2013 (11) TMI 1464 - AT - Central Excise

Denial of Cenvat credit - Revenue was of the view that instead of aluminium wire and rods, they had received ingots, without payment of duty Held that - Wherever complete description was given by the dealer as aluminium wire and rods, the Revenue has extended the benefit of the Modvat credit even if the entries in respect of the same were also made in RG-23A Pt. I register meant for aluminium ingots - the appellant was following the practice of entering aluminium wire and rods in the register meant for aluminium ingots, irrespective of the fact where complete description stand given by the dealer or not - all the invoices raised by the dealer gave the correct tariff heading relatable to aluminium wire and rods and gave correct cross reference to the invoices. Merely because the assessee has entered receipt of wire and rods in the register of ingots, as per the practice being followed by them, denial of Cenvat credit on this technical and procedural lapse is not called for - rate of duty in respect of wire and rods as also in respect of the aluminium ingots was the same and as such there could be no ulterior motive for the appellant to replace wires and rods with ingots Decided in favour of Assessee.

Issues:
1. Disposal of appeals with identical issues but separate lower authorities' orders.
2. Allegations of duty demand and penalties against the assessee and dealer.
3. Dispute over the description of goods in invoices and entries in records.
4. Denial of Cenvat credit due to alleged receipt of ingots instead of wire and rods.
5. Distinction between units of the same company in the adjudication process.
6. Justification for denial of credit based on technical and procedural lapses.
7. Analysis of the utilization of ingots in the final product manufacturing process.
8. Comparison of duty rates for wires, rods, and ingots to determine motive.
9. Decision on setting aside demands and penalties imposed by the Commissioner.
10. Confirmation of dropping the demand in favor of the assessee by lower authorities.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI, delivered by Ms. Archana Wadhwa, pertains to three appeals, two by the assessees and one by the Revenue, consolidated due to identical issues despite separate lower authority orders. The dispute revolves around duty demand and penalties confirmed against M/s Rico Auto Industries Ltd. and a dealer, M/s Agsons Agencies India Pvt. Ltd., for alleged irregularities in the receipt and credit of aluminium wire rods. The crux of the matter lies in the discrepancy between the description of goods in invoices and the entries made by the appellants in their records, leading to the Revenue's contention that ingots were received instead of wire and rods, warranting denial of Cenvat credit.

The Tribunal observed that the appellants maintained a single register for aluminium ingots, where entries for wire and rods were also recorded. Despite the procedural lapse, it was noted that the invoices correctly identified the goods as wire and rods, with no dispute on duty payment. The Revenue failed to establish any malpractice or diversion of ingots, as all received materials were utilized in the manufacturing process. Notably, the uniform duty rates for wires, rods, and ingots further weakened the Revenue's argument of intentional substitution.

Regarding the separate units of M/s Rico Auto Industries Ltd., discrepancies were addressed differently, with one unit absolved of allegations due to clerical errors, while penalties were imposed on the other unit. The Tribunal emphasized that the technical oversight in record-keeping did not warrant the severe actions taken by the Commissioner, as there was no evidence of wrongful credit utilization or material diversion. Consequently, the demands and penalties imposed were set aside for both appellants, affirming the lower authorities' decisions in favor of the assessee in one instance and rejecting the Revenue's appeal in the other.

In conclusion, the judgment highlights the importance of accurate record-keeping and the need for substantial evidence to support allegations of duty evasion. The Tribunal's thorough analysis of the factual and legal aspects of the case resulted in a fair and reasoned decision benefiting the appellants while upholding the principles of justice and due process in tax adjudication.

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