ORDER
P.S. Bajaj, Member (J)
1. In this appeal the revenue has challenged validity of part of the impugned order by which the Commissioner (Appeals) has dropped the recovery of the Modvat credit amount from the respondents which they availed on the shortage of inputs.
2. Ld. JDR has contended that the authorise representative of the respondents himself admitted the shortage of the inputs caustic soda resin, HCL etc. and even reversed the Modvat credit on the date when the officers visited the factory premises and found the shortage of the inputs. Ld. Commissioner (Appeals) had wrongly dropped the recovery of Modvat credit from the respondents on those inputs on which they have earlier availed the credit.
3. On the other hand ld. Counsel has raised two legal issues. Firstly that the demand is time barred, secondly, that the demand could not be confirmed under Section 11A of the Act, as it pertains to the Modvat credit for the recovery of which Rule 57-I could only be involved. Ld. Counsel has referred to the Apex Court judgment in the case of CCE v. Raghuvar (India) Ltd. reported in 2000 (38) RLT 777.
4. I have heard both the sides and gone through the record. The facts are not much in dispute. The officers of the Central Excise visited the factory premises of the respondents on 17-12-97 wherein they were engaged in the manufacture of solvent oil. On carrying out the stock verification of the raw-material, shortage involving Modvat credit of Rs. 43,830/- was found and this fact was admitted at the spot by the authorised signatory of the appellants who was present there at that time. The respondents accordingly even reversed the Modvat credit. Ld. Commissioner (Appeals) has dropped the recovery of the amount on the ground that the shortage was explained by the respondents and there was no evidence to prove the clandestine removal of the raw-materiel as such. But the view taken by him in my view is totally erroneous in law. The authorised representative of the respondents did not offer any explanation when his statement was recorded by the officers in the factory. He admitted the shortage of the raw materials and the respondents acting on his admission, even reversed the Modvat credit. In such a situation, it was not required by the Deptt. to prove clandestine removal of the raw-material as such by the respondents. The burden was rather on the respondents to explain the shortage and after having failed to do so, they themselves accepted their liability and accordingly reversed the credit. Therefore, the impugned order of the ld. Commissioner (Appeals) in this regard cannot be sustained.
5. This takes me to the legal issue raised by the ld. Counsel. It is well-settled that mere quoting of wrong provision of law will not invalidate the SCN, especially when all essential particulars/details had been provided therein and the assessee cannot be said to have been taken by surprise. In the instant case, no doubt the provisions of Section 11A had been referred for claiming the recovery of the Modvat credit amount from the respondents, instead of Rule 57-I, but I find that all other details for raising the demand had been given in the SCN. The respondents themselves admitted of having availed the Modvat credit on the short found inputs wrongly and reversed the same. Moreover, Modvat credit is also nothing but pre-paid duly by the assessee under the law, and as such by describing the recovery of Modvat credit as recovery of duty in the SCN, the respondents cannot be said to have been at loss in defending their case before the authorities below. Therefore, the ratio of law laid down in the case of CCE v. Raghuvar (India) Ltd. (supra) referred by the Counsel is not of any help to the respondents in the present case. The issue of limitation at this stage cannot be raised by the respondents. Even if it is assumed for sake of arguments that when the SCN was issued on them on 17-9-2001, the recovery of the Modvat credit amount had become time barred, but the respondents themselves had reversed this amount voluntarily before the issuance of SCN. It is not their case that this reversal was made by them by mistake or under protest. Therefore, when time barred Modvat credit amount had been paid by the respondents voluntarily and not under the protest before issuance of a SCN, they cannot be allowed to take ‘U’ turn and plead that it could not be recovered. The law laid down in the case of Raj Bahadur Narain Singh Sugar Mills Ltd. v. UOI regarding invoking of the larger period of five years for recovery of duty, is not attractive, to the case of respondents in the face of the facts detailed above.
6. The confirmation of duty regarding the clandestine removal of seven drums of the finished goods by the respondents without payment of duty, has not been contested before me by the Counsel and as such the impugned order in this regard is upheld.
7. In view of the discussions made above, the impugned order-in-appeal to the extent to which it has been challenged in the present appeal is set aside and the demand of Modvat credit amount of Rs. 43,830/- is confirmed against the respondents. Regarding imposition of penalty, ld. Counsel has contended that it is not imposable under the law. But his contention cannot be accepted. The respondents had not only wrongly availed the Modvat credit on the raw-material but also cleared the finished goods in the clandestine removal without payment of duty. Therefore, the penalty imposed by the adjudicating authority on the respondents along with the duty amount, is confirmed. The appeal of the Revenue is allowed with consequential relief as per law.
(Order dictated in the open Court.)