MADURA COATS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) This appeal arises from Order -in -Original No. 16/2002 dated 24.4.2002 by which the Commissioner of Central Excise has disallowed modvat credit and has ordered for recovery of an amount of Rs. 37,34,003 under erstwhile Rule 57AH of Central Excise Rules, 1944 read with Section 38A of the Central Excise Act, 1944 by invoking the larger period of limitation under Section 11A of the Act. There is an equal amount of penalty imposed under Section 11AC of the Act.

(2.) The short facts of the case are that the appellants are engaged in the manufacture inter -alia of cotton yarn, processed fabrics, man -made fabrics and industrial fabrics falling under Chapters 52, 54, 55 and 59 of the CETA, 1985. They were issued with show cause notice by the Assistant Commissioner on 5.9.2001 calling upon them to explain as to why the modvat credit taken by them in cenvat fabrics register on the strength of supplementary invoices should not be disallowed.

(3.) It was alleged in the notice that the unit at Aladiyur raised supplementary invoices with reference to the fabrics cleared during the period from 1.8.99 to 30.6.2000 with the sole intention of passing the benefit of CENVAT in favour of the assessee, as an offence case was registered by the Range officials against M/s Madura Coats Limited, Aladiyur for undervaluation of fabrics cleared to the assessee; in connection therewith, sales invoices and modvatable invoices were recovered by drawing a mahazar; and with a view to escape the penal consequences, the unit at Aladiyur voluntarily paid the amounts in question and raised the impugned supplementary invoices. It was also alleged in the notice that though the number and date of clearance documents under which the assessee received the fabrics .... Aladiyur unit were not correctly furnished in the Annexures to the supplementary invoices yet, the assessee took CENVAT credit on the strength of the documents (supplementary invoices) in contravention of Rules 57AB and 57AE of the Central Excise Rules, 1944. It therefore appeared that the amounts in question were taken as CENVAT credit with an intention to evade payment of duty. The provisions of Section 11 AB were invoked for recovery of interest and the provisions of Section 11 AC and Rule 173Q read with Rule 25 of Central Excise (No. 2) Rules, 2001 and Rule 13 of Cenvat Credit Rules, 2001 were invoked for imposition of penalty.