TaxTMI 
TaxTMI 
2005 (4) TMI 229
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....alty. 2. E/535/2002 Mr. Prakash Chand Mehta, MD, RPPL -do- Penalty Rs. 3,00,000/- 3. E/811/2002 Mr. Anil Kumar Agarwal, RPPL -do- Penalty Rs. 30,000/- 4. E/466/2002 M/s. Sunrise Freight Movers Ltd. (SFML) -do- Penalty Rs. 3,00,000/- 5. E/467/2002 Mr. Ramakant Saraf, MD, SFML -do- Penalty Rs. 3,00,000/- 2. In the impugned order the adjudicating authority has disallowed the Modvat credit of Rs. 31,36,264/- availed by the M/s. Rishi Polymach Pvt. Ltd., Mysore (M/s. RPPL for short) under Rule 57-I(1)(ii) of Central Excise Rules, 1944 read with Section 11A(1) of Central Excise Act, 1944. She imposed equal penalty under Rule 57-I(4)/57AH of Central Excise Rules, 1944 read with Section 11AC of Central Excise Act, 1944. Interes....
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....in Balance Sheet - Rs. 24,81,895.00. Thus total amount of Rs. 31,26,264.00 is disallowed. (2) The main allegation against the appellants is that they availed Modvat credit on certain inputs which were not actually received in their factory. In fact they used a lesser grade granules than what was shown in the invoices. In connivance with the transporters, the goods dispatched by the suppliers were substituted by the inferior goods. Since the invoiced goods actually did not reach the appellant's factory, taking of credit on them is irregular. There is also an allegation that the appellants had availed credit wrongly on inputs not recommended for manufacture of HDPE pipes. The appellants purchased raw materials from M/s. Mysore Calcids and C....
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.... use of the grades in question in the manufacture of HDPE pipes. (8) There is no evidence also that the inputs were clandestinely diverted. (9) There is no material change in the characteristics of the grade HD 53 EA 010 PA and without PA. (10) Even M/s. IPCL in the product literature did not mention EA 010 PA as a separate commodity and even in their process guide it is mentioned only as 53 EA 010. It is clear that EA 010 is the only material sold for the manufacture of pipes. M/s. IPCL never informed the appellants about any change in EA 010 PA and without PA. (11) There is no evidence that the appellants had procured 30 MT of said materials from the source other than M/s. IPCL. (12) There is no hard and fast rule that PA grade shoul....
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....tics of the said goods contained in the bags. (18) All the drivers and the Manager of M/s. Murugan Road Transport Company had categorically stated that they transported the said goods from CWC to SFMPL. M/s. SFMPL have also clearly stated that they used to transport the goods on request to M/s. RPPL either in their own lorry or hired lorry. In this background if particular driver or transporter has not transported to Mysore, that itself cannot be a ground to hold that the goods were not at all transported to M/s. RPPL, Mysore as erroneously inferred by the adjudicating authority. (19) The adjudicating authority has presumed that the goods were not transported to Mysore on the ground that M/s. SFMPL did not maintain proper record nor did t....
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.... uphold the Order-in-Original. 6. We have gone through the rival contentions. Out of the total amount of Modvat credit disallowed, the major portion to the tune of Rs. 24,81,895/- relates to non-use of imported materials. Since there was an omission in the balance sheet, the adjudicating authority disallowed the Modvat credit. However, considering the fact that the mistake had crept in during the preparation of the balance sheet and the Auditors had issued supplementary balance sheet, the disallowance of the above Modvat credit is not sustainable. Hence we hold that the imported raw materials had been used in the manufacture of HDPE pipes by the appellants. This also is evident from the production figures during the relevant periods. As re....