TaxTMI 
TaxTMI 
2011 (7) TMI 866
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....d capital goods used in or in relation to manufacture of their final products. Shri Bharat Gupta is the Divisional Manager (Stores) of the Appellant Company. 1.2 The Chief Commissioner, Customs & Central Excise, Lucknow, vide Order dated 27-6-2002 under Section 14A of the Central Excise Act, 1944, appointed M/s. K.S. Bhatnagar & Associates, Cost Accountants for audit of the central excise records of the Appellant Company for 2001-2002. The Cost Accountants in their report to the Commissioner made the following observations :- (1) While the Appellant Company during 2001-2002 has availed input duty cenvat credit of Rs. 67.03 and capital goods cenvat credit of Rs. 7.56 out of which capital goods credit of Rs. 0.8....
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.... the Appellants for - (a) recovery of allegedly wrongly availed cenvat credit amounting to Rs. 2,89,12,900/- during 2001-2002 under Rule 12 of Cenvat Credit Rules, 2001/2002 read with provisions of Section 11A(1) of Central Excise Act, 1944, along with interest on it at the applicable rate under Section 11AB ibid; (b) imposition of penalty on the Appellant Company under Rule 13(2) of the Cenvat Credit Rules, 2001/2002 read with Section 11AC of the Central Excise Act, 1944; (c) recovery of duty amounting to Rs. 4,45,85,431/- under proviso to Section 11(1) of Central Excise Act, 1944 on the goods alleged to have been cleared clandestinely during 2001-2002, along with i....
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....edit demand along with interest, imposed equal penalty under Section 11AC on the Appellant Company and penalty of Rs. 4,00,000/- on Shri Bharat Gupta under Rule 26 of the Central Excise Rules, 2001. 1.7 Against the above order, these appeals along with stay applications have been filed. 2. Heard both the sides in respect of the stay applications. 2.1 Shri A.R. Madhav Rao, Advocate, the learned Counsel for the Appellant, pleaded that the allegation of unaccounted excess consumption of raw materials/inputs valued at Rs. 18.72 crores and based on it, the allegation of clandestine removal of finished goods made out of such unaccounted consumption of raw materials and the duty demand of Rs. 4,45,85,431/- based on the same, is w....
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.... out of alleged excess cenvat credit of about Rs. 2.89 crores, while credit of Rs. 2.04 crores is that which had initially been taken in respect of certain inputs received but was reversed subsequently, as either the same was found to have been wrongly taken or the inputs having been found defective and unusable were scrapped and insurance was claimed, that the credit of Rs. 0.6912 crores was in respect of duty paid finished goods returned to the factory for repairs, reconditioning etc. under Rule 16 of the Central Excise Rules, 2001 and this credit initially taken under this Rule, was reversed when the finished goods were removed after repairs, etc., that letter dated 22-10-2007 of Superintendent Range-IV, Division-IV, Ghaziabad confirmed ....
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....y and therefore, the duty demand of Rs. 4,45,85,431/- has been correctly confirmed; (b) out of total cenvat credit demand of about Rs. 2.89 crores, the Appellant themselves admit to have taken credit of Rs. 2.04 crores wrongly and though the Appellant claimed to have reversed the entire amount, as per the Commissioner's findings in para 5.14 of the impugned order, a substantial portion of this amount Rs. 1.93 crores has not been reversed; and (c) at the time of audit, the Appellant did not inform them about availment of credit on the goods returned under Rule 16 for the repairs etc. He, therefore, pleaded that this is not a case for waiver. 3. We have carefully considered the submissi....
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.... accounts is much less than that shown in the profit & loss account and the balance quantity of inputs has been used for manufacture of finished goods, which have not been accounted for and have been cleared without payment of duty. Hon'ble Supreme Court in the case of Oudh Sugar Mills v. Union of India reported in 1978 (2) E.L.T. J172 (S.C.) has held that the allegation of clandestine removal without payment of duty cannot be made merely on the basis of input-output ratio. Moreover in this case, in view of the clarification given by the Appellant that the value of waste of raw materials has not been considered by the Cost Accountants, there does not appear to be any discrepancy in the value of raw material consumption. Therefore, so far as....