2007 (9) TMI 464 - AT - Central Excise

Summary

Issues:
1. Interpretation of Cenvat Credit Rules, 2004 regarding availing credit on inputs.
2. Application of legal precedents - Mangalam Enterprises case and CCE, Ahmedabad v. Narayan Polyplast case.
3. Allegations of manipulation of statutory records and fraudulent availment of credit.
4. Determination of contraventions of Rule 14(1) and 9 of Cenvat Credit Rules, 2004.
5. Assessment of revenue implications and intentional violation of provisions affecting the interest of Revenue.
6. Direction for depositing a sum equivalent to 50% of the duty demanded and consequences of non-compliance.

Analysis:

1. The case involved a challenge to an order of the Commissioner (Appeals) regarding the availing of credit on inputs before their receipt in the factory, contrary to the provisions of Rule 4(1) of the Cenvat Credit Rules, 2004. The Tribunal noted discrepancies in the receipt of goods and highlighted the violation of legal provisions deliberately by the appellant.

2. The appellant relied on the Mangalam Enterprises case and the CCE, Ahmedabad v. Narayan Polyplast case to support their position. However, the Tribunal distinguished the facts of the Mangalam Enterprises case, where credit was disallowed for inputs not directly received into the factory, from the present case where credit was taken before receipt in the factory. The Tribunal emphasized the intentional violation of rules by the appellant.

3. The Departmental Representative alleged that the appellant manipulated statutory records to fraudulently avail credit before paying Customs Excise Duty, establishing mens rea for violating Cenvat Credit Rules, 2004. The Tribunal considered the deliberate manipulation of records and the violation of Rule 14(1) and 9, indicating a clear contravention by the appellant.

4. Upon review of the records and arguments, the Tribunal found that the appellant had availed credit for goods not received in the factory as claimed, with incorrect entries in the statutory records. The Tribunal concluded that there was deliberate manipulation to avail credit not due at the relevant time, violating legal provisions.

5. The Tribunal addressed the revenue implications and the appellant's intention to take undue credit, emphasizing the interest of the Revenue being compromised. Despite arguments of minimal impact and a mere delay, the Tribunal found a clear violation by the appellant, directing them to deposit a specified amount within a set timeframe, failing which the appeal would be dismissed.

6. The Tribunal disposed of the stay application accordingly, setting a deadline for the appellant to comply with the directive for depositing the specified amount, with further proceedings scheduled for a later date.