2013 (9) TMI 649 - AT - Central Excise

Benefit of Notification No.32/99 Inadmissible Refund - The investigation revealed that the unit did not have any manufacturing facility and issued only Central Excise invoices to different buyers without clearance of the goods - The unit paid duty on the goods and obtained refund of the duty paid as per provisions of Notification No.32/99 - The issue was regarding recovery of inadmissible refund - Whether cross examination should have been extended in the case or not - Held that - The demand for wrongly availed cenvat credit was sustainable with interest - Department had done enough in the case to show that goods had not been received and appellant failed to discharge the burden of showing that they had actually received the goods - The department produced prima-facie evidence to show that M/s. Matiz Metals Pvt. Ltd. did not supply the goods to M/s. Shakti Enterprises and M/s. Shakti Enterprises did not supply the goods to CEPL and the transporter admitted not transporting the goods, the burden to show that there was actually receipt of the goods would fall on the appellant - CEPL have not chosen to make any efforts to produce any evidence to show such receipt of goods - appellant was a party to the conspiracy of passing on cenvat credit without actually supplying the goods. Benefit of Reduced Penalty - Whether the Commissioner (Appeals) was right in allowing the benefit of reduced penalty if the payment of Cenvat credit demanded with interest and 25% towards penalty was made within thirty days of communication of the order - Held that - The fact that original adjudicating authority had extended such a facility, no appellate authority could once again make similar offer - even after the original adjudicating authority had given an option, similar option can be extended again at the appellate stage can be said to have laid down such a ratio - The original adjudicating authority had extended the option in paragraph 14(3) of his order - once an option was given, if the appellant failed to utilise the same, such an option cannot be extended again Decided in favor of Revenue. Penalty - Held that - Taking note of the fact that total wrong credit was availed and the appellant will have to pay mandatory penalty of 100% having not availed the option given and also having regard to the facts and circumstances of the case and the role of the director it would be to reduce the penalty - Decided against Assesse.

Issues Involved:
1. Recovery of inadmissible refund and fraudulent availing of Cenvat Credit.
2. Cross-examination of witnesses.
3. Eligibility for reduced penalty under Section 11AC of Central Excise.
4. Penalty on the director of the appellant company.

Detailed Analysis:

1. Recovery of Inadmissible Refund and Fraudulent Availing of Cenvat Credit:
The investigation revealed that M/s. Matiz Metal Pvt. Ltd. issued Central Excise invoices without actual clearance of goods and obtained refunds fraudulently. These invoices were sold at a premium to buyers who availed Cenvat Credit without actual receipt of goods. M/s. Shakti Enterprises, a registered dealer, issued cenvatable invoices to several manufacturers, including M/s. Citizen Extrusion Pvt. Ltd. (CEPL), without supplying any inputs. The investigation confirmed that M/s. Shakti Enterprises received invoices from M/s. Matiz Metals Pvt. Ltd. and issued them to CEPL without actual delivery of goods, enabling CEPL to fraudulently avail Cenvat Credit. The scrutiny of invoices and statements from involved parties corroborated this fraudulent activity. Consequently, a demand of Rs. 5,66,363/- along with interest and penalties was confirmed against CEPL and its director.

2. Cross-Examination of Witnesses:
The appellants argued that the case was based on statements made years after the events and that cross-examination of the witnesses, particularly the transporter and the proprietor of M/s. Shakti Enterprises, was not allowed. The tribunal held that the unique circumstances of the case did not necessitate cross-examination. The transporter admitted to issuing blank LRs without actual transportation of goods and did not contest the show cause notice or the penal proceedings, which indicated the validity of his statement. Similarly, the proprietor of M/s. Shakti Enterprises had admitted to issuing invoices without goods, and his statements were considered reliable. The tribunal concluded that the burden of proving actual receipt of goods shifted to the appellant, which they failed to discharge.

3. Eligibility for Reduced Penalty under Section 11AC of Central Excise:
The Commissioner (Appeals) had allowed CEPL the benefit of reduced penalty if the payment of Cenvat credit demanded, along with interest and 25% of the penalty, was made within thirty days. However, the tribunal agreed with the Revenue that once the original adjudicating authority had extended such an option, it could not be offered again at the appellate stage. The tribunal upheld that the appellant was not entitled to the benefit of reduced penalty as they failed to utilize the initial option provided by the original adjudicating authority.

4. Penalty on the Director of the Appellant Company:
The original adjudicating authority imposed a penalty of Rs. 1,00,000/- on the director of CEPL, which was upheld by the Commissioner. The tribunal noted that the director, Shri Vishnu Kumar Agarwal, was directly involved in the fraudulent activities and responsible for availing Cenvat credit without receipt of goods. However, considering the total wrong credit availed and the circumstances, the tribunal decided to take a lenient view and reduced the penalty on the director to Rs. 75,000/-.

Conclusion:
The tribunal upheld the demand for wrongly availed Cenvat credit along with interest and confirmed the penalties imposed. The appeal by the Revenue regarding the reduced penalty was accepted, and the director's penalty was reduced to Rs. 75,000/-. All appeals were disposed of accordingly.

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