2002 (3) TMI 60 - HC - Central Excise

High Court affirms Tribunal decision on Modvat credit denial for aluminium/zinc alloy ingots.

The High Court upheld the Tribunal's decision in a case involving an application under Section 35(G)(3) of the Central Excise & Salt Act, 1944. The ... Demand - Limitation Issues:1. Application under Section 35(G)(3) of Central Excise & Salt Act, 1944 against Reference Order.2. Questions of law regarding Modvat credit on aluminium and zinc alloy ingots.3. Burden of proof on the department to establish suppliers as manufacturers.4. Evidence of non-conducting of enquiries by Central Excise officers.5. Denial of Modvat credit and imposition of penalty.6. Filing of invoices with RT-12 returns and mis-declaration.7. Knowledge of exemption by the petitioner company.8. Appeal against Tribunal's decision on Modvat credit.Analysis:1. The case involved an application under Section 35(G)(3) of the Central Excise & Salt Act, 1944 against a Reference Order. The Tribunal raised questions of law regarding the Modvat credit on aluminium and zinc alloy ingots supplied by specific manufacturers. The Tribunal examined evidence on record and concluded that the petitioner company was not entitled to the benefit of deemed credit on non-duty paid inputs.2. The issue of burden of proof arose concerning whether the department had established with acceptable legal evidence that the suppliers were manufacturers of the goods supplied. The Tribunal found that the department had not conducted necessary enquiries regarding the suppliers' manufacturing activities, leading to a lack of evidence supporting the suppliers' status as manufacturers.3. Another key issue was the denial of Modvat credit and imposition of penalties. The Tribunal considered whether the department had discharged the burden of proof in establishing the suppliers' manufacturing activities. The Tribunal concluded that the petitioner company had availed inadmissible Modvat credit on non-duty paid inputs, leading to the invocation of the extended period of five years for recovery.4. The case also addressed the filing of invoices with RT-12 returns and potential mis-declaration by the petitioner company. The petitioner argued that since the returns were regularly filed and assessed by the Range Superintendent, they should not be charged with misdeclaration. However, the Tribunal found that the petitioner had availed Modvat credit on exempted goods, leading to the rejection of their appeal.5. The knowledge of exemption by the petitioner company was also a significant aspect of the case. The Tribunal considered the lack of evidence suggesting that the petitioner had knowledge of the exemption status of the goods, but ultimately held that the petitioner had suppressed material facts from the department, justifying the denial of Modvat credit.6. In conclusion, the High Court upheld the Tribunal's decision, stating that the petitioner company was not entitled to the Modvat credit they had availed. The Court found no grounds for interference and disposed of the reference accordingly.