2011 (10) TMI 165 - AT - Central Excise

Allowability of Cenvat Credit when input goods have not been received in the factory premises- Transporter delivered the goods to buyers - Held that -where goods have not reached the appellants premises and have been diverted in-between and, therefore, the credit taken by the appellants without actually receiving the goods is a clear case of fraud and thus credit cannot be allowed. Waiver of Pre Deposits of tax pending appeals - Held that -Where no financial difficulty or hardship is pleaded by the appellants and the evidence available on record does not support the appellant s case, waiver cannot be given. Assessee also liable to pay interest outstanding.

Summary

Issues:
Fraudulent availing of CENVAT credit without receiving goods, Adjudication under Central Excise Act, 1944, Imposition of penalties, Appeal before Commissioner (Appeals), Pre-deposit waiver request, Comparison with a previous judgment for pre-deposit waiver.

Detailed Analysis:

The case involved allegations of fraudulent availing of CENVAT credit by a company manufacturing MS ingots without actually receiving the materials into their factory. The investigation revealed that the transporter diverted the goods to a different location instead of delivering them to the company's premises. The company's directors failed to provide satisfactory explanations or evidence regarding the receipt of the goods. Consequently, a demand for the wrongly availed CENVAT credit, along with interest and penalties, was confirmed under the Central Excise Act, 1944 (Section 11A(1), 11AB, Rule 15, 11AC).

The appellants challenged the decision before the Commissioner (Appeals) but the appeal was dismissed. During the proceedings, the appellants requested a waiver of the balance amount of dues adjudged, citing a deposit made by them and referring to a judgment by the High Court of Bombay in a similar case for pre-deposit waiver.

Upon considering the submissions from both parties, the judge found substantial evidence supporting the department's claim of fraudulent CENVAT credit availing. The transporter's admission and the statements of the buyers confirmed the diversion of goods, indicating a clear case of fraud. The judge noted the absence of essential documents like consignee copies of transport documents, further strengthening the case against the appellants.

In response to the appellants' reliance on a previous judgment for pre-deposit waiver, the judge distinguished the situations, emphasizing the lack of financial difficulty or hardship plea from the appellants in the current case. Consequently, the judge ordered the appellants to make a pre-deposit of Rs.5 lakhs under Section 35F of the Central Excise Act, 1944, within a specified timeline, with the balance amount waiver subject to compliance and stay on recovery during the appeal's pendency.