2010 (6) TMI 357 - AT - Central Excise

Demand of duty clandestine removal - evidence relating to each of the party has to be appreciated separately - some may be found guilty and others benefit of doubt - setting aside of demand of duty and penalty after appreciating the relied against the said parties can not stand in the way of sustaining the demand of duty and penalty on the appellants - appeal is rejected Penalty - registered dealers have not supplied the goods to the appellants which stand admitted by the Director of the appellant company himself, the non-imposition of penalty on the supplier of invoices on a technical ground cannot give any relief to the appellants - beneficiary of irregular credit taken as they only have utilised it towards discharge of their duty liability - evade payment of duty on the final products

Summary

Issues Involved:
1. Entitlement to Modvat Credit.
2. Justification of demand of duty and imposition of penalties in light of penalties set aside for the supplier and importer.
3. Justification of demand of duty and imposition of penalties when similar demands and penalties were set aside for other parties.

Detailed Analysis:

1. Entitlement to Modvat Credit:
The primary issue was whether the appellants were entitled to Modvat Credit. The appellants argued that the procedural violation of the importer directly dispatching goods to buyers instead of storing them in the registered dealer's premises should not lead to denial of credit. They relied on the statement of Shri Om Prakash Gandhi and the Director of the appellant company, who stated that the goods were received, stored temporarily, and then taken to the manufacturing unit upon receipt of invoices. However, the Tribunal found that the appellants had not received the goods as per the invoices issued by M/s. Shobhit Impex. The Director initially admitted non-receipt of goods, and the transporters confirmed delivery to a different entity (M/s. Annpurna Impex). The Tribunal concluded that the appellants were not entitled to credit as the conditions of receipt and utilization of goods were not fulfilled.

2. Justification of Demand of Duty and Imposition of Penalties:
The appellants contended that penalties against M/s. Shobhit Impex were set aside because they were not required to pay any duty, thus lacking intent to evade duty. They argued that imposing penalties on them was unjustified when the supplier and importer were let off. The Tribunal noted that penalties on M/s. Shobhit Impex were set aside due to the incorrect application of Rule 173Q(1)(d) and not because the goods were supplied. The factual foundation of irregular credit passing was undisturbed. The Tribunal held that non-imposition of penalty on the supplier on technical grounds did not absolve the appellants, who benefited from the irregular credit and intended to evade duty on final products.

3. Justification of Demand of Duty and Imposition of Penalties for Other Parties:
The appellants argued that the Tribunal provided relief to other parties involved in the impugned order and that similar relief should be extended to them. The Tribunal examined the evidence for other parties and found significant differences. For instance, in the case of M/s. Emkay Industries Ltd., the unloading of goods was not disputed despite discrepancies in vehicle numbers, contrary to the appellants' case where non-receipt of goods was corroborated by multiple statements. Similarly, the case of M/s. Tirupati Chemicals lacked statements from purchasers or transporters. The Tribunal emphasized that each party's evidence must be separately assessed, and strong evidence against the appellants justified the demand and penalties. The setting aside of penalties for other parties did not affect the appellants' case due to qualitatively different evidence.

Conclusion:
The Tribunal rejected the appeal, upholding the denial of Modvat Credit and the imposition of duty and penalties on the appellants. The decision was based on the lack of receipt and utilization of goods, the technical grounds for setting aside penalties on the supplier, and the distinct evidence against the appellants compared to other parties. The appeal was pronounced in open court on 30-6-2010.