2014 (2) TMI 449 - HC - Central Excise

Availment of CENVAT Credit without receiving concerned inputs - Recovery of credit with interest and penalties - Held that - assessee had indulged into availment of cenvat credit without actually receiving the goods. It was found that the goods were never received in the factory and mere entries were made. This was established through the evidence on record which showed that the vehicles supposed to have been used for transport of the goods could never have been put to such use. The Revenue Authorities relied on the RTO reports which showed that the vehicles in question were of two wheelers and auto-rickshaws which allegedly transported tonnes of goods to the factory premises of the assessee. The assessee did not dispute the RTO reports, but canvassed that the entries in the record could have been made erroneously and hence discrepancy. From the stage of the show cause notice itself, it was alternatively suggested that in view of the short-fall in the stock in the premises of the assessee at the time of checking, even if the goods were actually received, the same were removed without payment of duty or reversal of the cenvat credit. Report of the RTO authority established that the numbers of the vehicles through which the goods were said to have been transported were two wheelers and rickshaws in which such heavily weighing goods could not ever have been transported. The assessee did not dispute the RTO report, but only suggested that the numbers of the vehicles in their registers would have been wrongly noted. We are afraid, such a flimsy explanation cannot be accepted. Discrepancies were noted not in one or two vehicles, but in large number of cases. Further, the assessee in order to explain away the short-fall in the physical stock, contended that the goods previously received were sold in the market as the same was found to be inferior and not possible for use in manufacturing activity. Even this was so, the assessee was required to reverse the cenvat credit which the assessee admittedly did not do. The Authority, therefore, rightly invoked the extended period of limitation - Decided against assessee.

Summary

Issues Involved:
1. Denial of Cenvat credit of Rs. 8,99,805/- for December 2006.
2. Whether the appellant availed Cenvat credit without receiving the concerned inputs.
3. Whether the demand for Cenvat credit raised in December 2010 was barred by limitation.

Detailed Analysis:

1. Denial of Cenvat Credit of Rs. 8,99,805/- for December 2006:
The assessee challenged the orders passed by the Excise Authorities, confirmed by the Customs, Excise, and Service Tax Appellate Tribunal, regarding the denial of Cenvat credit. The premise was based on specific intelligence that the assessee was evading excise duty by availing Cenvat credit without receiving inputs from a sister concern. A search on 14.03.2007 revealed discrepancies in the stock of TMT/CTD bars. Statements from the Director confirmed the physical stock-taking conclusions, indicating that the goods were sold without invoice and without reversing the Cenvat credit. The Adjudicating Authority rejected the assessee's defense, confirming the duty demand, interest, and penalties.

2. Availing Cenvat Credit Without Receiving the Concerned Inputs:
The Revenue's case was that the assessee availed Cenvat credit without receiving the goods, supported by RTO reports indicating that the vehicles listed in the invoices were incapable of transporting the goods. The assessee argued that the goods were received and the vehicle numbers were mistakenly recorded by semi-literate personnel. However, the Adjudicating Authority found the invoices not genuine and the credit wrongly availed. The Tribunal upheld this view, noting that the burden of proof was reasonably discharged by the department, and the Director was aware of the discrepancies, justifying the penalty.

3. Demand for Cenvat Credit Raised in December 2010 and Limitation:
The show cause notice issued on 28.12.2010 was based on findings from 2007, raising questions about the limitation period. The Revenue argued that the credit availed was never reversed, and the goods were removed without proper documentation, constituting suppression of facts with intent to evade duty. The Tribunal and Revenue Authorities concluded that the extended period of limitation was rightly invoked due to the nature of the discrepancies and the assessee's non-cooperation.

Conclusion:
The High Court, after reviewing the evidence, concurred with the findings of the Revenue Authorities and the Tribunal. The court found no question of law arising from the concurrent factual findings that the assessee indulged in creating false entries of receipt of goods without physical delivery. The discrepancies in vehicle numbers and the failure to reverse Cenvat credit supported the Revenue's case. Consequently, the appeal was dismissed, affirming the denial of Cenvat credit and the imposition of penalties.