ORDER
V.K. Jain, Member (T)
Page 194
ORDER NO. A-827/KOL/05
1. This is an appeal filed by M/s. GKW Ltd. against the order in appeal No. 82/BOL/2004 dated 18th June, 2004 passed by the Commissioner of Central Excise (Appeal-IV), Kolkata. The brief facts of the case are as follows:
The appellant company removed 28.980 MT of inputs of HR Sheets on 7th December, 1998 by declaring the same as scrap in the invoice raised for such removal. The Revenue issued a show cause notice which was adjudicated by the Deputy Commissioner of Central Excise, Durgapur-II Division, who confirmed the demand of duty for Rs. 63,031 (Rupees sixty-three thousand and thirty-one) and imposed a penalty of Rs. 25,000 (Rupees twenty-five thousand) on the appellants and made them liable to pay interest @ 24 per cent on the duty so confirmed. The commissioner (appeals) upheld the Order of the lower authority and hence this appeal before this Tribunal.
2. Heard Shri S.P. Majumdar, learned Advocate for the appellant company. He submits that 28.980 M.T. of HR Sheets received by the appellant company as inputs for the manufacture of their final products, motor vehicle wheels and rims got rusted, since it was not used for four years, and were to be sold as scraps during November and December, 1998. In terms of Rule 57F(3)(a)(iii) of the Central Excise Rules, the inputs removed as such, were required to be cleared on payment of excise duty equal to the amount of credit taken on the inputs. The HR Sheets so received by the appellant company were manufactured by M/s. Steel Authority of India Ltd. and a Page 195 total sum of Rs. 51,874 (Rupees fifty-one thousand eight hundred and seventy-four) was taken as Modvat Credit by the appellant company in 1994. Since the said HR Sheets were rusted, they could not be used in their final products and as such, they cleared the same as scraps in November and December, 1998, by paying the central excise duty of Rs. 54,338 (Rupees fifty-four thousand three hundred and thirty-eight). Learned Advocate submits that since the inputs have been removed as such by the appellant company, they were required to pay only a sum of Rs. 51,874 (Rupees fifty-one thousand eight hundred and seventy-four) towards duty against the Modvat Credit which they had taken. Therefore, they were not supposed to pay any extra duty. He further submits that the fact that the adjudicating authority has taken the value @ Rs. 27,000 (Rupees twenty-seven thousand) per M.T. during the material period of clearance, is not correct. However, the Revenue has not given any proof as to how the above value has been arrived at by them. He further submits that the allegation that the appellant company sold the prime quality HR Sheets in the guise of scraps, is based on sheer assumption and presumption, and is not substantiated. He also submits that the Revenue has not made any enquiry to prove their allegation. He further contends that it is a well-settled principle of law that suspicion howsoever grave, cannot take the place of proof or evidence. He cites the following decisions of CEGAT in support of his contention:
(a) ; Sakhinath Mondal v. Commissioner of Customs (P), West Bengal;
(b) 2002 (148) ELT-125 (TRI.-KOL); Hanuman Trading Corporation v. Commissioner of Customs, Calcutta;
(c) ; Shafique Rehman v. Commissioner of Customs, New Delhi.
In view of this, he submits that the order passed by the commissioner (appeals) should be set aside and their appeal be allowed.
3. Heard Shri Y.S. Lomi, learned J.D.R. for the Revenue. He reiterates the findings of the commissioner (appeals).
4. I have heard both sides. In this case, the appellant company has constantly taken a plea that the HR Sheets, which they had received in 1994, had been cleared by them in 1998. These inputs were unsuitable for the manufacture of their final products. Since they have taken the credit of Rs. 51,874 (Rupees fifty-one thousand eight hundred and seventy-four), they were to reverse the same at the time of clearance. I find that at no point of time, this plea of the appellant company has been verified by the department. Further, I do not find any basis of taking the value as Rs. 27,000 (Rupees twenty-seven thousand) per M.T. by the Revenue. The assessee has several times, asked the Revenue to show them how the value has been arrived at by the department. However, the department has also Page 196 not supplied them any evidence as to how the value of Rs. 27,000 (Rupees twenty-seven thousand) per M.T. has been arrived. The Revenue should have made an enquiry on the plea taken by the appellant company that they had cleared the rusted HR Sheets as scrap after four years, and given its findings. Secondly, they should also have provided the basis on which the valuation taken by them is reached. In view of the above, I remand the matter to the original adjudicating authority to adjudicate the case after observing the principles of natural justice. The appeal is allowed by way of remand.