GUPTA PIGMENTS AND CHEMICALS LTD. Vs. CCE

JUDGEMENT

(1.) These are five appeals, two of them (Nos. 1656 and 1657) directed against one order passed by the Commissioner (Appeals) and the remaining three against another order passed by him. The two impugned orders pertain to two show -cause notices issued by the department on the basis of results of the same investigation.

(2.) On 6.9.99, a team of Central Excise Officers had made a surprise visit to the factory of M/s. Gupta Pigments and Chemicals Ltd. (GPCL, for short) and checked physical stock of finished goods and inputs, whereupon an excess stock of 105.740 MTs of lead ingots (finished product) was found vis -a -vis the recorded balance in RG -I register as also shortages of 274.629 MTs of lead ingots (input) and 100 kgs. of white lead (input) were noticed vis -a -vis the respective stock balances recorded in RG 23A Part I register. The stock verification was done in the presence of Shri S.K. Chauhan (General Manager), Shri R.K. Srivastav (Production Manager) and independent witnesses and the details thereof were duly recorded in panchnama. The excess stock of finished goods was seized, also, under the panchnama. A statement of Shri Chauhan was also recorded under Section 14 of the Central Excise Act, wherein he could not explain the excess or shortage of goods. The officers also noticed a stock of lead ingots with "MTIL" marking in the factory premises, regarding which Shri Chauhan stated that the said goods had been manufactured by them by using moulds borrowed from M/s. Met Trade India Ltd. (MTIL, for short). He, however, could not produce evidence of movement of any moulds between MTIL and GPCL. On 6.9.99 itself, the officers visited M/s. MTIL's factory and found excess stock of 15.020 MTs of lead ingots (finished) vis -a -vis RG -1. They also noticed that lead ingots with "MTIL" marking were being manufactured by them without showing such production in their records. They believed that the goods with "MTIL" marking found in GPCL's premises had been manufactured by M/s. MTIL and clandestinely cleared to M/s. GPCL without payment of duty. They, therefore, visited GPCL's premises again, took stock of the lead ingots with "MTIL" marking, which weighed 278.274 MTs, and seized the same under panchnama in the presence of the aforenamed persons and witnesses.

(3.) From the above findings coupled with the results of further investigations including scrutiny of records resumed from both the premises, it appeared to the department that the 278.274 MTs of lead ingots with "MTIL" marking were not duty -paid and hence liable to confiscation; that 274.629 MTs of lead ingots (input) involving Modvat credit of Rs. 9,63,948 and 100 kgs. of white lead (input) involving modvat credit of Rs. 906 had been disposed of GPCL otherwise than under Rule 57F of the Central Excise Rules and hence the total modvat credit of Rs. 9,64,854 was recoverable from them under Rule 571 of the said Rules; and that M/s. GPCL and Shri Chauhan were liable to be penalised under Rule 173Q [read with Rule 571 (4)] and Rule 209A respectively. Accordingly, a show -cause notice was issued by the department, which was adjudicated by the jurisdictional Additional Commissioner, who (a) imposed redemption fines of Rs. 9 lacs and Rs. 3 lacs in lieu of confiscation of the 'MTIL' - marked ingots (278.274 MTs) and the other ingots (105.740 MTs) respectively, (b) ordered appropriation of these amounts from the Bank guarantee finished by GPCL at the time of provisional release of the goods, (c) ordered recovery of Rs. 9,64,854 (equivalent to modvat credit on the inputs found short) with interest from the party, (d) imposed penalties of Rs. 9,64,854 and Rs. 50 000 on GPCL under Rule 571(4) (read with 173Q) and Rule 209A respectively and (e) imposed a penalty of Rs. 2 lacs on Shri Chauhan under Rule 209A.