ISMT LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, PUNE

JUDGEMENT

(1.) THE appeal is directed against Order -in -Original No. 23/ASR/2005 -ADJ, dated 29 -6 -2005 passed by Commissioner of Central Excise, Pune -III. Vide the impugned order, the learned Commissioner has confirmed a duty demand amounting to Rs. 1,43,84,829/ - towards ineligible credit availed by the appellant without receipt of inputs, scrap; Rs. 3.00 lakhs towards inputs not received on which the credit has been availed; Rs. 6,41,516/ - towards credit attributable to goods sent on job work but not received back either as such or by way of scrap; Rs. 22,17,400/ - towards DSRM Rolls manufactured by the appellant and sold to Indian Seamless Steel & Alloys Ltd., (ISSAL in short) in September 1996 and leased back to the appellant and Rs. 13,05,482/ - towards reversal of credit in respect of 38 Nos. of DSRM Rolls sold to Indian Seamless Metal Tubes Ltd. (ISMTL in short) and leased back to the appellants. He has also imposed a penalty amounting to Rs. 89,22,882/ - on the main appellant; Rs. 15 lakhs on Shri M.G. Apte, General Manager (Finance) of the appellant firm under Rule 209A of the Central Excise Rules, 1944 and a penalty of Rs. 25.00 lakhs on Shri Sanjay Gupta, the agent of scrap dealer. However, Shri Sanjay Gupta has not appeared before us. Therefore, we are taking up the appeals only in respect of the main appellant, M/s. ISMT Ltd. and Shri M.G. Apte, General Manager (Finance) of the main appellant.

(2.) THE first demand of Rs. 1,43,84,829/ - has been made on the ground that during the year 1995 -96 the appellant took credit on a quantity of 92,427 MTs of scrap said to have been received as per RG -23A Part -I Register maintained by the appellant, whereas in form 3CD, which is a statutory return filed by the appellant with the income tax authorities, the appellant had shown the purchases of all raw materials including non -cenvatable raw materials at 80,990 MTs. Further, in the daily stock statement maintained by the appellant, which indicates the opening balance, receipt, consumption and closing balance of the raw materials, the receipts were shown to be 78,408 MT. Therefore, notice was issued to the appellant alleging that they have availed excess credit on a quantity of 14,019 MTs (92,427 MTs - 78408 MTs) without actual receipt of the materials and therefore, no credit could be taken on the said quantity amounting to Rs. 1,43,84,828/ -. As regards the demand of Rs. 3.00 lakhs, this demand pertains to the quantity of raw materials short received by the appellant being the difference between the quantities indicated in the duty paying documents and the weighment of the inputs received at the weigh bridge of the appellants. In respect of this quantity, the appellant had raised debit notes on the supplier/transporter towards non -receipt of the goods and had recovered the amount. Therefore, the adjudicating authority concluded that in the absence of actual receipt of the goods, no credit could be taken and accordingly confirmed a duty demand of Rs. 3.00 lakhs. As regards the third demand of Rs. 6,41,516/ -, the appellant had supplied raw materials to job workers under Rule 57F(4) of the Central Excise Rules, 1944 and the waste generated during the job working process was required to be returned, which was not done, or the waste generated should have been cleared on payment of duty for which no evidence has been led by the appellant and therefore, after adjusting for the invisible loss during job -working process, the adjudicating authority confirmed the above demand towards the visible loss, which occurred during the job -working process. As regards the fourth demand of Rs. 22,17,400/ - the duty demand was confirmed on the ground that the appellant manufactured 76 Nos. of DSRM Rolls falling under CETH 84.55 and the said DSRM Rolls were sold to M/s. ISSAL. Since the goods were sold, the appellants were required to pay duty on such DSRM Rolls manufactured by them. The fifth demand of Rs. 13,05,482/ - was confirmed on the ground that the appellant had imported 38 Nos. of DSRM rolls and took credit of the CVD paid thereon and subsequently, these rolls were sold to ISMTL but the credit taken was not reversed. Inasmuch as the rolls were sold, the appellant was required to pay duty or reverse proportionate credit.

(3.) THE learned Additional Commissioner (AR) appearing for the Revenue on the other hand reiterates the findings of the adjudicating authority. He submits that as regards the demand of duty of Rs. 1,43,84,829/ - is concerned, it is clear that in the returns filed before the Income -tax authorities in form 3CD for the year 1995 -96, the appellant had indicated the purchases at 80,990 MT, which is much lower than the figure of 92,427 MTs shown in the RG -23A Part -I Register. The figure of 92,427 MTs pertains to Cenvatable inputs whereas the figures in the 3CD return reflects both Cenvatable inputs as well as non -centavable inputs and in the normal course, the figures declared in form 3CD should be higher than those reflected in RG -23A part -I register. He also points out that for the previous two years, 1993 -94 and 1994 -95 are concerned, the figures declared in form 3CD is higher than those declared in the RG -23A register. Therefore, during the year 1995 -96 alone, the declaration of a lower figure in form 3CD does not stand to any reason. Further, in the daily stock statement which accounts for the receipt, consumption and during stock of raw materials, the receipt shown is only 78,408 MTs. As per the procedure followed by the appellant, as evidenced from the statement of Shri Pattanshetti, Assistant Manager (Stores), it is clear that the appellants have been maintaining the daily stock an actual basis and as soon as the goods are received, entries are made in the register. If that be so, the actual receipt of goods during 1995 -96 can be taken only at 78,408 MTs and not 92,427 MTs as indicated in the RG -23 Part -I register. Therefore, the adjudicating authority is right in denying Cenvat credit on 14019 MTs which is in excess of the figures reflected in the daily stock register. Accordingly, he submits that the demand of Rs. 1,43,84,829/ - by denying the credit on excess material is clearly sustainable in law.