ORDER
Archana Wadhwa, Member (J)
1. Both the appeals are being disposed of by a common order as they arise out of the same impugned order passed in de nouo proceedings.
2. The appellant, M/s Trishakti Alloys (P) Ltd. is engaged in the manufacture of aluminium alloys ingots and other items classifiable under Chapter 76 of the Central Excise Tariff Act. Their factory was visited by the Central Excise officers on 18.1.1998, who conducted various checks and verifications. The City Office was also put to search. Certain irregularities were noticed the shortages of finished goods as also modvatable inputs was detected. Statements of the appellants’ Authonsied Representative were also recorded.
3. As a result of scrutiny of the various documents seized from the premises, it was found that in respect of certain inputs, the appellants have not made any payment towards freight inward for the inputs. From this, the Revenue concluded that the inputs have not been, brought into the factors’ and the appellants have availed the benefit of modvat credit on the basis of the documents only. The above position was also admitted by Shri A.K. Kaushal, Authorised Representative of the appellants’ Company, in his statements wherein he admitted that the inputs covered by the invoices were not received at the factory’ and the same were sold in the market and the goods covered by such invoices were replaced by locally purchased inputs.
4. Based upon the above, the appellants were issued a show-cause notice proposing to disallow the modvat credit of Rs. 15,16,598.00 under the provisions of Rule 571. It was also mentioned in the notice that as the appellants have already deposited an amount of Rs. 7 lakhs (Rupees seven lakhs only) why the same should not be appropriated and the balance be demanded from them with the imposition of personal penalty and confirmation of interest. Demand was also raised in respect of certain short found finished products.
5. During the course of adjudication, the appellants represented that they received the raw materials under coverage of more than 1000 invoices. The allegation in the show-cause notice pertains to only 67 invoices. They produced their accounts and other relevant documents in respect of certain invoices showing that freight for fetching the inputs were paid by them and the proof of paying the freight charges was submitted by them. The adjudicating authority accepted the appellants’ contention in respect of 25 invoices covering modvat credit to the tune of Rs. 7,81,406/- and dropped the demand relating thereto. However, in respect of 42 invoices of M/s. Sumitra Metal, he observed that the said invoices showed the mode of transportation as hand cart. This mode of transportation does not appear to be possible to carry tons of raw materials from Howrah to Bagi, which covers a distance of over 50 kms. through a route which prohibit the movement of hand cart. As such, he after taking note of the statements of Shri A.K. Kaushal, concluded that the inputs covered by the said 42 invoices of M/s Sumitra Metals were not actually received by the appellants, who had taken the movat credit only on the basis of the documents. Accordingly, he confirmed the demand of duty of Rs. 7,35,192.00 and also imposed personal penalty of an idential amount upon the appellants under the provisions of Rule 571(4) of the Central Excise Rules, 1944. Apart from the above, the duty of Rs. 5,466.00 was confirmed in respect of short found final product along with imposition of personal penalty of an identical amount upon the appellants under the provisions of Section 1 1AC of Central Excise Act, 1944. Penalty of Rs. 75,000/- has also been imposed on Shri A.K. Kaushal for participation in the unlawful activities of the appellants, M/s Trishakti Alloys Pvt. Ltd.
6. The appellants filed an appeal against the above order of the Commissioner which was disposed of by the Tribunal vide its order Nos. A-1563, 1564/Cal./2000 dated 18.9.2000 remanding the matter to the adjudicating authority by taking note of the appellant’s submission that they have the evidence of payment of freight for bringing the inputs to their factory. Accordingly, the Commissioner was directed to give an opportunity to the appellant to produce such evidence. The impugned order has been passed in de novo proceedings.
