TaxTMI 
TaxTMI 
2011 (2) TMI 198
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....al Memo dated 17-9-2002. They also obtained true copies of computerized registers of HR Coil receipts and invoices on sample basis from the respondent. A statement of the company's Authorized Representative was recorded under section 14 of the Central Excise Act on 26-2-2003. After the investigations, three show-cause notices (SCNs) were issued to the respondent on 3-9-2003, 30-9-2003 and 23-1-2004 for recovery of alleged inadmissible MODVAT/CENVAT credits amounting to Rs. 29,92,445, Rs. 4,19,012 and Rs. 1,12,636 availed during August 1998 - August 2002, September - December 2002 and January - March 2003 respectively. These SCNs also demanded interest and proposed penalties under the relevant Rules, read with the relevant sections of the Central Excise Act. The first SCN invoked the extended period of limitation by alleging that the noticee had suppressed short-receipts of HR Coils with an intent to avail inadmissible credit fraudulently for evading payment of duty on final product. The shortages of HR Coils and the credits taken thereon were mentioned in the annexures to the SCNs. 2. In their replies to the SCNs, the respondents submitted, inter alia, (i) that they used to veri....
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....nputs. In this context, ld.JCDR claimed support from CCE v. Nicholas Piramal (India) Ltd. 2009 (244) ELT 321/[2010] 24 STT 66 (Bom.), CCE v. Karam Chand Appliances (P.) Ltd. 2009 (238) ELT 706 (HP) and CCE v. Spectra Electronics (P.) Ltd. 2009 (235) ELT 795 (HP). It was further contended (with reference to Rule 7(4) of the CENVAT Credit Rules, 2002) that the burden was on the respondent to show that the input was utilized in the manufacture of the final product. In this connection, JCDR relied on CCE v. Greaves Cotton Ltd. 2008 (225) ELT 198 (Bom.). According to him, the burden of proof was not discharged in this case. Referring to the statement of the respondent's authorized signatory & Manager (Excise), Sanjay Dahiwade, the ld. JCDR contended that short-receipt of HR Coil was admitted by the party and, therefore, MODVAT/CENVAT credit was not admissible to them in respect of the quantity not received and not used in the manufacture of the final product. In this connection, he relied on Swaraj Mazda Ltd. v. CCE 2007 (208) ELT 480 (Trib. - Delhi). Apropos of the certificates produced from Legal Metrology Department, the JCDR submitted that the statutory rules governing input duty cr....
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....hemicals Ltd. v. CCE 2003 (158) ELT 378 (Trib. - Mum.), which view was approved by the Larger Bench in the case of Bhuwalka Steel Industries Ltd. (supra). 6. We have carefully considered the submissions. It is an admitted fact that the lorryloads of HR Coils which were received at the respondent's factory were weighed on their weighbridge and the net weights of the material were recorded in the "HR Coil Receipt Register" maintained by the respondent. Often these weights were found to be less than the quantities mentioned in the corresponding invoices. In some cases, the weight entered in the said register was higher than that indicated in the invoice. In both cases, MODVAT/CENVAT credit was availed of the duty paid on the material as indicated in the invoices. These facts noted by the lower appellate authority are also not in dispute. The only dispute is with regard to the credit availed on the differential quantity of input where the weight of material entered in the material receipt register is less than that mentioned in the corresponding invoice. According to the appellant, this differential quantity of input was not received in the factory and was not used in the manufactur....
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....weighment on different scales at the dispatch and receiving ends and whether the same is within the tolerance limits with reference to the Standards of Weights and Measures Act, 1976. (v) Whether the recipient assessee has claimed compensation for the shortage of goods either from the supplier or from the transporter or the insurer of the cargo. 13. All these factors listed above and any other relevant factor has to be kept in view in deciding any particular case as to whether the entire consignment has been received at the end of the recipient assessee without any diversion. Tolerances in respect of hygroscopic, volatile and such other cargo has also to be allowed as per industry norms excluding, however, unreasonable and exorbitant claims. Similarly, minor variations arising due to weighment by different machines will also have to be ignored if such variations are within tolerance limits. In our view each case has to be decided according to merit and no hard and fast rule can be laid down for dealing with different kinds of shortages." 7. In the present case, the variations due to weighment by different weighbridges are, undisputedly, only 0.02 per cent to 0.....
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....allenged the Larger Bench decision. 8. The HR Coils in question would pass the tests laid down in the Bhuwalka decision of the Tribunal's Larger Bench, to be eligible for MODVAT/CENVAT credit of the duty paid on the entire quantity covered by the invoices. Nothing to the contrary was established on behalf of the appellant. The case of the respondent is further supported by the High Court's decision in Bhilwara Spinning Ltd.'s case (supra), wherein the entire amount of CVD paid on imported raw material (HFO) was held to be available as MODVAT credit to the assessee, by the High Court, after noting that undisputedly there was no diversion of the goods covered by the invoices, the transit loss was only normal loss due to evaporation and no part of the goods was put to any use other than in the manufacture of the end product. The High Court also held thus : "The mode of proof of quantity and payment of duty on inputs received and used as input is by producing the invoices. Unless the invoices are found to be wrong or diversion of inputs received under invoice to any other use is found, there is no provision to avail lesser Modvat credit than what has been proved to have been paid....