, Hyderabad. They have submitted that the lorry receipts of Hyderabad VLT & Co. referred to in SCN does not contain the details of consignor or description of the goods transported. In these circumstances, the conclusions arrived at by the Commissioner that only texturised and twisted yarn manufactured by Saachi Textiles had been transported by Hyderabad VLT & Co. or for and behalf of Saachi Textiles is not correct and not acceptable. There is also no evidence of transport payment made to Hyderabad VLT & Co. He further pointed out that the statement of Shri Vasam Srinivas and Shri Hunamandla Ram Narayan Rao, job workers who had allegedly received unaccounted goods from appellants is not conclusive to come to any conclusion as regards the quantities of such unaccounted finished product received by them and the grey fabrics transported by them back to Saachi Textiles. He further submitted that there was nothing from these statements to establish the case of clandestine manufacture and removal or clandestine receipt of raw materials. He submitted that there is no admission made by any witness in the matter with regard to clandestine removal of goods covered by 30 invoices. He further submitted that the Commissioner was not right in adding 1% to the raw material weight in arriving at the weights of the finished product alleged to have been cleared without payment of duty. He further submitted that the Commissioner had failed to consider the appellants' eligibility for exemption under CE No. 1/93 dated 28.2.93 for the year 1996-97. Therefore, the Commissioner had proceeded on the basis of SCN to suggest clearances for the year 1995-96 had exceeded Rs. 3 crores. He submitted that there is no working available with the impugned order to come to the conclusion for the year 1995-96, with regard to clearances having exceeded Rs. 3 crores. He submitted that even the Commissioner was not justified in refusing grant of Modvat credit for the inputs POY which said to have been received by them for manufacture of unaccounted quantities of texturised/twisted yarn and even reliance by Revenue on unaccounted receipt of POY is on documents on which appellants ought to have been granted Modvat credit to arrived at the correct value and duty liability. He pointed out that for the year 1995-96, the assessable value cannot be the sale price. The duty amount is to be determined after taking into consideration various abatements available for the party in terms of Section 4(4)(d)(ii) CEA 44. He contends that even in the case of clandestine removal, the duty has to be worked out only after considering the exemption Notification No. 1/93 dated 20.2.93 and after giving various deductions in terms of Section 4 of the Act. He contends that duty which has been arrived at is highly exaggerated amount and without giving fair opportunity of hearing and considering their pleas on these aspects and hence the order impugned to that extent of confirmation of demands is not sustainable and requires to be set aside on this count. He further submitted that as regards the quantity of 4511.96 kgs. of POY available with the appellants on 11.10.96 same was not liable for confiscation and the same ought to have been released by accepting the explanation. He pointed out that the transaction in this case pertains to prior to September 96 and therefore question of imposing mandatory penalty Under Section 11AC does not arise and not sustainable as said provision was not enacted then and it came into force only after the period in question. Therefore, he contends that for all these reasons, Revenue has not established the case of clandestine manufacture and removal and hence demands are required to be set aside and, in the alternative, Ld. Counsel pleads that the matter was required to be reconsidered on duty computation and the benefit of Notification available to them. He relied on the ratio of the following judgments:
1. Geetha Steel Rolling Mills
2. Gujarat Ambuja Cement
3. Nova Steels (India) Ltd. 1997 (95) ELT 759.
He further relied on the Final Order No. 696/96 dated 30.4.96 rendered in the case of Indo Organics & Manickavel v. CCE Guntur with regard to grant of Modvat credit even on clandestine removal.
11. Ld. DR points out that the evidence on record is enormous which clearly disclose the manner in which the appellants had adopted modus operandi for receiving the inputs in fabricated copies and fictitious names and the entire transaction had been discussed and the order is a speaking one and well written order in all aspects of the matter. He submits that there were clear admissions with regard to receipt of inputs and the transporters had admitted delivery of goods to the appellants. The Managing Director and the clerk dealing with Excise matters had admitted about the receipt of inputs in fictitious names; manufacture and clearances of the final product and therefore the Commissioner had rightly upheld the allegations. He submits that appellants were not entitled to the benefit of notification as claimed for the reasons and duty had been rightly computed after giving all deductions available Under Section 4 of the Act. Therefore, he submits that penalty had been rightly imposed as evasion of duty was very high and hence prays for confirming of the order.
12. We have considered the submissions and after considering the same, we find that
(a) since the Commissioner has not given reasons for denying the Modvat credit eligibility on the duty paying invoices of M/s. Sanghi Polyster, which has been ascertained from the Central Excise records and when he is coming to a finding that the goods have been received in the factory premises and thereafter used in relation to the manufacture of the final products, which was required to pay duty, then Modvat credit cannot be denied, as held in the decisions of the Tribunal relied on by the Ld. Advocate i.e. Pasumal Irrigations Ltd. ; Gujarat Ambuja Cement ; Bharat Cocking Coal Ltd. 2000 (40) RLT 195 (CEGAT); Indo Organic & Manickavel -- Final Order No. 696/1996 dated 30.4.96. It is now well established that Modvat credit cannot be denied when final goods are being held to be dutiable and duty being determined on them especially before the date of amendment of Rule 57E. Therefore, the order of the Commissioner which has not considered the plea of the appellants to grant them Modvat credit cannot be upheld and the order is required to be set aside and remanded back for de novo adjudication to determine the eligibility of the Modvat credit and thereafter determine what would be the duty required to be paid from the PLA account and thereafter determine penal liabilities, since penal liabilities will have to be reckoned with the amounts of monitory gains appellants had obtained, since there are no allegations that non-duty paid raw material was being received and thereafter being texturized and removal without payment of duty.
(b) The statements of the Managing Director have not been retracted and the recovery of the invoices has not been disputed. Therefore, applying the law as held in para 54 of the case of Siemens as reported at and the other material on record, we would consider this case to be prima facie of clandestine manufacture and non-duty paid removal. However, the quantum of the excisable goods manufactured and removed without accounting and determining duty thereon is required to be determined by the Commissioner after considering the material and the arguments as placed before us and also which the appellants may like to place before the Commissioner at the time of personal hearing in the matter which we propose to remand.
(c) Since the matter is remanded back for re-determination of the amounts of duty required to be paid through PLA and the penalties and fines in de novo adjudication, we leave all matters open for the parties to agitate before the Commissioner, who should pass a speaking order as to why the decisions cited before him are not applicable in the facts of this case.
13. The impugned orders are set aside and appeals allowed as remand for de novo adjudication.