CEAT LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) This case is once again arising before this Tribunal consequent upon a remand ordered by the Hon'ble High Court vide order dated 3.7.08 as clarified in order dated 23.9.08 in Central Excise Appeal No. 110 of 2007 on the file of the Hon'ble High Court of Judicature at Bombay.

(2.) The appellant is engaged in the manufacture of automotive tyres, tubes etc. During the period of dispute (1997 -98 to 1999 -2000), they had availed MODVAT Credit on both inputs and capital goods. The internal auditors of the department, upon scrutiny of the appellant's records, found that certain credits on inputs and capital goods had been irregularly availed by them. Subsequently, in a show -cause notice dated 21.11.2002, the department alleged that the appellant had incorrectly availed excess MODVAT Credit on inputs for the period 1998 -99 in contravention of Rule 57A of the Central Excise Rules, 1944; irregularly availed MODVAT Credit on capital goods in breach of Rule 57R(8) of the said Rules by simultaneously claiming depreciation of value of the said capital goods under Section 32 of the Income Tax Act; availed excess MODVAT Credit on LSHS (Low Sulphur Heavy Stock) supplied by M/s HPCL thereby contravening of the provisions of Rules 57A read with Rule 57G, etc. The show -cause notice further alleged that the noticee had deliberately suppressed relevant facts for the purpose of wrongly availing MODVAT Credits totaling to Rs. 27,08,101/ -. The show -cause notice proposed to deny the MODVAT Credits, in question, to the appellant under Rule 57I in respect of inputs and Rule 57U in respect of capital goods, as also to impose penalties on them under the relevant provisions. These proposals were contested by the party in a detailed reply to the show -cause notice. With regard to the allegation of suppression of facts, the party pleaded that the MODVAT Credit availed on capital goods after claiming depreciation of value thereof under the Income Tax Act was only unintentionally taken. With regard to the excess credit allegedly taken on inputs, it was submitted that the shortage of the quantity of inputs received in the factory was negligibly small and that credit was taken only on the quantity actually received in the factory. The appellant prayed for dropping of the proceedings. It was in adjudication of this dispute that the impugned order was passed by the learned Commissioner, who confirmed the demand of duty to the extent of Rs. 17,96,685/ - against the appellant under Section 11A(1) of the Central Excise Act with interest thereon under Section 11AB of the Act. The adjudicating authority also imposed penalty equal to duty on the appellant under Rule 57I(4) read with Section 11AC.

(3.) We have heard the learned Departmental Representative also in respect of the above MODVAT Credits in question.