2011 (6) TMI 607 - AT - Central Excise

CENVAT credit - on the basis of invoices of M/s Natraj Textile Processors Pvt. Ltd. (NTPPL) which is their sister concern - alleged that NTPPL has cleared the goods without payment of duty and suppressed the same from the department - lower adjudicating authority has arrived at decision only on the basis of order passed by the Additional Commissioner and did not give his finding after taking the cognizance of the evidence produced by the respondent Held that - proceedings initiated against NTPPL resulted in the confirmation of demand and imposition of penalty on NTPPL which has not been challenged which goes to show that duty was not discharged on the goods removed by M/s NTPPL. Therefore the duty paid character of the goods on which the respondents have taken CENVAT credit is not free from doubt. Similarly the order passed by the Commissioner (Appeals) is self contradictory. appeal is allowed by way of remand

Issues:
1. Appeal against Order-in-Appeal No. PII/PAP/121/2008 dated 27.6.2008.
2. Allegation of availing CENVAT credit on the basis of invoices from a sister concern.
3. Disallowance of credit, imposition of penalty, and interest.
4. Appeal filed before the Commissioner (Appeals).
5. Finding of no revenue loss by the Commissioner (Appeals).
6. Lack of recording corroborative statement of the appellant's representative.
7. Contradictory findings by the Commissioner (Appeals).
8. Remand of the case for reconsideration.

Analysis:
1. The appeal was filed against Order-in-Appeal No. PII/PAP/121/2008 dated 27.6.2008. The case involved the allegation that the respondent availed CENVAT credit based on invoices from a sister concern, leading to a demand for recovery of credit, interest, and penalty under Rule 13 of the Cenvat Credit Rules, 2002. The lower adjudicating authority disallowed the credit, but the Commissioner (Appeals) allowed the appeal, prompting the appeal by the Revenue.

2. The Revenue contended that the sister concern did not pay duty on goods removed from their factory, which was admitted by an authorized signatory of the sister concern. The Central Excise authority had already decided against the sister concern, confirming demand, interest, and penalty. The Revenue argued that the findings of the Commissioner (Appeals) regarding no revenue loss were incorrect, emphasizing the non-challenge of the sister concern's order.

3. The Commissioner (Appeals) had found no revenue loss to the department, leading to a revenue-neutral case conclusion. The Commissioner highlighted a minor technical infirmity and stated that penalizing the respondent for such an issue was unwarranted. However, the Revenue disagreed, citing the non-discharge of duty by the sister concern as a crucial factor.

4. Upon careful consideration, the Tribunal observed that the lower authority's decision lacked evidence of revenue loss due to CENVAT credit availed by the respondent. Additionally, the failure to record the representative's statement after the signatory's admission raised concerns. The Commissioner's contradictory findings and the need for reconsideration led to remanding the case for a fresh decision, with both parties allowed to present supporting documents.

5. In conclusion, the Tribunal allowed the appeal by remanding the case for further consideration by the Commissioner (Appeals), emphasizing the importance of addressing the duty payment status of goods and avoiding contradictory conclusions in the judgment.

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