2010 (1) TMI 1016 - AT - Central Excise

Summary

Issues Involved:
1. Violation of principles of natural justice due to non-supply of the report.
2. Validity of the end use certificate in establishing actual transportation of goods.
3. Sufficiency of payment of duty on the final product to establish receipt of goods.
4. Justification for the imposition of penalty.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The respondents argued that they were not provided with a copy of the report from the concerned DTO/RTA, which was crucial for their defense. The adjudicating authority had relied on this report to conclude that the vehicle numbers mentioned in the invoices were not genuine. The Tribunal noted that the absence of this report's copy to the respondents constituted a violation of the principles of natural justice. However, it was also noted that the respondents did not dispute the contents of the invoices or the fact that the vehicle numbers were not genuine. Thus, the primary burden had shifted to the respondents to prove the actual transportation of goods.

2. Validity of the End Use Certificate:
The respondents relied on an end use certificate to establish that the scrap was actually transported and used in manufacturing. The Tribunal observed that the end use certificate, issued under Notification No. 17/01 dated 1-3-2001, was not sufficient to establish actual receipt and use of the goods, as it was based on documentary evidence rather than physical verification. The certificate dated 23rd March 2002, related to the goods allegedly used in July 2001, and there was no evidence of physical verification at the time of use.

3. Sufficiency of Payment of Duty on Final Product:
The respondents contended that the payment of duty on the final product should establish the receipt of raw materials. However, the Tribunal found that there was no factual statement or evidence provided by the respondents to support this claim. The ground (J) in the appeal memo was not considered sufficient to discharge the burden of proof regarding the actual receipt and use of the raw materials described in the invoices.

4. Justification for the Imposition of Penalty:
The Tribunal concluded that since it was established that the goods were not received by the respondents and the Cenvat credit was availed merely on the basis of invoices, the fraudulent nature of the transactions warranted the imposition of penalties. The Commissioner (Appeals) had failed to analyze the materials on record and had disposed of the appeal in a casual manner, relying on decisions that were not applicable to the facts of the case.

Conclusion:
The Tribunal set aside the impugned order of the Commissioner (Appeals) and restored the order passed by the adjudicating authority, confirming the demand and penalties imposed. The appeal was allowed, and the order of the adjudicating authority was reinstated with all consequential relief.