TaxTMI 
TaxTMI 
2006 (2) TMI 514
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....vealed that raw materials on which Modvat credit had been availed were diverted for the purposes of research and development. Therefore, Revenue proceeded against them for recovery of the Modvat credit irregularly availed on such goods which were diverted for R & D purposes. The original authority issued an order dated 24-9-2001 demanding an amount of Rs. 38,91,220/- being the Modvat credit irregularly availed. An amount of Rs. 42,000 already paid by the appellant had been adjusted. A penalty of Rs. 30,50,868/- was imposed under Rule 57-I(4) of the C.E. Rules, 1944. Interest was demanded under Rule 57-I(5), a penalty of Rs. 1,00,000/- was imposed on the appellant. A penalty of Rs. 1,00,00/- was imposed on the Managing Director Shri V. Rama ....
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....properly accounted for in RG-1 which is the statutory record. The entire inputs received into the factory and the final products manufactured and cleared were properly accounted for in the statutory records. The Commissioner was incorrect in his finding that an amount of Rs. 2,40,03,000/- written off in the balance sheet for the year 1997-98 towards unusable and work in process shows that the appellants were incurring heavy production losses during R & D activity. He ought to have seen that the notice was issued demanding the reversal of Modvat credit on the inputs contained in the said useless material without any allegation that the same emerged during any R & D activity. Further all proceedings were dropped vide Order-in-Original No. 66/....
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....and hence longer period is not applicable. There is clear evidence that inputs have been diverted for R & D purposes. The scope of the remand order of the Tribunal is very limited, as observed by the Adjudicating Authority. He was asked to examine whether R & D activity is an integral part of the manufacturing process. The contentions of the appellants that even the R & D activity resulted the manufacture of final product which are accounted for are not accepted by the Adjudicating Authority in the absence of evidence. The appellant is working under the system of self removal procedure. They cannot take the plea that the officers were visiting the unit and no irregularity was pointed out. Inasmuch as the Adjudicating Authority has given a f....