2011 (5) TMI 336 - AT - Central Excise

Demand - Modvat credit - Demand on the ground that the credit has been availed on the basis of fake and fictitious invoices issued by the non existent weavers - The Tribunal in the case of M/s. Bhagwati Silk Mills has considered the identical appeals of the other appellants similarly situate and has remanded the matter to the original adjudicating authority for denovo decision in the light of the observations made therein. Penalty - Revenue has also challenged the impugned order of Commissioner (Appeals) for reducing the penalty on the assessee and deleting the penalty on the Director - Hence, already remanded the assessee appeal, also remand the Revenue s appeal to the original adjudicating authority for fresh decision.

Summary

Issues involved:
1. Denial of modvat credit based on fake and fictitious invoices.
2. Recovery of duty and penalty by Revenue.
3. Remand of the matter to the original adjudicating authority for fresh decision.
4. Challenge by Revenue on reducing penalty and deleting penalty on Director.

Analysis:

1. Denial of modvat credit based on fake and fictitious invoices:
The Tribunal confirmed the duty against the appellant by rejecting the modvat credit due to the utilization of invoices issued by non-existent weavers. This action was taken as these invoices were deemed fake and fictitious. The Tribunal referred to a previous case involving M/s. Bhagwati Silk Mills where similar appeals were considered. The Tribunal decided to remand the matter to the original adjudicating authority for a fresh decision, instructing them to consider the observations made in the M/s. Bhagwati Silk Mills case.

2. Recovery of duty and penalty by Revenue:
The Revenue had already recovered a portion of the duty by encashing a bank guarantee. The total duty amount was Rs. 20,95,221, out of which Rs. 4 lakhs had been recovered. The Tribunal, acknowledging this recovery, waived the pre-deposit condition for the balance amount of duty and the entire penalty imposed on the appellants. This decision was made to reflect the partial recovery already made by the Revenue.

3. Remand of the matter to the original adjudicating authority for fresh decision:
The Tribunal set aside the impugned order and remanded the case to the original adjudicating authority for a fresh decision. The authority was directed to consider the observations from the M/s. Bhagwati Silk Mills case. Additionally, the Tribunal noted that the Revenue had challenged the impugned order of the Commissioner (Appeals) regarding the penalty reduction for the assessee and deletion of the penalty for the Director. As a result of remanding the assessee's appeal, the Tribunal also remanded the Revenue's appeal to the original adjudicating authority for a fresh decision. The stay petition and appeals were disposed of accordingly.

4. Challenge by Revenue on reducing penalty and deleting penalty on Director:
The Revenue had challenged the decision of the Commissioner (Appeals) to reduce the penalty for the assessee and delete the penalty for the Director. Given the remand of the case to the original adjudicating authority for a fresh decision, the Tribunal also remanded the Revenue's appeal on this matter for reconsideration. This ensured that all aspects related to penalties were to be reviewed and decided upon afresh by the adjudicating authority.