2013 (11) TMI 1176 - AT - Central Excise

Evidence for receipt of goods Confirmation of Cenvat credit Interest and twice of the Penalty imposed under Rule 15(2) of Cenvat credit rules 2004 r.w. Rule 25 of Central Excise Rules 2002 Waiver of Pre-deposit Held that - There was merit in the appellant s contention that the grounds on which the Cenvat credit demands availed on the basis of 2 invoices issued by M/s Salem Steel Plant and Cenvat credit availed on the basis of 7 invoices issued by M/s A.B. Paul & Co., has been denied, are flimsy - there is no justification for imposition of penalty twice the amount of Cenvat credit demand confirmed - The amount already deposited by the appellant is sufficient for hearing of the appeal - The requirement of pre-deposit of the balance amount of Cenvat credit demand, interest and penalty waived till the disposal stay granted.

Issues:
1. Denial of Cenvat credit for Stainless Steel scrap procured from two sources.
2. Lack of transport documents for goods transportation.
3. Imposition of penalty and interest under Cenvat Credit Rules and Central Excise Rules.
4. Appeal against the order of the Commissioner (Appeals) reducing the demand amount.

Issue 1: Denial of Cenvat Credit
The appellant, engaged in manufacturing Stainless Steel products, faced denial of Cenvat credit amounting to Rs. 3,56,204 for Stainless Steel scrap procured from Salem Steel Plant and M/s A.B. Paul & Co. The denial was based on alleged lack of evidence regarding transportation and receipt of goods at the factory in Delhi. The original Adjudicating Authority confirmed the demand, imposing penalties under Rule 15 (2) of Cenvat Credit Rules, 2004, and Rule 25 of Central Excise Rules, 2002 read with Section 11AC. The Commissioner (Appeals) later reduced the demand to Rs. 3,56,204, leading to the current appeal.

Issue 2: Lack of Transport Documents
The denial of Cenvat credit was primarily due to the absence of transport documents proving the movement of goods from the sources to the appellant's factory. Specifically, for Stainless Steel scrap procured from Salem Steel Plant, while evidence of transportation to ICD Tughlakabad was available, there was no document showing the subsequent transportation to the factory in Delhi. Similarly, for scrap procured from M/s A.B. Paul & Co., the lack of transit passes/local truck challans from U.P. Government authorities raised doubts about the receipt of goods at the appellant's Delhi factory. These deficiencies formed the basis for the denial of credit.

Issue 3: Imposition of Penalty and Interest
The original Adjudicating Authority imposed penalties and interest on the denied Cenvat credit amount, citing violations of Cenvat Credit Rules and Central Excise Rules. The penalties were set at twice the confirmed demand, leading to a substantial financial burden on the appellant. However, the Commissioner (Appeals) reduced the penalty proportionately along with the demand amount. The appellant contested the imposition of penalties, arguing that the grounds for denial were weak and did not warrant such severe penalties.

Issue 4: Appeal Against Commissioner (Appeals) Order
The appellant filed an appeal against the order of the Commissioner (Appeals), seeking further reduction in the demand amount and penalties. During the hearing, the appellant's counsel argued that the reasons for denial of Cenvat credit were unsubstantiated, and the appellant had already made a significant payment towards the demand. The Tribunal, after considering both sides' submissions, found merit in the appellant's plea regarding the flimsy grounds for denial. Consequently, the Tribunal waived the requirement for pre-deposit of the balance amount, interest, and penalties for the appeal hearing, staying the recovery until the appeal's final disposal.

This detailed analysis of the judgment highlights the key issues surrounding the denial of Cenvat credit, lack of transport documents, imposition of penalties and interest, and the appeal process against the Commissioner (Appeals) order.

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