ORDER
R.K. Abichandani, J. (President)
1. The applicant has preferred this appeal against the Order-in-Original No. 15/2005, dated 28-10-2005 passed by the Commissioner of Central Excise, Pondicherry confirming demand of Rs. 41,72,987/- under Rule 57-I(4) and Rule 57AH(2) read with Section 11AC of the Central Excise Act, 1944, being the amount of credit availed by the assessee on “Engines and Alternators” which had not been actually received in their factory during the period from 1-4-1990 to 19-5-2001 and imposing the penalty of the like amount on the applicant. According to the Revenue, certain discrepancies were noticed when the excise officers visited the headquarters of the appellant company on 5-12-2000, between the number of engines on which CENVAT credit had been availed by the unit, the physical stock of engines available in the factory. When the officers visited the unit on 19-5-2000, the stock and SI. Nos. of diesel engines and alternators available in the factory was ascertained and listed in Annexures ‘A’ & ‘B’ to the Mahazar. In the show-cause notice that was issued to the appellant, the details of engines and alternators on which credit had been availed by the assessee for the period 1-4-1999 to 19-5-2001 were listed in Annexure ‘A’ of the notice; the details of engines and alternators cleared as such or in assembled condition were listed in Annexure ‘B’ to the notice; the details of engines and alternators which were found in stock in the factory as per the Mahazar dated 19-5-2001, were stated in Annexure ‘C’ to the notice, and out of the engines and alternators listed in Annexure ‘A’ but which were found to have neither been cleared (as listed in Annexure ‘B’) nor were in the stock of the unit, on the date of verification, were listed as Annexures ‘D’ and ‘E’ for engines and alternators, respectively.
2. After the show-cause notice was issued, the assessee by their letter dated 30-7-2002 requested the Commissioner to clarify the basis on which it was alleged that they had not received inputs, namely, engines and alternators in their factory and yet availed credit in respect thereof. By another letter dated 12-8-2002, the appellant requested for copies of annexures and letters and sought to know the reasons for restricting the investigations to 1999-2000. The assessee by their letter dated 20-9-2002, had stated that they had tried to meet the Commissioner to express their difficulty in replying to the show-cause notice because no basis for the allegation that ‘inputs’ mentioned in Annexure ‘D’ and Annexure T, were received in their factory was given in the show-cause notice. The assessee kept on alleging that the annexures drawn by the department was incorrect. A reconciliation statement was produced by the assessee, showing relevant details of 30% of the entries of the Annexure ‘D’, which according to the assessee also appeared in Annexure ‘B’ to the show-cause notice. A test check of entries proved that the reconciliation done by them was correct. It was urged on behalf of the assessee that similar instances of engines and alternators cleared on payment of duty existed in Annexures ‘D’ and ‘E’ and these were listed in Annexure ‘K’ produced on behalf of the assessee. It appears from the record that some allegations were also levelled on behalf of the assessee against the department. The Commissioner finally, on the basis of the material on record, confined the demand to the items as per Annexures IA ‘IB’, ‘IIA’, ‘IIB’, ‘IIIA’ and ‘IIIB’ of the impugned order.
3. It has been contended by the Authorised Representative of the appellant company, who is the Managing Director of the company that the appellants desired to reconcile all the items which were mentioned in Annexures ‘D’ and ‘E’ and to show to the authority that the appellant had not availed of any CENVAT credit without receiving the inputs. It is submitted that the Commissioner has not himself applied mind to the material put forth before him, which would have shown that each and every item listed in Annexures ‘D’ and ‘E’ to the show-cause notice was duly accounted for. The Authorised Representative took us to the relevant material on record with a view to point out that the appellant had successfully established that 30% of the respective entries of Annexure ‘D’ were demonstrated before the authority, which is duly accounted for.
4. On going through the record, it appears to us that the learned Commissioner has stated in para 32.3 of the impugned order, entrusted the work of reconciliation to the Investigating Officer. Prima facie, when the assessee had put up relevant material to demonstrate reconciliation, it was for quasi judicial authority, to examine this material and come to its own conclusion rather than to entrust a part of its work of quasi judicial nature to a subordinate. It appears that the Investigating Officer had put up some note dated 15-10-2003 reporting that the claims made by the assessee through Annexures T’, ‘G’ and ‘K’ were reconciled and that he had agreed to most of the entries. The Investigating Officer in his note appears to have stated that out of the demand of Rs. 61 lakhs, the discrepancies pointed out was found to be correct and worked out to Rs. 12 lakhs only, and the balance amount was to be demanded from the assessee. It appears that the Commissioner acted on such a recommendation contained in the note without applying his own mind as to whether there were any other entries which stood reconciled. It also appears from para 32.5 of the impugned order the Commissioner relied upon the report of the preventive unit in which it was stated that based on on the sales and stock details, the assessee’s claims in respect of engines and alternators was found correct as listed in Annexures ‘IA’ and ‘IB’ attached to the impugned order and that the same covered the annexure filed by the assessee as also clarified earlier by the Investigating Officer. It is also stated that Annexures ‘IIA’ and ‘IIB’ of the impugned order showed details of engines and alternators which the Preventive Unit had found accounted for through sales. It is also observed that the Preventive Unit after verification had furnished the details of engines and alternators as listed in Annexures ‘IIIA’ and ‘IIIB’ to the impugned order on which the assessee had availed credit but had failed to account for properly and on which the assessee was liable to pay the credit amount. Acting on the report of the Preventive Unit, Commissioner has held the appellant to be liable for the amount of Rs. 41,72,982/- being the credit availed on the engines and alternators listed in Annexures ‘IIIA’ and ‘IIIB’ of the impugned order.
5. There is no dispute about the fact that neither the note submitted by the Investigating Officer nor the report made by preventive unit was made available to the assessee. It also appears that the Commissioner has relied upon whatever reports that were given to him blindly without considering whether the preventive unit had take into account the relevant facts. As observed above, it was for the quasi judicial authority to take its own decision in the matter and he should not have delegated his quasi judicial powers even partially to the Investigating Officer or the preventive unit.
6. Having regard to the facts and circumstances of the case, we direct that, there shall be interim stay or the impugned order on the condition that the appellant shall deposit Rs. 5 lakhs (Rupees Five Lakhs only) within 8 weeks from today, failing which the appeal will stand dismissed. On the deposit being so made, there shall be waiver of the pre-deposit of the rest of the amount of duty and penalty payable by the appellant during the hearing of the appeal. This application is disposed of accordingly. Post the matter for compliance on 7-8-2006.
(Dictated and pronounced in open Court)