7. Shri B.N. Chattopadhyay, ld. Consultant appearing for the appellants, has submitted that the modvat credit has been disallowed to them on the findings that the appellants have not received the inputs which findings are based on the sole ground that the invoices of M/s Sumitra Metal are showing the mode of transportation as hand cart and the appellant; have not been able to show that the payment made by them towards freight inward of the inputs have been reflected in their cash book. He submits that inasmuch as the track could not reach the gate of godown of M/s Sumitra Metal on account of bad road position, the goods were taken out from the godown by hand cart and thereafter the same were loaded in the truck engaged by them and the goods were brought to their factory. They submitted that the factual position was clarified by M/s Sumitra Metals vide their letter dated 11.2.1999 which was enclosed to their reply to the show-cause notice. They submitted that they had paid the transportation cost to bring materials from M/s Sumitra Metals and such payment were entered in their cash books of the relevant period wherein they have been shown as deliver charges instead of freight inward. He also submitted that the adjudicating authority has relied upon heavily upon the statement of Shri A.K. Kaushal, Holder of Power of Attorney. He submits that such statement was not voluntary and Shri A.K. Kaushal has retracted the said statement subsequently. He submits that the demand is barred by limitation and the penalty under the provisions of Rule 571(4) is not imposable inasmuch as the said rule was not in existence at the relevant time.
8. Shri A.K. Pandit, ld. JDR appearing for the Revenue, submits that the adjudicating authority has given a clear findings that the appellants failed to produce any account before him to show that the freight was paid to bring the goods in their factory premises. Shri A.K. Kaushal has also admitted that the inputs were not brought to the factory but were sold in the market and replaced the same with the bazar scrap to compensate the raw materials. As such, the evidence lead to inevitable conclusion that the inputs shown to have been urchased under the invoices, on the basis of which the modvat credit has been taken, were in fact not brought to the factory premises.
9. I have considered the submissions made by both sides. The appellants are not denying the fact that the goods were loaded in hand cart from the godown premises of M/s Sumitra Metal. However, it is their contention that subsequently, the same were transferred to the truck and the payment of freight to the trucks is duly recorded in their record. The Tribunal in the earlier order, had remanded the matter so that the appellant could produce the evidence of payment of freight to the trucks transporting the inputs under the cover of disputed invoices, no such accounts were produced before the authority. If fully agree with the observations made by the Id. Commissioner that heavy materials to the tune of tons cannot be transported in the hand cart. It is also seen that Shri A.K. Kaushal who has written the statements in his own hand has admitted that the inputs covered by the invoices have been sold by them in the market through various brokers and the same has been replaced with the bazar scraps. The appellants’ contention that such statement is not voluntary having been retracted cannot be accepted inasmuch as the said statement has been written by Shri A.K. Kaushal in his own hand and the retraction is only as a matter of routine. Merely because, the statement has been retracted, cannot ipso facto lead to the inevitable conclusion that the same was given under coercion and threat in the absence of any evidence to that effect. There is no circumstances on record reflecting upon to the statement having been given under any pressure by the Central Excise authorities. Even in the affidavit dated 27.1.1998 given by Shri Kaushal, there is no reference to any use of coercion and threat by the Departmental officers. In the said statement, Shri Kaushal has admitted their fault and has begged to be pardoned for the same. It is also seen that the appellants voluntarilly deposited an amount of Rs. 7 lakhs (Rupees seven lakhs only) even before the issuance of the showcase notice. All these facts indicate towards guilt of the appellants. However, in the wake of specific plea made by the Id. Consultant that freight for bringing the inputs from M/s Sumitra Metal, has been recorded in their cash books, the matter was remanded. Even during remand proceedings, the appellant could not produce any evidence to that effect. As such, I confirm the demand of duty to Rs. 7,35,192.00 against the appellants.
10. As regards the personal penalty imposed under Rule 571(4), the appellants have contended that the said provision was not in existence at the relevant time. However, I note that proposal in the notice was to impose penalty under Rule 571(4) as also under Rule 173Q. As, such, penalty can be imposed under Rule 173Q. Similarly, penalty is also imposable on Shri A.K. Kaushal, who was the main person indulging into illegal activities. However, taking into account overall facts and circumstances of the case, I reduce the penalty on M/s Trishakti Alloys (P) Ltd. to Rs. lakhs (Rupees three lakhs only) and on Shri A.K. Kaushal to Rs. 30,000/- (Rupees three lakhs only) and on Shri A.K. Kaushal to Rs. 30,000/- (Rupees thirty thousand only). But for the above modification in the quantum of penalty, appeals are otherwise rejected.
Pronounced