TaxTMI 
TaxTMI 
2006 (11) TMI 86
X X X X Extracts X X X X
X X X X Extracts X X X X
....05,465/- is recoverable under Rule 57AI/57I of the erstwhile Central Excise Rules, 1944/Rule 12 of the erstwhile Cenvat Credit Rules, 2001 /Cenvat Credit Rules, 2002 with proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944. (ii) Interest under Section 11AB. (iii) Penalty under Section 11AC. The Adjudicating Authority, apart from confirming the duty demand of Rs. 50,05,465/-; equal penalty; and the interest under 11AB, imposed the following personal penalties: (i) Penalty of Rs. 5,00,000/- on Shri Rajkumar Sipani, Managing Director and Shri Anil Sipani, Director (ii) Rs. 20,000/- on Shri K.M.S. Imtiyaz Saleem, Proprietor of M/s. Royal Plastics (Unit 1) Bangalore. Further, he absolutely confiscated the seized cash of Rs. 10,04,000/- from the residence of Shri Rajkumar Sipani, Managing Director of the company under Section 121 of the Customs Act 1962. The appellants strongly challenge the findings in the impugned order. Hence, they have come before this Tribunal for relief. 3. Shri M.S. Nagaraja, the learned Advocate appeared on behalf of the appellants and Shri K. Sambi Reddy, the learned JDR, for the Revenue. 4. The learned Advocate urge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Cenvat credit availed plastic granules as alleged in the Show Cause Notice. There is no material evidence for removal of inputs not only for the period prior to commencement of investigations on 11-7-2002 but even during the period of investigation since, the same assumptions are made the basis for the period up to 31-3-2003. (vii) Various factors like handling, feeding to hoppers, variation in the quality of raw material, moisture content, quality of electricity, stop page of extruders, improper blending of different grades of granules, skill levels of operators are responsible for wastage. There is not a whisper of evidence for the alleged removal of plastic granules without payment of duty. (viii)The performance of machinery will not be uniformly the same. There cannot be an exact mathematical equation between the inputs used and the finished products manufactured. The onus to prove the clandestine clearance lies heavily upon the Revenue and it is required to be discharged on production of sufficient, tangible and affirmative evidence. The following case-laws were relied on :- (a) Nutech Polymers Ltd. v. CCE, Jaipur-II - 2004 (173) E.L.T. 385 (Tri.-Del.) (b) Wester....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Party did not make any adverse observation on the quantum of waste. The officers visited the appellant's factory and commenced investigations on 11-7-2002. Therefore, for the period from 11-7-2002 to 31-3-2003, the department cannot allege that there was willful suppression or mis-statement to invoke larger period of limitation. The following case-laws were relied on :- (a) Sarabhai M. Chemicals v. CCE, Vadodara - 2005 (179) E.L.T. 3 (S.C.) (b) Batliboi & Company Ltd. v. CCE, Surat - 2000 (117) E.L.T. 460 (Tribunal) (c) CCE, Kanpur v. Prakash Gramodyog Samiti - 2003 (157) E.L.T. 580 (Tri.-Del.) (xi) The cash amounting to Rs. 10,04,000/- was seized from the residence of Shri Rajkumar Sipani and Shri Anil Kumar Sipani, on 11-7- 2002, under a belief that the same represented the cash removed without payment of Cenvat. The provisions of Section 121 of the Customs Act, 1962, do not apply to the alleged removal of Cenvat availed inputs in contravention of Rule 3(1) and/or Rule 3(4) of the Cenvat Credit Rules, 2002. The Notification No. 68/63-C.E. dated 4- 5-1963 declaring applicability of Section 121 of the Customs Act does not include the Cenvat Credit Rules, 2002 in its am....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dated 19-7-2004 has been is sued. This Show Cause Notice proposes demand of Rs. 50,05,465/- being the Cenvat credit irregularly availed by the appellant on the plastic granules diverted by them during the period between July 1999 to March 2003. Annexure-D to the Show Cause Notice indicates how the above amount has been arrived at. In order to appreciate the contention of the department we are reproducing the said Annexure-D to the Show Cause Notice below :- ANNEXURE 'D' WORKSHEET SHOWING THE CENVAT CREDIT IRREGULARLY AVAILED BY M/s. SIPANI FIBRES LIMITED BANGALORE, DURING THE PERIOD BETWEEN JULY 1999 TO MARCH 2003 YEAR YEAR Total quantity of granules consumed in Kgs. Total waste recorded in Kgs. Waste Percentage Excess waste claimed/granules diverted Value per Kg. of granules Total value of granules diverted Rate of duty Cenvat to be reversed/C.Ex. duty to be paid 1999- 2000 3228005 364842 11.30 105041 39.77 4177481 24% 1002595  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly indicates that the Department has not accepted the waste declared by the appellant. For example, for the year 1999-2000, the appellant has claimed for use in packing a waste of 1,72,805 Kgs. According to the Department, the actual usage of wastage for packing is 67,764 Kgs. The difference between the above figures comes to 1,05,041 Kgs. Revenue holds that this represents the raw material diverted for local sale. There is also an indication that the packing material required is at the rate of 15 mtrs per roll per bale as per statement of Shri Aravind Acharya. It was pointed out by the appellant that the statement has been retracted. Even though the Commissioner has recorded that the retracted statements have no evidentiary value, in confirming the demand as per Annexure-D, he has contradicted himself. After making an assumption that 1,05,041 Kgs. of granules were diverted in the year 1999-2000, the duty has been arrived at after taking the value of the granules per kg. Thus, the entire demand is based on theoretical calculation. Similarly, for the years 2000-2001,2001-2002 and 2002-2003, the same method has been adopted. There is no other evidence. Not even a single customer who ....