2013 (7) TMI 216 - AT - Central Excise

Wrong availment of CENVAT credit without receipt of raw materials and their use by Appellant - According to the Revenue, appellants did not receive Aluminium Ingots weighing 663.062 MTs, Aluminium scrap totally weighing 417.580 MTs and 26.548 MTs of Copper scrap thereby wrong credit of more than Rs.1.36 crores was availed - Held that - Appellants (AMA-II) did not receive these inputs but took the credit based on the evidences - test reports and copper content of the finished Aluminium alloy ingots manufactured by AMA-II during the period from 18/12/2004 to 11/03/2005, it was found that there was a shortage of 26.548 MTs of copper scrap dream - Investigation which found that there were no stamps of check posts on transport documents etc. in the case of M/s. Chawla Roadlines in respect of supply of ingots from M/s. Kirshore & Co., the Transport Commissioner had also given a report that there was no entry in the exit stamps in respect of these transportations; vehicle owners/drivers also gave statements that their vehicles were not used, etc Decided against the Assessee. On the one hand Department has demanded CENVAT credit on the ground that inputs were not received whereas on the other hand they have demanded duty on clandestine removal and both cannot co-exist - Held that - The case relating to clandestine removal is based on non-transportation and non-receipt of Aluminium scrap and the clandestine removal charge is based on specific quantity of raw materials accounted for and feasible production therefrom. Both can co-exist Decided against the Assessee. Cleared Aluminium Alloy ingots without payment of duty - Held that - Appellant cleared Aluminium Alloy ingots without payment of duty and the demand of duty to more than Rs.94 lakhs can be justified on various grounds - Generation of Aluminium ash and iron waste has been shown to be around 33% of the total production whereas it is quite well known that in Aluminium industry other than melting loss and evaporation of 2 to 3%, there cannot be any other loss - Also gathered evidences in the form of statements of transporters to show that no ash or iron waste transported and also made efforts to contact the buyers. None of them can be traced out, etc. Decided against the Assessee. Personal Penalties under Rule 13/15 and under Rule 26 of Central Excise Rules, 2002 has been levied with modification as had been ordered by Commissioner. Liniency shown on Mr. V.K.Jha on the ground that no admission by Shri V.K. Jha that he was involved in accountal of production and removal etc. The benefit of doubt has to be extended to Shri V.K. Jha.

Summary

Issues Involved:
1. Wrong availment of CENVAT credit without receipt of raw materials by AMA-II.
2. Clearance of Aluminium Alloy ingots without payment of duty by AMA-II.
3. Clearance of goods manufactured by AMA-II under the name of AMA-I.
4. Liability of penalties for suppliers and transporters.
5. Liability of penalties for functionaries of AMA-II.

Detailed Analysis:

1. Wrong availment of CENVAT credit without receipt of raw materials by AMA-II:
Investigation revealed that AMA-II availed CENVAT credit for Aluminium Ingots, Aluminium scrap, and Copper scrap without actual receipt of these inputs. The evidences included discrepancies in transport documents, absence of check post stamps, and statements from vehicle owners and transporters denying transportation. The appellants argued that both demands for CENVAT credit and duty on clandestine removal cannot co-exist, but the Tribunal found both charges valid based on different sets of evidence. The Tribunal noted that the appellants failed to rebut the evidences effectively and upheld the Department's case.

2. Clearance of Aluminium Alloy ingots without payment of duty by AMA-II:
The Revenue's evidence included the production of excess ash and iron waste, which was found to be fictitious. The Tribunal supported the Revenue's reliance on statements from transporters and buyers, who confirmed non-receipt of goods. The Tribunal concluded that the appellants indulged in clandestine removal of finished goods and upheld the duty demand along with penalties.

3. Clearance of goods manufactured by AMA-II under the name of AMA-I:
The Commissioner found that clearances under certain invoices were made in the name of AMA-I, though goods were manufactured by AMA-II. This was supported by the statements of an authorized signatory, who admitted the manipulation for tax benefits. The Tribunal upheld the Commissioner's findings and confirmed the duty demand, interest, and penalties.

4. Liability of penalties for suppliers and transporters:
The Tribunal upheld penalties on suppliers (M/s. Kishore & Co., M/s. Consumer Products, and M/s. Steel & Metals) for supplying only invoices without actual goods. The Tribunal also upheld penalties on M/s. Chawla Roadlines and M/s. Royal Transport of India for their roles in facilitating evasion by issuing false transport documents and not transporting goods. The statements from transporters and owners, along with the Transport Commissioner's report, were deemed sufficient evidence.

5. Liability of penalties for functionaries of AMA-II:
The Tribunal reviewed penalties on various functionaries:
- Shri Narsingh Swamy: Actively involved in manipulation and fabrication of records. Penalty reduced from Rs. 2 lakhs to Rs. 10,000/-.
- Shri Ramnivas Swamy and Shri Shailendra: Involved in preparing bogus invoices and entries. Penalties reduced to Rs. 10,000/- and Rs. 5,000/- respectively.
- Shri V.K. Jha: Spectro-in-charge, found to have limited involvement. Penalty set to NIL.
- Shri Samir Agarwal and Shri Vipul Agarwal: Partners in the firm, held responsible for overall activities. Penalties reduced to Rs. 5 lakhs each.

Conclusion:
The Tribunal upheld the findings of clandestine removal and wrong availment of CENVAT credit by AMA-II. Penalties on suppliers, transporters, and functionaries were reviewed and adjusted accordingly. The appeals were disposed of with modifications to penalties as detailed in the judgment.