CLASSIC STRIPS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) HEARD both sides.

(2.) THE issue relates to fraudulent availment of modvat credit on invalid documents and imposition of penalty on the main appellant as well as co -noticees. We have perused the impuned order. After perusal of the same and the records, we find that the order of the Commissioner while dis -allowing the modvat credit is solely based on various oral statements. Briefly stated the facts of the case are that on the specific information that M/s. Classic Strips Pvt. Ltd. the manufacturer of Printed self -adhesive PVC stickers/stripes availed modvat / Cenvat facility under the then Rule 57A of Central Excise Rules, 1944 (now Rule 4 of the Cenvat Credit Rules, 2002). The impugned order does not appear to have discussed any documentary or corroborative evidence to sustain disallowance of the modvat credit.

(3.) THE appellants are non SSI unit and are availing the benefit of Cenvat credit scheme on the duty paid inputs under Cenvat Credit Rules, 2002. Some of their inputs are printing inks, dyes and pigments, which they are procuring from various manufacturers and registered dealers. Searches were made in the factory and the statement of the company recorded. The show cause notice issued made allegations that the appellant was availing modvat credit fraudulently on the basis of dealers invoices without actually receiving the goods. No copy of the test report was given to the appellants to enable them to file their reply within the time limit granted in the show cause notice. No independent enquiry was conducted despite written request of the appellant as admitted in the letter dated 7.8.2002. The panchnama dated 1.9.1999 which was drawn on the day of the surprise visit clearly mentioned that no discrepancies in the stock of finished goods as well as raw materials was noticed and the same were according to the book balances. The appellant submitted that the opinion of the UDCT was a conclusive and clear report, which would nullify the hearsay evidence and was cogent and reliable since it was the department who had made a reference to UDCT and whose opinion was not disputed by the appellants, being in their favour. The appellant further submitted that it was clear that the Department held willfully suppressed the outcome of the UDCT opinion. The failure of the investigation to carry out proper investigation could not be at the expense of the appellant and to their prejudice. The Id. DR has reiterated the impugned order. Alter heating and perusal of the records, we find that for the following reasons we need to waive the pre -deposit and after waiver allow the appeals at the stay stage itself: