2006 (12) TMI 420 - AT - Central Excise

Summary

Issues involved: Disallowance of Cenvat Credit and penalty u/s Rule 57G of the Central Excise Rules, 1944.

Disallowance of Cenvat Credit:
The appeal was filed against the disallowance of Cenvat Credit of Rs. 1,08,198/- and penalty of Rs. 25,000. The denial of credit was based on the ground that duty paying documents were not in favor of the appellant as required by Rule 57G of the Central Excise Rules, 1944. The Commissioner (Appeals) noted the possibility that goods might have been sent to the actual consignees without accompanying the goods. The appellant argued that procedural irregularities should not lead to the denial of substantial benefits, citing relevant case laws. The Tribunal found that the duty paying documents were not in the appellant's name and no evidence was produced to show that the goods were supplied to them. The case laws cited by the appellant were deemed inapplicable, as in a similar case where Modvat credit was allowed, evidence was presented to prove the consignment to the appellants, which was lacking in this case. Consequently, the demand of duty was upheld, but the penalty was set aside considering the circumstances.

Penalty u/s Rule 57G:
The penalty of Rs. 25,000 was imposed along with the disallowance of Cenvat Credit. However, after considering the facts and circumstances of the case, the Tribunal decided to set aside the penalty while upholding the demand of duty due to the absence of evidence proving the consignment of goods to the appellants. The appeal was disposed of accordingly.