2009 (2) TMI 565 - AT - Central Excise

Tribunal Upholds Order in Modvat Credit Case, Dismisses Appeals for Procurement Discrepancies

ABHAY INDUSTRIES Versus COMMISSIONER OF CENTRAL EXCISE, DAMAN

The Tribunal upheld the impugned order in a case involving alleged wrongful availing of Modvat credit by a metal components manufacturer. The appellant ... Demand - Cenvat/Modvat - Short receipts of inputs Issues Involved: Alleged wrongful availing of Modvat credit without bringing inputs in factory premises, calculations of duty quantum based on raw material shortage, rejection of Chartered Engineer's certificate, discrepancies in documents showing procurement of raw materials.Manufacture of Metal Components and Containers:The appellant, engaged in manufacturing Metal Components, Metal Containers, and Ring-O-Seal, faced allegations of wrongfully availing Modvat credit without bringing inputs to their factory premises. The Department alleged that the appellant had taken credit amounting to Rs. 33,94,590.90 based on raw material found short, which was sold in the open market. The dispute revolved around the calculation of the quantity of duty owed by the appellant.Calculation of Duty Quantum:The impugned order was passed by the Commissioner in de novo proceedings after the matter was remanded by the Tribunal. The appellant's grievance centered on the calculation of the duty quantum. The appellant contended that the calculation regarding the alleged shortage of raw materials, used to deny Modvat credit, was incorrect. The appellant's advocate presented evidence from bills of entry showing the thickness of imported metal sheets and argued that the calculations made by the investigating officer were misleading and incorrect.Rejection of Chartered Engineer's Certificate:The adjudicating authority rejected the Chartered Engineer's certificate, citing discrepancies in the report and questioning the basis of the calculations. The authority found faults in the Chartered Engineer's methodology, including reliance on data from another unit and discrepancies in the size and type of goods manufactured by the appellant. The authority also highlighted discrepancies in the documents related to the procurement of raw materials, leading to the rejection of the certificate.Discrepancies in Procurement Documents:The adjudicating authority pointed out discrepancies in the documents showing the procurement of raw materials, emphasizing that the calculations based on the highest gauge mentioned in the bills of entry were incorrect and misleading. The authority observed that the appellant failed to provide actual gauge-wise purchase details, leading to inaccuracies in the calculations. Additionally, discrepancies in the size of components and the number of consignments further raised doubts about the accuracy of the appellant's submissions.In conclusion, the Tribunal upheld the impugned order, emphasizing that the appellant did not provide a satisfactory explanation for the discrepancies highlighted by the adjudicating authority. The rejection of the Chartered Engineer's certificate was justified based on the inconsistencies in the report and the lack of evidence supporting the calculations. The Tribunal found no grounds to interfere with the order and dismissed the appeals.