EM ESS ELECTRICALS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal has been filed by the appellants against the impugned order -in -appeal dated 9 -7 -2002 vide which the Commissioner (Appeals) has confirmed the duty demand of Rs. 6,37,246/ - with penalty of Rs. 6 lakhs.

(2.) THE appellants are engaged in the manufacture of electric wires and cables. They had been availing the benefit of Modvat credit scheme on the raw materials such as copper wires. They purchased copper wires from M/s. Kejriwal Enterprises and M/s. Priyanka Metal Overseas under the cover of 29 gate passes during the years 1991 -92 and 1992 -93. The purchased copper wire was used by them in the manufacture of cables and Modvat credit was taken in respect thereof on the basis of gate passes. However, during the enquiry by the officers of Central Excise, it revealed that Kejriwal Enterprises and Priyanka Metal Overseas did not manufacture the copper wires and that they only issued the gate passes to the appellants for claiming Modvat credit. Accordingly, the appellants were served with the show cause notice for disallowing Modvat credit of Rs. 6,37,246/ - on the ground that the copper wire purchased by them from the above said firms was neither received in their factory nor used in the manufacture of the final product. The extended period of limitation was invoked in the show cause notice and penalty was also proposed to be imposed. The appellants contested the contents of that notice. They denied of having not received the inputs through the disputed 29 gate passes from Kejriwal Enterprises and Priyanka Metal Overseas. They alleged that the gate passes were duly submitted by them with RT 12 returns and made entries in the RG 23A register and that payment was made by them through cheques. The adjudicating authority did not accept their version and confirmed the demand with penalty detailed above. A separate penalty of Rs. 50,000/ - was also imposed on Shri Subhash Gahrotra, partner of the appellants. The Commissioner (Appeals) however set aside that penalty. But maintained the rest of the order -in -original of the adjudicating authority against the appellants.

(3.) THE learned Counsel has contended that there is no tangible evidence on the record to prove the non -receipt and non -utilisation of the raw material i.e. copper wire by the appellants, in the manufacture of their final product. The enquiry made against Kejriwal Enterprises and Priyanka Metal Overseas regarding their manufacturing activity, had been wrongly used against the appellants without any basis. He has also contended that the demand is time -barred.