2018 (12) TMI 427 – CESTAT CHENNAI – TMI – Validity of SCN – CENVAT/MODVAT Credit – removal of input as such by raising invoices without reversing credit – diversion of controlled substances (Ephedrine) from the factory – manufacture not taken place – period involved is from 24.8.1998 to 24.3.1999 – penalty – Held that:- The Show cause notice is highly vague and does not give the exact allegation. It is presumed to be alleged that appellant removed inputs as such without reversing the credit and has contravened provisions of 57F. But then it is also stated that inputs are removed as tablets. When the inputs are Ephedrine Powder, then the removal in the form of tablets will not be removal as such requiring reversal of credit. If they are removed as Ephedrine tablets after manufacture then these attract Central Excise duty.
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From the facts narrated in the show cause notice, it is not clear whether the allegation is inputs were removed as such or whether Ephedrine tablets manufactu
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ing duty alongwith interest on the inputs cleared as such and also proposing to appropriate the amount of ₹ 2,87,986/- paid by them on 14/2/2000. After due process of law, the original authority confirmed the demand alongwith interest and also imposed penalties. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal. 2. On behalf of the appellant, the Ld.Counsel, Sh.M.N.Bharathi submitted that the period involved is from 24.8.1998 to 24.3.1999. During this period, the erstwhile MODVAT Credit Rules were in force. As per 57 F of the said Rules, the appellant can remove the inputs as such on payment of duty equal to the amount of credit availed in respect of inputs. The appellant had already paid the duty which is seen from the invoices relating to the clearances made. He referred to Page 25 of the appeal paper book and argued that on all five invoices, the appellant had paid duty to the tune of ₹ 4,08,901/-. On 14/2/2000, the appellant in order to buy peace
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would show that appellant is not guilty of suppression of facts with intention to evade payment of duty. 3. The Ld.AR, Sh.L.Nanda Kumar appeared and argued the matter. He submitted that the appellants had cleared the items to other persons as well as their Head Office, where no manufacturing activity was taken place. The invoices cannot be relied, as these are fake invoices. These documents cannot be accepted for payment of duty. The inputs having been removed as such in the guise of Ephedrine tablets, the demand and penalties imposed are legal and proper. 4. Heard both sides. 5. On going through the records, it is seen that the investigations were started on the premises of the diversion of controlled substances (Ephedrine) from the factory. The period involved is from 24.8.1998 to 24.3.1999. The said substance was notified as controlled substances vide SO 1296 (E) dt.28/12/1999 only. Thus the investigations had emanated on the premises stating that these are controlled substances fal
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8,901/- + ₹ 2,87,986/-). From the facts narrated in the show cause notice, it is not clear whether the allegation is inputs were removed as such or whether Ephedrine tablets manufactured were removed without payment of duty. When Ephedrine Powder is the input, the allegation that they removed inputs as such in the guise of Ephedrine Tablets does not make any sense. However, from the records, it is made out that the appellants have paid the duty demand of ₹ 6,72,397/-. Duty of ₹ 4,08,901/- was paid on invoices and ₹ 2,87,986/- paid by reversal of credit. Taking this aspect of payments into consideration, I am of the view that a further reversal of credit or payment of duty is not required. The amount already paid as above is to be appropriated by Revenue towards the duty demand. 6. The appellants have also prayed to set aside the penalties. When the amount of duty demand have been paid as per the invoices and credit has been reversed, the penalties imposed cannot
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