A two member bench of Custom, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai has held that the allegation of bogus quantity against assessee is factually wrong. The bench held that the allegation that assessee has contravened the condition of the notification 6/2002 of Ministry of Environment and Forest dated 1.3.2002 in as much as their final products did not contain 25% of fly ash was factually wrong. The bench dismissed the impugned order initiated against the assessee.
The assessee, M/s.Vishaka Industries Limited is engaged in manufacture of Asbestos Cement Sheet, falling under Central Excise Tariff 6811 of the Schedule to Central Excise Tariff Act, 1985. The appellant is registered with the Central Excise department. The appellant was using raw materials like cement, fly ash, cotton pulp, etc. for manufacture of final product viz., Asbestos Cement Sheet. The appellant was availing the duty exemption in terms of Notification No.6/2002-CE dt.1.3.2002 on the finished products.
The factory of M/s. Visaka Industries Ltd., Paramathy was visited by the officers attached to Headquarters Preventive Unit, Salem Commissionerate on 27.8.2005. On verification of the accounts and documents maintained by them, it was noticed that the appellant was manufacturing Asbestos Cement Sheet and was availing exemption from excise duty as per Notification 6/2002-CE. The exemption under the said notification is available to the goods falling under Chapter 68, only if not less than 25% by weight of flyash or phosphor gypsum or both has been used with a condition that the manufacturer maintains proper account in such form and in such manner as the Commissioner of Central Excise having jurisdiction may specify in this behalf.
Assessee contended that that the assessee has established the source from where they procured the alleged 1322.235 MTs of fly ash. Assessee contended that for the period 2004-2005, he had procured from M/s.Chettinad Cements Corporation Ltd. M/s.MSM Transports, ACC RMC, Sakthiguhan Construction Products, and SIAR Traders. The assessee contended to have procured 2957.85 MTs of fly ash from Chettinad Cements.Assessee gave the calculation with regard to the actual quantity of fly ash received by the assessee and the alleged bogus quantity. Assessee contended that the assessee is able to establish the source of the source also.
Revenue contended that as the documents were produced after much lapse of time, the veracity of these documents are doubtful. Revenue contended that that the assessee had wrongly availed the exemption as per the notification 6/2002 dt.1.3.2002 by accounting bogus/excess fly ash receipts. Revenue further argued that if such bogus fly ash receipts are deducted, the fly ash usage percentage for manufacture of finished products ( Cement Asbestos Sheet, falling under Chapter 68 ) would be below 25% and that therefore, the assessee is not eligible to claim exemption of ‘Nil’ duty as per the notification.
The two member bench comprising Rudra Beewi C.S ( Member, Judicial ) and Vasa Seshagiri Rao ( Member, Technical ) held that “the appellant has been able to successfully establish that the alleged bogus quantity of fly ash was actually received in their factory and used in the manufacture of final product. In such circumstances, the allegation that appellant has contravened the condition of the notification 6/2002 dt. 1.3.2002 in as much as their final products did not contain 25% of fly ash is without any factual basis. The impugned order was set aside.
The assessee was represented by Raghavan Ramabadran. Revenue was represented by Rudra Pratap Singh.
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