Sterling Coach Builders (P) Ltd. vs Commr. of C. Ex.

V.C. Daga, J.—Perused Appeal.

Heard the Learned Counsel for the Appellant and the Learned Counsel appearing for the Respondents.

This Appeal was admitted by an order dated 10-1-2006 to consider following substantial questions of law:

(a) Whether the Tribunal was correct in holding that despite the inputs having been used for producing the final products the benefit of MODVAT could yet be denied for procedural irregularity?

(b) Whether the Tribunal was correct in holding that the credit has been taken in total disregard of law, when indeed it is not disputed that the inputs had entered the factory and got consumed in the manufacturing process?

Facts

The Appellants are engaged in manufacturing of floor covering and door trims for automobiles falling under Chapter 57 and 87 of Schedule to the Central Excise Tariff Act, 1985, which is sold exclusively to Mahindra and Mahindra Ltd.

The Appellants filed a declaration under Rule 576(1) of Central Excise Rules, 1944 declaring "synthetic Floor Covering" falling under sub-heading 5705.05 of CET as an input used in the manufacture of final product. The Appellants claim to have intended to set up another manufacturing unit at Nashik which according to the Petitioners unfortunately got delayed. Since the new unit was to be established at Nashik, the suppliers were communicated the address of the said unit for supplying raw materials.

According to the Assessee M/s. Mitkeri Fibres Ltd. Consigned 10 consignments of inputs to the Appellants with Nashik address. The Appellants claimed to have used the said duty paid inputs in its factory at Thane and claimed credit, substituting the Nashik address with that of Thane, on the invoices. This fact when came to the light, the Central Excise Department, issued 7 show cause notices to the Appellants calling upon them to show cause why credit of Rs. 2,70,029.21 should not be disallowed and recovered from them with penalty under Rule 173Q of the Central Excise Rules 1944 (the Rules).

The Appellants by their reply dated 28-11-1996 replied to the show cause notice. The Appellants were granted personal hearing by the Asstt. Commissioner of Central Excise. The Appellants, during the course of the personal hearing, filed an Affidavit of its Director Smt. S.B. Pherwani confirming the receipt of the inputs at Thane unit. During the Course of inquiry, it came on record that invoices were originally issued in the name of M/s. Sterling Coach Builders (P) Ltd. at N-11, Midc, Ambad, Nashik. Subsequently, address part of the invoices, in duplicate copies was corrected to M/s. Sterling Coach Builders (P) Ltd., Jiwan-Laxmi Estate, 133, G.B. Road, Ovala, Thane 400 607. The said correction was not made as required under Rule 173G (2)(vi) of the Rules, reproduced herein below:

(vi) where any correction, other than one relating to the date or the time of removal of the goods or to the description of the goods (including the variety of goods, the number and description of packages and the identification marks thereon), becomes necessary in any (invoice) before removal of the goods, such correction may be made by the Assessee provided this is done neatly and over his dated signature in all copies of the (invoice)

The Show Cause Notice was adjudicated under the order-in-original dated 17-2-1997, wherein, the finding is recorded that the statements made by Ms. S.B. Pherwani, Director of the said Assessee, were false. A serious view of the matter was taken. The absence of octroi receipts were noticed and breach of the basic requirements of Rule 173G(2)(vi) were endorsed. In the result, the Show cause notice was confirmed. The Assessee held guilty of misstatement. The MODVAT credit in the sum of Rs. 2,70,029.21 was dis-allowed and the penalty of Rs. 50,000/- was imposed.

Aggrieved by the order in original dated 17-2-1997 passed by the Asst. Commissioner of Central Excise, Pune, the Appellants carried appeal to the Commissioner of Central Excise (Appeals), who was pleased to confirm the finding recorded in the order in original holding that the corrections made in invoice were not done at the time of removal of the goods, but the same were done subsequently It was also found that the Appellants failed to produce any substantial evidence to prove that the inputs in question were travelled from Unit at Nashik to Unit at Thane. The wrong statements made in the Affidavit dated 28-12-2006 were noticed. The Appeal, ultimately, was dismissed finding it to be without any merit.

Not satisfied with the aforesaid order of the First Appellate Authority, the Appeal was carried to the Customs Excise Appellate Tribunal, Mumbai, wherein the Tribunal was also pleased to confirm the findings recorded by both the authorities below. However, the penalty was reduced from Rs. 50,000/- to Rs. 25,000/- 2004 (91) ECC 324 .

Being aggrieved by the aforesaid order of the Tribunal, the Appellate Jurisdiction of this Court is invoked by the Appellants to canvass the questions of law extracted in the opening part of this Order.

Consideration

Having heard both the parties, we thought it fit to grant some time to the Appellants to produce octroi receipts evidencing transfer of goods from unit at Nashik to unit at Thane. The Appellants-Assessee have made a statement that they are not in a position to produce octroi receipts. In the absence of octroi receipts, one has to conclude for want of evidence that the goods did not travel from Nashik to Thane. It is a common knowledge that if the goods are to be removed from one Municipal or Corporation area to another Municipal or Corporation area, the entry tax, namely; Octroi is required to be paid. Had goods been transported from Nashik to Thane, the octroi duty ought to have been paid by the Appellants. The very fact that, there is no material on record evidencing payment of octori duty leads us to conclude against the Appellants defence that goods were taken from Unit at Nashik to Unit at Thane. The findings recorded by all the authorities below thus, cannot be faulted with. The said findings are based on the facts and circumstances available on record. The absence of production of best evidence must lead to draw adverse inference against the Appellants.

We, therefore, do not find any merit in the Appeal and, therefore, answer the questions of law in the negative i.e. in favour of the Revenue-Respondents and against the Appellants.

In the result, Appeal is dismissed with no order as to costs.