2003 (2) TMI 142 - AT - Central Excise

Tribunal remands appeals for quantitative co-relation, waives pre-deposit & penalties

The Tribunal remanded the appeals for quantitative co-relation concerning the manufacturer, M/s. Poonam Drums Containers Pvt. Ltd., waiving pre-deposit ... Cenvat/Modvat Issues involved:Waiver of pre-deposit of duty and penalty, correlation between input supplied and form received, penalties imposed upon dealers, direction for quantitative co-relation, liability to penalty of the manufacturer.Analysis:The judgment pertains to applications for waiver of pre-deposit of duty and penalty confirmed against M/s. Poonam Drums Containers Pvt. Ltd. and others. The primary issue revolves around the correlation between the input described in invoices and the actual form received by the manufacturer. The Commissioner of Central Excise confirmed duty against M/s. Poonam Drums Containers Pvt. Ltd. for allegedly taking credit on coils but receiving sheets instead, leading to a lack of co-relation between the input supplied and received form. The Tribunal referred to previous cases where unconditional waiver of pre-deposit and penalties was granted, emphasizing the need for quantitative co-relation. In a batch of similar cases, penalties imposed on dealers were set aside, and the manufacturer was directed to establish co-relation based on quantitative measures.The Tribunal highlighted the importance of establishing co-relation between the number of sheets obtained from a coil and the original coil. It noted that while specific physical co-relation may not be feasible due to the nature of the goods, weight-based co-relation could suffice. The judgment emphasized that as long as the weight of the sheets corresponds to the weight of the coils and there is no evidence of non-duty paid coils being received, the required degree of co-relation is achieved. The absence of evidence regarding the fate of other coils received by the dealer was also noted, indicating a lack of allegations regarding additional invoices or mismanagement of goods.Given the final decision on the issue and the waiver of pre-deposit and penalties, the Tribunal remanded the appeals for quantitative co-relation concerning the manufacturer, M/s. Poonam Drums Containers Pvt. Ltd. The penalties imposed on the dealers were set aside, with the liability of the manufacturer for penalties depending on the outcome of the co-relation exercise. The judgment underscores the significance of establishing a clear quantitative co-relation between input materials and the final products, highlighting the need for factual assessment in determining liability for penalties.