TaxTMI 
TaxTMI 
2000 (8) TMI 224
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....pany and Rs. 20 lakhs on the General Manager (Finance) of the first appellant company. 2.The brief facts of the case are that the appellants are engaged in the manufacture of steel ingots and other re-rollable products falling under Chapter 72 of the Schedule to the CETA, 1985. During the period from May 1992 to December 1993, they received raw materials and availed Modvat credit on the same under Rule 57A of the Central Excise Rules. Based upon investigation, the Department was of the view that credit had been taken without actual receipt of the goods from various suppliers and hence show cause notice dated 2-7-1997 was issued to the appellants proposing denial of Modvat credit and proposing penal action against the appellants. On 3-3-199....
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...., the appellants have made a calculation for the period of 16 months in question taking into account the opening and closing stock of raw materials, the raw materials received and consumed during the respective months and the production as per the RG 1 register. By this calculation, the appellants seek to disprove the allegation of the department that the quantities in question have not been received in the factory of the appellants. 3. For instance, in the month of June 1992, the opening stock of the raw material viz., scrap and which consists of both imported and indigenous scrap is 342.439 MTs. The appellants have received the total quantity of 2343.641 MTs of scrap during this month as pe....
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....th which is to the tune of 2114.126 MTs could not have been possible with the consumption of 1625.231 MTs of raw materials. This is a clear indication of the fact that the raw materials in question have indeed been received in the factory of the appellants. 7. The above calculation has been made only for one month. Similar calculations are available for all the 16 months and the documents substantiating the calculations are submitted as an illustrative measure, for a period of six months. 8. The appellants submit that on the basis of the statements given by M/s. Chirag Ingots, the Income Tax authorities had initiated proceedings for the assessm....
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....ve been cleared on payment of duty, if such quantity of raw materials had not been received in their factory. They submit that this point becomes very significant in view of the fact that the correctness of the figures of finished products mentioned in the RG 1 register is not questioned by the Department nor does the Revenue allege that the appellants had obtained the raw materials shown in the gate passes/invoices from some other source. They submit that the difference between the raw materials consumed and the production of finished goods works to 256.824 MTs which is approximately 10.83% and that this differential quantity represents burning loss and that burning loss to the extent of 10% is an accepted norm in the iron and steel indust....
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....-rollable products - they have stated that they only issued documents for supply of raw materials without actually supplying the sane. It is on the same basis that proceedings were initiated against the appellants by the Income-tax authorities. Since those proceedings have been set aside by the Appellate Commissioner of Income-tax, cross-examination of the input suppliers becomes absolutely necessary and denial of cross examination of these persons has resulted in contravention of the principles of natural justice. Further the Commissioner has recorded a finding that the appellants have not filed any reply to the show cause notice in spite of lapse of a period of two years from the date of issue of the notice. This is factually incorrect. T....