2010 (4) TMI 943 - AT - Central Excise

CENVAT credit - aluminium wire rods and wire bars - Clandestine removal - fake invoices - receipt of invoices without actual receipt of inputs - Held that - the appellants never received wire rods and bars in their factory is based on the law of evidence. Once the Revenue produces sufficient evidence which would lead an ordinary prudent man to conclude that the evidence led by the department prima facie shows the goods have not been received, the onus of proving that the goods have been received shifts to the person who claims to have received the same - Except denying what has been stated in the show cause notice, appellants have not led any positive evidence which is possible in this case to show that they have actually received aluminium wire rods/bars - credit not allowed. Demand - extrusions - Extrusion becoming scrap before reaching RG-1 stage have not been accounted - Held that - the fact that the department has not produced any evidence to show that such goods have been removed or sold does not in any way affect the demand for Central Excise duty on the goods manufactured. Further this is not a case of mere shortage/excess of stock but Department has conducted investigation to prove the excess production - the onus has shifted to the appellants to show that they had accounted for all the goods produced in the RG-1 register. Central Excise duty is leviable on the manufacture. The taxable event is manufacture and not removal or sales - demand upheld. CENVAT credit - aluminium ingots - Held that - Once again the onus of proving that they have accounted for all the goods produced, shifts to the appellants and they have failed to discharge this burden. They want the department to show challanwise details of goods transported or not transported. There are several decisions of Hon ble Supreme Court and High Courts wherein it has been held that in such clandestine activities, only the person who indulges in such activities knows all the details and it would not be possible for any investigating officer to unearth all the evidences required and prove with mathematical precision - demand upheld. Penalty on partner of company - Held that - he himself admitted that he was aware of clandestine removal and also non-accountal of full production made in the factory. Under these circumstances, he has been rightly penalized by the Commissioner. Therefore the penalty on Shri P.N. Shah has to be upheld. Penalty on firm - Held that - the benefit of payment of 25% of the duty as penalty under Section 11AC subject to the payment of duty demanded with interest thereon and penalty to the extent of 25% within thirteen days is made by the appellant firm has to be extended. Appeal dismissed - decided against assessee.

Summary

Issues Involved:
1. Demand of Rs. 67,51,495/- being the Cenvat credit availed on aluminium wire rods and wire bars.
2. Demand of duty of Rs. 10,96,768/- in respect of extrusions.
3. Demand for duty of Rs. 9,48,134/- on aluminium ingots.
4. Penalty on Shri P.N. Shah, the partner of the company.
5. Penalty on the firm under Section 11AC of Central Excise Act, 1944.

Detailed Analysis:

1. Demand of Rs. 67,51,495/- being the Cenvat credit availed on aluminium wire rods and wire bars:
The Commissioner relied on the show cause notice issued to M/s. Pankaj Extrusions Ltd. and statements from various individuals, including Shri U.P. Patel, who stated that wire rods and bars were never received at the factory. The appellants contested this by arguing the statements were unreliable and that wire rods/bars were necessary for quality production. However, the Tribunal found the evidence, including the production figures and statements from the partner and melting-in-charge, sufficient to conclude that the wire rods and bars were not received. The Tribunal upheld the demand for irregular Cenvat credit of Rs. 67,51,495/-.

2. Demand of duty of Rs. 10,96,768/- in respect of extrusions:
The demand was based on entries in a file marked "A/32," which the Commissioner held represented actual production. The appellants argued that the figures included semi-finished goods and scrap, not accounted for in RG-1. The Tribunal analyzed the detailed monthly statements and concluded that the figures represented actual production, not semi-finished goods. The Tribunal held that the department had proved excess production and the appellants failed to account for it, thus upholding the demand of Rs. 10,96,768/-.

3. Demand for duty of Rs. 9,48,134/- on aluminium ingots:
The demand was based on production records and statements from Shri U.P. Patel and Shri P.N. Shah, corroborated by the transporter's admission of issuing fake LRs. The appellants' defense was deemed inadequate as they failed to provide evidence to counter the department's claims. The Tribunal upheld the demand of Rs. 9,48,134/-.

4. Penalty on Shri P.N. Shah:
Shri P.N. Shah admitted to being in charge of day-to-day affairs and aware of the clandestine removal and non-accountal of production. The Tribunal found the penalty justified but reduced it from Rs. 25,00,000/- to Rs. 10,00,000/- considering the total duty involved.

5. Penalty on the firm under Section 11AC of Central Excise Act, 1944:
The Tribunal upheld the penalty but extended the benefit of paying 25% of the duty as penalty within thirty days, following the precedent set in the case of Swati Chemicals Industries. If the appellants fail to make the payment within the stipulated period, the penalty would stand at 100% of the duty demanded.

Observations:
The Tribunal noted the excessive adjournments and delays in the hearing process, which resulted in justice being delayed for the Revenue. The case highlighted the need for stricter adherence to procedural timelines to ensure timely justice.