2011 (6) TMI 422 - AT - Central Excise

Shortage of stock detected in supply by supplier - supplier later paid the entire duty involved - original authority held that instead of genuineness invoices, parallel invoices were issued when the goods were removed on 27.12.07 and therefore the benefit of credit cannot be allowed to the respondents - Held that - Supplying unit has no doubt attempted/indulged in evasion of duty. The goods stands accounted in the production records and that is how the shortage was detected. The goods stand cleared on parallel invoices. However, the duty on the goods stands paid before due date of payment. As far as the respondent is concerned, undoubtedly they have received the goods on the basis of authenticated invoices and there is no doubt that they have received the goods and utilized the same for intended purposes. In view of the above, extending the credit to the respondents by the Commissioner (Appeals) calls for no interference.

Summary

Issues:
1. Duty evasion by supplying unit.
2. Eligibility of credit to the respondents.
3. Authenticity of invoices.
4. Commissioner (Appeals) decision.

Analysis:
The case involves an appeal by the department against an order-in-appeal related to duty evasion by a supplying unit and the eligibility of credit to the respondents. The investigation revealed a shortage of MS Ingots, with a portion sent to the respondents on parallel invoices. The supplying unit admitted the mistake, paid the duty, and the matter was considered closed. However, the department claimed that the goods were cleared without payment of excise duty and argued against granting credit to the respondents due to the clandestine removal of goods. The Commissioner (Appeals) set aside the order demanding duty and penalty from the respondents.

The department contended that the goods were removed on parallel invoices, and the duty was paid only after timely detection by officers, thus disputing the eligibility of credit to the respondents. On the other hand, the respondents argued that they received the goods in good faith based on authenticated invoices and should not be penalized for the supplier's actions.

Upon review, the Commissioner (Appeals) found that the respondents received the goods on proper invoices with duty particulars, and the duty was paid by the supplying unit before the due date. The Commissioner allowed the credit to the respondents based on the genuine receipt of goods and utilization for intended purposes. The Tribunal upheld the Commissioner's decision, emphasizing that the respondents acted in good faith and utilized the goods appropriately, warranting no interference with the credit granted.

In conclusion, the Tribunal rejected the department's appeal, affirming the decision to grant credit to the respondents based on the genuine receipt of goods and proper utilization, despite the supplying unit's evasion of duty. The judgment highlights the importance of authentic invoices and good faith transactions in determining eligibility for credit under excise rules.