ASHOK LAYLAND Vs. CCE

JUDGEMENT

(1.) This is an appeal at the instance of the assessee challenging the order passed by the Commissioner of Central Excise, Jaipur dated 12.10.2000. Under the impugned order the Commissioner confirmed the duty demand of Rs. 64,81,078 (Modvat credit), Rs. 22,64,168.70 (debit already appropriated and imposed penalty of Rs. 20,67,200 under Rule 571(4) and a further penalty of Rs. 20,00,000 under Rule 173 -Q(1)(bb). There is also a demand of interest under Rule 57 -1(5). The period involved is from August 1994 to September 1997. The show cause notice is dated 4.8.99.

(2.) The appellant is a manufacturer of motor vehicles falling under Chapter 87. They have a factory at Alwar in Rajasthan and another one at Ennore, Madras. The components are manufactured at Ennore, Madras and are supplied to Alwar Factory where assembly of motor vehicles takes effect. Some of the components are purchased from outside by the Ennore factory and sent to Alwar. Under the show cause notice dated 4.8.99 issued by the Commissioner of Central Excise, Jaipur, it is alleged that the appellant had availed ineligible credit to the extent of Rs. 1.44 crores during the period from August 1994 to September 1997 under Rule 57 -1 of the Central Excise Rules, 1944. It is further alleged that on examination of the records by the officers of Anti Evasion Department who visited the appellant's premises in October 1997 it was found that the appellant had been receiving various inputs and component from Ennore factory under invoice -cum -Knocked Down Despatch Advice (KDDA), that on receipt of the goods, a document known as Shortage/Excess Intimation Note (SEIN) was being prepared at Alwar factory. The above document showed the details of the goods as per the KDDA and the actual quantity received differed. But the appellant had taken modvat credit of the duty mentioned on the invoices, that no adjustment had been made in respect of shortage or non -receipt in the RG 23A Part II and that the actual quantity of inputs received nor the duly on such inputs had been correctly declared. The show cause notice proposed to recover en excess modvat credit under Rule 57 -1 by applying the extended period of limitation.

(3.) The appellants filed a detailed reply to the show cause notice pointing out that no duty could be demanded as alleged in the show cause notice both on merits as well as on the ground of limitation. Earlier two show cause notices dated 28.10.94 and 30.10.95 had been issued to the appellant on the very same issue for the period from 6.11.89 to 30.6.94. Detailed replies were filed to the above show cause notices. Thereafter the Additional Commissioner passed an order dated 5.1.98 sustaining the demand against which an appeal had been preferred by the assessee before the Commissioner of Central Excise, Jaipur. It was contended that there was no suppression of facts which would enable the Revenue to take recourse to the larger period of limitation of the department was fully aware of the nature of the transactions which were identical to that obtained during the period from 6,11.89 to 30.6.94 covered by the earlier show cause notices. The department was fully aware of the manner of receipt of the goods in Alwar factory and taking of modvat credit on the same by the appellant even when the earlier show cause notice were issued in 1994 and 1995. The appellant pointed out that as per earlier two show cause notices the department had asked the appellant to reverse modvat credit of Rs. 33 lakhs (approx.) for the period from 1989 to 1994 working out pro rata on the same basis, the department had then arrived at a figure of Rs. 59,583 per month. This amount was being reversed every month during the relevant period from August 1994 to September 1997. Thus in all, during this period an amount of Rs. 22 lakhs (approx.) had been reversed in the RT -12 Returns cumulatively. Under these circumstances, it cannot be contended that the department was not aware of the procedure followed by the assessee and that there was no suppression of facts. Hence, the appellant contended that the present show cause notice dated 4.8.99 is barred by limitation.