MEWAR POLYTEX LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal by the assessee seeks to challenge the order of the Tribunal dated 4-7-2005, allowing the appeal of the Revenue, and setting aside the order of the Commissioner (Appeals), who in turn had set aside the order-in-original, whereby (by order-in-original), the Assistant Commissioner had disallowed the Modvat credit of Rs. 5,37,799/-, and confirmed the recovery thereof, and also imposed a penalty of Rs. 50,000/- under Rule 173Q(1)(bb) of the Central Excise Rules, 1944 . The appeal was admitted on 7-4-2006, by framing the following substantial question of law :-

(2.) The necessary facts, in brief are, that the show cause notice dated 15-2-1999 was issued to the assessee alleging to have wrongly taken credit to the extent of Rs. 5,37,799/- under Rule 57A of the Central Excise Rules, 1944, during August, 1998, and calling upon the assessee to show cause and explain, as to why aforesaid credit, wrongly taken by assessee should not be disallowed/recovered under provisions of Rule 57-I, and penal action under Rule 173Q(1)(bb) should not be taken, and interest should not be charged under Section 11AB. This is the precise show cause notice given. To show as to how the Modvat credit was wrongly availed, it was mentioned in the notice, that the assessee is engaged in the manufacture of HDPE/PP fabrics and bags, and clearing the goods for home consumption on payment of central excise duty, as well as exporting the goods under bond without payment of duty, and is availing Modvat credit on the inputs under Rule 57A. It was alleged, that the assessee vide AR4s dated 4-8-1998, 17-8-1998 and 22-8-1998 had exported certain quantity of fabrics in his own account, and in the said AR4s had given declaration, that the assessee have manufactured the fabric as mentioned in AR4, and that the benefit of Modvat under Rule 57A has not been availed, and have not availed the facilities under Rules 12(1)(b) and 13(1)(b), and that export is discharge of export obligation under advance licence file, which was a false declaration, as the assessee has been availing Modvat credit on the inputs under Rule 57A. Likewise, in column 4, the assessee had further declared, that the export is under duty drawback, while on examination of Central excise records and R.T.12 return of the assessee, it was found, that the assessee had taken Modvat credit on the inputs used in the manufacture of exported goods, and they have not received any duty free consignment of PP Granules (Inputs) from anyone, for exporting the goods on his behalf till the date of above-said exports, and they have also not reversed any credit taken on the inputs used in the goods exported vide above referred AR4s. Thus, the assessee was found to have wrongly taken credit of modvat, to the tune of Rs. 5,37,799/-, which was not admissible.

(3.) The Assessing Officer confirmed the demand, which was set aside in appeal, and was reconfirmed in further appeal, as mentioned above.