2013 (10) TMI 496 - AT - Central Excise

CENVAT Credit - issue of invoice without supply of material - Held that - M/s. Bhagwati Trading Company, (as first stage dealer) were engaged in passing of inadmissible Cenvat Credit to various manufacturers/dealers by issuing invoices, without actually sending the duty paid goods shown as manufactured by M/s. Khemka Ispat Ltd. They issue the cenvatable invoices to the manufactures of the goods and the second stage dealers - The invoices showed the goods manufactured by M/s. Khemka Ispat Ltd. - the cenvatable invoices on which the Cenvat Credit has been taken by M/s Anurag Alloys & Die Cast (P) Ltd. were not the genuine invoices as no goods manufactured by the manufacturer were supplied in these invoices - no credit is admissible to M/s Anurag Alloys & Die Cast (P) Ltd. Penalty - Imposition of Penalty under Rule 15 of Cenvat credit Rules r.w section 11AC of the CE Act Held that - There is no reason to interfere with this finding of the Commissioner (Appeal) in upholding penalty equal to inadmissible Cenvat Credit amount - there is no ground for interfering penalty imposed on M/s Jagdamba Metal Store also -the Order-in-Appeal was upheld Decided against Assessee.

Summary

Issues:
1. Admissibility of Cenvat Credit based on invoices without actual supply of goods.
2. Imposition of penalty under Rule 15 of the Cenvat Credit rule.

Analysis:
1. The case involved appeals by two companies against an Order-in-Appeal passed by the Commissioner Central Excise, Delhi-IV. The investigation revealed that a first stage dealer was passing inadmissible Cenvat Credit through invoices without actual supply of goods. The second stage dealer availed this credit and passed it on further. The appellants argued that all transactions were genuine as payments were made through proper channels and goods were received. However, the Commissioner (Appeals) rejected their appeal based on statements of involved parties.

2. The second stage dealer contended that they did not admit to issuing invoices without physical supply of goods and challenged the penalty imposed on them. The Commissioner AR supported the lower authority's findings of a racket involving inadmissible invoices. Ultimately, the Commissioner (Appeals) confirmed the inadmissible Cenvat Credit against both companies and imposed penalties accordingly.

3. The Tribunal upheld the Commissioner's decision, stating that the Cenvat Credit was not admissible due to the lack of actual supply of goods as per the invoices. The first stage dealer admitted to not supplying goods mentioned in the invoices. Therefore, the Cenvat Credit availed by the companies based on these invoices was deemed inadmissible.

4. Regarding the penalty under Rule 15 of the Cenvat Credit rule, the Tribunal found that the companies availed credit based on inadmissible invoices, justifying the imposition of penalties equal to the inadmissible credit amounts. The Tribunal dismissed the appeals, emphasizing that the penalty was mandatory under the Central Excise Act and upheld the Order-in-Appeal against both companies.

5. The Tribunal rejected the reliance on a previous Tribunal decision by the appellants, highlighting that each case involving clandestine removal of goods or inadmissible Cenvat Credit is unique and cannot be generalized. Therefore, the decision of the Tribunal in this case was based on the specific facts and circumstances presented, leading to the rejection of the appeals filed by the companies.