TaxTMI 
TaxTMI 
2005 (7) TMI 258
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....the excise invoice on which credit was availed were found to be relating to such vehicles which could not have transported the said quantities of scrap from the dealers to the assessees factory. They being non-existent or smaller vehicles i.e. other than trucks. (ii) Annexure B listed the demands on credits availed which were required to be claimed, as the enquiries made revealed (as per show cause notice Para 32 reproduced below) : "In view of the foregoing paras, it appears that noticee no. 1 had indulged in misuse of Modvat credit by adopting the modus operandi that the registered dealers were supplying the goods to the Noticee No. 1 which were not the goods as specified in the corresponding invoices which also is corroborated from the statements referred supra. The said registered dealers were showing in their statutory books and invoices that the said inputs are sold from the stock of the said inputs received by them in a particular purchase invoice. Whereas, investigations revealed that the goods documented on the Modvatable invoice were neither sent to nor received by Noticee No. 1. Although on the invoices issued to Noticee No. 1, it is shown that the to....
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....Para 72 of the order as regards non-receipt of the inputs. Considering the charges and the findings arrived at by the adjudicator, we find no merits in the plea of the registration numbers being incorrectly recorded in few cases, of the vehicles of the dealers, as made before us. We would therefore confirm the findings as arrived by the ld. Adjudicator as regards the reversal of credit being found not eligible. (b) As regards the finding on the credit reversals ordered as regards Annexure B, it is found - (i) Revenues case in this regard based on statements of dealers, which can be generalized as - (a) The dealers purchase duty paid scrap from original manufacturers under the cover of invoice issued under Rule 52A of erstwhile Central Excise Rules, 1944. (b) The scrap is received in mixed form. The dealers, in their premises, sort the mixed scrap. (c) After sorting, good quality scrap is sold at prices higher than purchase price, with or without passing, on the Modvat benefit to the customers. (d) Out of low qu....
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....Singh Scrap Processors Ltd. [2002 (143) E.L.T. 619 (Tri.)] as held that process of sorting and pressure billeting engaged by first stage scrap dealers to be amounting to manufacturer. If that be so, then it was for the Revenue to have charged such dealers with duty liability caused reassessment of the 'scrap' so sorted and then proceeded to vary the credit availed by the assessee. It is well settled that the route of 57E where applicable has to be resorted and not route of Rule 57-I to deny the credit. (vi) Perusal of the statements, as read before us, viz. Sh. Kelhen Choudhury of M/s. Royal Trading Co. dtd. 2-2-01 reveals the following - "(a) they purchase M.S. scrap from Press Metal Corporation, Automobile Corporation of Goa Ltd., Tube Investment of India Ltd., Telco, Bajaj Auto Ltd, Premier Automobile Ltd., and Balmer Lawrie & Co. Ltd. (b) The appellants were either placing orders on phone or through broker named Sri Rajpal Chaudhary, Chembur. (c) The scrap was transported through their trucks and when necessary other transporters trucks were also arranged. He also gave vehicle number for 22 vehicles. (....
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....s. In fact his statement is clearly proves that only duty paid scrap has been supplied to the appellants. When confronted with the illustration of vehicles by which the scrap was supplied to the appellants, which was not capable of supplying the scrap mentioned in the invoice, he stated that the scrap cannot be supplied in tankers and/or delivery vans. The statement does not state that the transportation was arranged by the appellants. The department should then have enquired from Shri Abdul Mannan Khan as to how the wrong vehicle number has been mentioned in the excise invoice. Failure to enquire the relevant questions vitiates the entire proceedings. Shri Abdul Mannan Khan gave the address and phone no. of the broker namely Shri Sunil. The department failed to take any statement of Shri Sunil to verify the statements made by Shri Abdul Mannan Khan. This was important since Shri Abdul Mannan Khan has specifically stated that the transportation of goods was arranged by brokers. Failure of the department to take the statement of the broker vitiates the proceedings initiated by the show cause notice and confirmed by the Order-in-Original. In the statement, no question was asked to ....
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....aq as to how wrong vehicle numbers were entered in the excise invoices by them, as alleged by the show cause notice in Annexure A to the show cause notice. In other words, the department has failed to enquire from Shri Siraj-Ul-Haq as to how the scrap was supplied by them or at least how the vehicle nos. were entered by them in the excise invoices as alleged in the Annexure to show cause notice. Therefore, this statement is also of no help to the department in forwarding their case. (ix) The statement of Sh. Aziz U.R. Rehman, proprietor of M/s. Mehboob & Co., dtd. 10-4-02 clearly indicate that after segregation the deficit on a particular invoice quantity is replenished from same quality scrap lying in the godown. There is thus no material of deficit being retained or substituted by non-duty paid scrap. (x) There is no statement about non-supply of scrap material or and supply of an accommodation invoice to transfer duty only. 'The mention of one parent invoice on dealer's invoice will thus not invalidate the credit eligibility. (xi) FIFO principle has been accepted by Board (refer to Sr. No. 19 of Trade Notice No. 63/Mumbai-III/Ge....