2011 (7) TMI 885 - AT - Central Excise

CENVAT credit - Bogus invoices - Rule 173Q of Central Excise Rules 1944 - it is clear that the respondent not only received the invoices but also received the goods in their factory. The department could not produce any evidence in order to demolish the above findings of the lower authorities - Supreme Court decision in the case of CCE vs. HMM Ltd. (1995 -TMI - 43962 - SUPREME COURT OF INDIA) held that penalty is not imposable unless the department is able to sustain its demand show-cause notice which was under challenge on the ground of limitation - Decided in favor of thee assessee

Issues:
1. Appeal against dropping of proceedings for fraudulent CENVAT credit availed by the respondent.
2. Allegation of passing CENVAT credit fraudulently by procuring bogus invoices.
3. Admissibility of CENVAT credit reversed by the respondent under protest.
4. Challenge to lower adjudicating authority's order by the Revenue.
5. Upholding of lower adjudicating authority's order by the Commissioner (Appeals).
6. Interpretation of statements made by the respondent's Manager - Commerce.
7. Application of legal precedents in similar cases to the present situation.
8. Examination of evidence regarding receipt of goods by the respondent.

Analysis:
1. The case involved an appeal by the Revenue against the dropping of proceedings for alleged fraudulent availing of CENVAT credit by the respondent. The lower adjudicating authority had dropped the proceedings, which was upheld by the Commissioner (Appeals), leading to the Revenue's appeal.

2. The respondent was accused of passing CENVAT credit fraudulently by using bogus invoices. The Manager - Commerce of the respondent admitted to the fraudulent nature of the invoices, leading to the reversal of CENVAT credit under protest by the respondent.

3. The lower authorities found that the goods were physically moved along with the invoices, and the modvat was reversed under protest. This aspect was emphasized by the learned Advocate representing the respondent.

4. The Commissioner (Appeals) noted that the adjudicating authority did not find evidence of fraud or willful misstatement by the respondent, leading to the withdrawal of the show-cause notice as being time-barred.

5. The Tribunal, in its decision, highlighted that the respondent had received both the invoices and the goods in their factory. The lack of evidence presented by the department to refute this finding strengthened the case for the respondent.

6. The statement by the respondent's Manager - Commerce admitting to reversing the credit due to fraudulent invoices was analyzed. The absence of the term 'fraudulent' in the show-cause notice was noted, and legal precedents were cited to support the decision.

7. The Tribunal differentiated the present case from previous cases involving fraudulent invoices and non-receipt of goods. The consistent findings of the lower authorities regarding the receipt of goods by the respondent were crucial in dismissing the Revenue's appeal.

8. Ultimately, the Tribunal dismissed the Revenue's appeal, citing the lack of evidence to challenge the lower authorities' findings regarding the receipt of goods by the respondent, in line with legal precedents on the imposition of penalties.

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