2009 (8) TMI 950 - AT - Central Excise

Summary

Issues:
Confirmation of duty denial based on Modvat credit availed by appellants, imposition of penalties under Section 11AC and Rule 26 of Central Excise Rules, 1944, challenge on merits and limitation, evidence of goods not received by registered dealers, appellant's contention of receiving goods and compliance with obligations, denial of Modvat credit, limitation on demand, penalties imposed on other appellants under Rule 26, applicability of Rule 26 in absence of transportation or sale of goods.

Analysis:

The judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the confirmation of duty denial against the appellants, amounting to Rs. 18,45,716, due to the denial of Modvat credit they had availed during a specific period. The Revenue's stance was based on investigations indicating that registered dealers did not receive the inputs they supposedly sold to the appellant. Penalties were also imposed under Section 11AC and Rule 26 of the Central Excise Rules, 1944.

The appellants challenged the orders on merits and limitation. The lower authorities relied on evidence suggesting that the goods were not received by the registered dealers, which raised doubts about the transaction chain leading to the appellant. However, the appellants argued that they had indeed received the goods, paid the dealers, and properly recorded the transactions in their registers, fulfilling their legal obligations.

Upon evaluating the submissions, the Tribunal found that even if the Revenue's case was accepted at face value, it did not warrant denying credit to the appellant. The goods were received by the appellant, supported by invoices and payment records. Lack of evidence indicating non-transportation of goods from dealers' premises to the appellant's premises weakened the basis for confirming the demand against the appellant.

Furthermore, the Tribunal acknowledged the appellants' argument regarding the limitation period, noting the absence of suppression or misstatement that would justify invoking an extended limitation period. Consequently, the demand raised for the specified period was deemed barred by limitation, relieving the appellant from the pre-deposit requirement for duty and penalty.

Regarding the penalties imposed on other appellants under Rule 26, the appellants contended that the goods were neither transported nor sold, rendering the confiscation provisions inapplicable. Citing a precedent, the Tribunal agreed with the appellants, finding merit in their case and dispensing with the pre-deposit condition for the penalties imposed on all appellants.

In conclusion, the Tribunal allowed all stay petitions unconditionally, providing relief to the appellants in terms of duty denial, limitation on demand, and penalties imposed under Rule 26, based on the evidence and legal arguments presented during the proceedings.