The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the denial of Modvat credit was not sustainable without substantiating with corroborative evidence.
The appellants M/s Mak Engineering Industries Limited and M/s Alloy Steel Rolling Mills (ASRM) challenged the order dated 21.02.2012 passed by the Commissioner of Central Excise, Kolkata-II Commissionerate which disallowed Modvat Credit of Rs.15,73,482/- to Mak Engineering under various provisions of the Central Excise Act, 1944 (Excise Act) read with the Central Excise Rules, 1944 (Excise Rules) along with the confirmation of interest and equivalent penalty.
A common show cause noticehad been issued to both Mak Engineering and its job worker, ASRM allegedthat the ingots/billets and rounds used by the appellant were not of the type specified by the buyer and credit of Rs.12,83,740/- availed in respect of inputs used in manufacturing Elastic Rail Clip (ERC), Modified Loose Jaw (MLJ), Rail Anchor and Suspension Shackle was disallowed.
It was alleged by the show cause notice that ASRM had mis-declared the fact that it had not done re-rolling of non-alloy steel and violated the provisions of Section 3A of the Excise Act read with Rule 96ZP(1) of the Excise Rules and the Notification No. 32/97-CE(NT) dated 01.08.1997 read with Notification No.214/86 dated 25.03.1986.
It was observed that the commissioner failed to re-consider the entire matter and did not properly consider the applicability of the findings in the adjudication order dated 25.07.2006 of Manash Forgings, which was the sister concern of Mak Engineering.
The Tribunal viewed the observation of the commissioner stating that no documentary evidence had been produced to show that without changing the percentage of carbon, silicon, manganese and sulphur, only the presence of chromium at 0.3% will change the character of nonalloy steel to alloy steel products as arbitrary,as it ignored the provisions of Chapter Note 1(f) of Chapter 72 of the Excise Tariff.
Shri P K Choudhary, judicial member and Shri Raju, technical membernoted that there was no independent evidence to sustain the purported findings against ASRM, over and above the case set up by the revenue against Mak Engineering. set aside the entire de-novo impugned orderand allowed the appeals filed by Mak Engineering Industries Limited and Alloy Steel Rolling Mills.
Shri J.P.Khaitan and Saurabh Bagaria & Indranil Banerjee, Shri Debjyoti Basu & Chandan Kumar Lal appeared for the Appellant and Shri A. Roy appeared for the Respondent.
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