2009 (2) TMI 556 - AT - Central Excise

Summary

Issues:
Imposition of penalty on appellants for incorrect CENVAT credit and denial of rebate to ultimate exporter.

Analysis:
The judgment involves two appeals filed against the imposition of penalties on the appellants. The first penalty was equal to the duty under Section 11AC imposed on M/s. Arihanth Textiles, and the second penalty was Rs. 50,000 imposed on Glamour Dyeing Printing Mills Pvt. Ltd. under Rule 15(1). The penalties were imposed based on discrepancies found during verification. The department alleged that invoices on which credit was taken were issued to someone else by the supplier, and that the CENVAT credit taken by Arihant Textiles was incorrect. Additionally, rebate was denied to M/s. Astha Exim due to non-receipt of goods, and a penalty was imposed on Glamour Dyeing & Printing Mills for a paper transaction without actual manufacturing or export processes. The appellants contended that they had received yarn and not grey fabrics as alleged, and manufactured grey fabrics out of the yarn. The department's case relied on the fact that invoices were issued to someone else, indicating a manipulation. However, the appellants argued that they had received the yarn and there was no evidence to suggest otherwise.

The arguments presented by both sides were considered by the tribunal. The issue at hand was deemed to be straightforward, and pre-deposit under Section 35F was waived. The appeals were taken up for final disposal with the consent of both parties. The tribunal noted that the office copies of the invoices showing they were issued to another party were not part of the records or supplied to the appellants for their response. Without evidence to show that Arihant Textiles did not receive the yarn covered by the invoices, the tribunal found that the Revenue had not established a case against the appellants. It was concluded that the appellants were not required to provide further evidence in the absence of proof that they had not received the yarn. Consequently, the appeals filed by the appellants were allowed, providing them with consequential relief. However, the judgment clarified that the decision was limited to the appellants and did not express any opinion on the rebate claim of Astha Exim.