2014 (2) TMI 1185 - AT - Central Excise

Denial of CENVAT Credit - Bogus invoices - Availment of credit without actual receipt of goods - Held that - Appellant has reflected three different figures, 80990 MTs in form 3CD which is a statutory return under the income-tax law, being the total quantity of Cenvatable inputs and non-cenvatable inputs received, 92,427 MTs in the RG-23A Part I register for the quantity of cenvatable inputs received and 78,408 MTs in the daily stock statement, which is a statutory register prescribed for receipt of raw materials. In view of the variations in the receipts, the appellant was directed, during the course of hearing on 25-9-2013, to produce copy of the balance sheet and schedules showing the details of inventory held for the year 1995-96, so as to resolve the difference among the three figures reflected in the three different accounts maintained by the appellant. The appellant has produced a copy of balance sheet and the schedule. However, the said document does not reflect the opening balance, receipt and the closing balance of the raw material, but merely indicates the quantity of raw material consumed during the year. Thus, this document is of no use in ascertaining the receipt of raw materials, during 1995-96. As per the daily stock statement register, the quantity of receipt of raw materials during the year 1995-96 is found to be 78,408 MTs. Further, from the statement of Shri Pattanshetti, Assistant Manager (Stores) of the appellant firm, it is evident that the receipt of goods were entered as soon as they were received and the consumption of the goods were also recorded on a daily basis. If the appellant had followed this procedure as admitted by them, there is no reason to disbelieve the figures reflected in the daily stock statement maintained by the appellant. Therefore, we hold that for excise purposes reliance placed by the adjudicating authority on the figures reflected in the daily stock statement register cannot be faulted at all. - On the basis of these evidences available, we have no hesitation to conclude that the quantity of raw material received by the appellant during 1995-96 was only 78,408 MTs. and therefore, the appellant could have taken credit only on this quantity. Accordingly, we hold that the adjudicating authority has correctly confirmed the demand - However, some portion of demand is not sustainable - Penalty imposed is alsoo reduced - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Ineligible credit availed without receipt of inputs.
2. Credit availed on short-received inputs.
3. Credit attributable to goods sent for job work but not returned.
4. Duty on DSRM Rolls sold and leased back.
5. Reversal of credit on sold DSRM Rolls.

Issue-wise Detailed Analysis:

1. Ineligible Credit Availed Without Receipt of Inputs:
The appellant was found to have taken credit on 92,427 MTs of scrap as per RG-23A Part-I Register, while the statutory return (Form 3CD) indicated 80,990 MTs, and daily stock statements showed 78,408 MTs. The adjudicating authority confirmed a duty demand of Rs. 1,43,84,829/- for the excess 14,019 MTs. The appellant argued that the discrepancy was due to credit taken in 1995-96 for goods received in 1994-95. However, the Tribunal held that the daily stock statement, a statutory register, should be relied upon, confirming the duty demand since the appellant failed to reconcile the differences satisfactorily.

2. Credit Availed on Short-Received Inputs:
The appellant admitted to short receipt of inputs and raised debit notes on the supplier/transporter. Despite this, they claimed Cenvat credit based on duty-paying documents. The Tribunal upheld the adjudicating authority's demand of Rs. 3.00 lakhs, stating that credit cannot be availed for materials not received.

3. Credit Attributable to Goods Sent for Job Work but Not Returned:
The appellant supplied raw materials to job workers under Rule 57F(4), but the waste generated was not returned or cleared on payment of duty. The adjudicating authority confirmed a demand of Rs. 6,41,516/-. The Tribunal upheld this, noting that the appellant failed to comply with Rule 57F(5) requirements, which mandate the return or duty payment of waste.

4. Duty on DSRM Rolls Sold and Leased Back:
The appellant manufactured and sold 76 DSRM Rolls to ISSAL and 38 imported rolls to ISMTL but did not discharge duty or reverse credit. The Tribunal held that since the rolls were captively used within the factory, they were exempt under Notification No. 67/95-C.E., dated 16-3-1995. Thus, the demands of Rs. 22,17,400/- and Rs. 13,05,482/- were set aside.

5. Reversal of Credit on Sold DSRM Rolls:
The Tribunal reiterated that reversal of credit is required only when capital goods are removed as such or after use. Since the rolls were used within the factory, the demand for reversal of Rs. 13,05,482/- was not sustainable.

Penalties:
The Tribunal found the total penalty of Rs. 54.00 lakhs harsh and reduced it to Rs. 15 lakhs for the main appellant. The penalty on Shri M.G. Apte, General Manager (Finance), was set aside as he did not personally gain from the wrong credit availed by the appellant firm.

Conclusion:
The Tribunal upheld the demands of Rs. 1,43,84,829/-, Rs. 3.00 lakhs, and Rs. 6,41,516/- but set aside the demands of Rs. 22,17,400/- and Rs. 13,05,482/-. The penalty on the main appellant was reduced to Rs. 15 lakhs, and the penalty on Shri M.G. Apte was set aside. The appeal of Shri Sanjay Gupta was to be heard separately.