2007 (4) TMI 541

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....7 to December '97 have claimed credit of duty on inputs i.e. rubber, fabric, caron black, wire, pigments and chemicals etc. in terms of Modvat rules. 2. After consuming the inputs, these packing material/containers were cleared by them either as such or as scrap without payment of duty and without issuing Central Excise gate-pass/invoices under Rule 52A and without following proper procedure. The Department alleged that they have suppressed the facts of clearance of such packing material with intent to evade payment of Central Excise duty. It is alleged that during the period from June '93 to November '97, the assessee have evaded Central Excise duty to the tune of Rs. 6,59,756/- on the clearances of such packing material effected cla....

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....odvatable inputs. He has disallowed the Modvat credit under the provisions of Rule 57-I, read with prevision to Section 11A(1) of Central Excise Act, 1944. The Central Excise duty amounting to Rs. 6,099/- is confirmed under Section 11A. The amount has already been paid by the assessee is adjusted. Penalty of Rs. 2,64,670/- imposed under Section 11AC of the Central Excise Act, 1344. Recovery of interest on the confirmed amount at the appropriate rate is also ordered. 5. On filing appeal by the assessee, the ld. Commissioner (Appeals) observed that the inputs damaged due to water flooding were used for the manufacture of final products during the forthcoming months. In view of the above the Modvat credit amounting to Rs. 2,58,571/- was ....

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.... Surveyor also suggests that the inputs were not completely destroyed. Therefore, their use in the manufacture of final products and taking into account the credit and the same cannot be denied. 9. On considering the facts and circumstances of the case, I am of the view that the ld. Commissioner (Appeals) has rightly held that the physical verification of the stock was not undertaken correctly. It appears that it is not humanly possible to conduct physical verification for such huge quantity of tyres of so great varieties in the time taken by the officers. The contention of the respondents appears to be proper as there is no necessity to remove a small quantity of tyres clandestinely. The respondents alleges that the copy of panchnama....