2011 (7) TMI 340 - AT - Central Excise

Deemed credit - Job work - Merchant manufacturer(M/s. Avinash Exports) had filed rebate claim for an amount of Rs.1,94,856/- without actually exporting the goods - Penalty equal to the amount of duty demanded was also imposed on the appellant - Further, the penalty was also imposed on the Director, Shri K.K. Ahuja - Both the Director and the company are in appeal - Since the statement of the director of the processor was supported by statutory records and payment in the PLA, Tribunal came to the conclusion that the statement of the co-accused alone cannot be relied upon to demand duty and impose penalty - this case are also similar to the case of Shree Shiv Vijay Processors Pvt. Ltd - Other than the statement of Shri Ashok Jhanwar no other evidence is available - In this case also while the deemed credit is taken of Rs.1,29,904/-, the duty paid by the appellant is Rs.1,94,856/- Hence, appeals have to be allowed with consequential relief to the appellants.

Summary

Issues involved:
1. Deemed cenvat credit availed by the appellant without actual export of goods.
2. Imposition of penalty on the appellant and the Director.
3. Similarity of facts with a previous case involving false rebate claims.
4. Reliance on statements and statutory records as evidence.

Analysis:

Issue 1: The appellant, engaged in processing grey fabrics on a job work basis, faced proceedings for availing deemed cenvat credit of Rs.1,29,904 without actual export of goods, following a rebate claim by the merchant manufacturer M/s. Avinash Exports based on fake export documents. The appellant's director claimed to have received and processed the fabrics, supported by statutory records and payments received. However, proceedings were initiated against the appellant for the deemed credit taken.

Issue 2: A penalty equal to the demanded duty was imposed on both the appellant and the Director, Shri K.K. Ahuja. The penalty was a consequence of the confirmed demand for deemed cenvat credit availed by the appellant. The appellant challenged the penalty along with the duty demand in the appeal.

Issue 3: The appellant's advocate argued that the facts of the case were akin to a previous case involving M/s. Shree Shiv Vijay Processors Pvt. Ltd., where the Tribunal allowed the appeal against false rebate claims made by M/s. Avinash Exports. The advocate contended that since the facts were similar, the duty demand and penalties against the company and the appellants should be set aside.

Issue 4: The Tribunal, after considering submissions from both sides, found similarities in the circumstances of this case with the case of Shree Shiv Vijay Processors Pvt. Ltd. In both instances, false rebate claims were made by M/s. Avinash Exports, but the evidence was limited to statements. The Tribunal emphasized the importance of statutory records and payments from the PLA as supporting evidence. Ultimately, the Tribunal allowed the appeals, noting that reliance solely on the statement of the co-accused was insufficient to demand duty and impose penalties.