2011 (1) TMI 109 - AT - Central Excise

Demand of duty and interest - registered dealer has claimed that he has supplied the goods on ex-godown basis and that he was not aware as to whether they were diverted and if so to whom and where it was diverted - respondents claimed that they have paid the freight in respect of this vehicle - credit is admissible to the recipient subject to proving that the duty paid goods alongwith concerned duty paying documents have been received by the assessee - since the supplier has submitted that the goods have been supplied and the respondents submitted that they have received the goods and since there was no discrepancy in the transport documents, the credit could not be disallowed - order of the original authority to the extent of demanding duty to the tune of Rs. 70,935/- alongwith interest alone restored

Summary

Issues:
Appeal against order disallowing credit, interest, and imposing penalty.

Analysis:
1. The department appealed against the Commissioner (Appeals) order disallowing credit, interest, and penalty. The case involved a registered dealer supplying goods to the respondents in 2003, with discrepancies found in transport documents and non-existing transport firms. The department alleged paper transactions and denied credit based on ineligible documents, demanding duty, interest, and imposing a penalty.

2. The Commissioner (Appeals) set aside the original authority's order, citing evidence like GRs and octroi receipts to confirm material receipt by the respondents. The Commissioner relied on previous court decisions supporting the respondents' case. The department, represented by the SDR, argued that discrepancies in invoices and transport documents should invalidate octroi receipts. Reference was made to tribunal decisions to support their stance.

3. The respondents' advocate distinguished the case from those cited by the SDR, emphasizing the confirmation of goods supply by the registered dealer. They argued that discrepancies in vehicle numbers should not negate material receipt, as the supplier arranged transport and the respondents paid freight. The advocate sought to uphold the Commissioner (Appeals) order based on evidence like GRs and octroi receipts.

4. After considering submissions and records, the judge found discrepancies in the transport documents, especially in a case where an oil tanker's registration number was used for slab cuttings transportation. The judge noted the failure to identify the transporter or driver for this vehicle. While discrepancies existed in some cases, the investigation was conducted years after material receipt, raising doubts about firm existence during that period.

5. Consequently, the judge upheld the credit for two invoices where no discrepancies were found, but disallowed credit for the invoice with the oil tanker registration discrepancy. The burden to prove material receipt rested on the assessee, and due to significant transport document discrepancies, the burden was not discharged. The judge concluded that penalty restoration was unwarranted in this case.

6. The final decision set aside the Commissioner (Appeals) order regarding the credit extension, restoring the original authority's demand for duty and interest. The appeal was partly allowed, with the duty demand of Rs.70,935 along with interest being reinstated.