COMMR. OF CENTRAL EXCISE Vs. HINDUSTAN ENGINEERING AND

JUDGEMENT

(1.) THE brief facts of the case are that the respondent has availed irregular modvat credit during the period of 1995 -96 on the basis of duty paying documents of various steel materials fraudulently prepared and supplied by a registered dealer without actually supplying the corresponding materials. During the course of investigation by DGAE against some registered dealers of iron and steel products, it was found that the input materials manufactured and cleared by prime manufacturers are used by the small scale sector/evasion prone industries by purchasing them in cash without accountal. The corresponding duty paying documents alone are procured/purchased by the registered dealers who take corresponding credit in RG 23D Account and then issue their own modvatable invoices in their favour of other manufacturers. In fact, they transact only with the duty paying documents without dealing with the corresponding input materials. The recipient manufacturers avail of modvat credit on the strength of such fraudulently procured documents against purchase of bazaar scrap. In this way the respondents have contravened the provisions of Rule 57A, 57F, 57G of the Central Excise Rules, 1944. After investigation, a show -cause notice was issued by the Revenue. The Additional Commissioner confirmed the duty and also imposed a penalty of Rs. 1,00,000/ - (Rupees one lakh only) on the respondents in terms of Rule 173Q of the Central Excise Rules, 1944.

(2.) THE respondents went to an appeal to the Commissioner (Appeals) who in his order allowed the appeal with consequential relief to the respondents, if any.

(3.) THE Revenue has come in appeal being aggrieved with the decision of the Commissioner (Appeals). Hence the present appeal.