2014 (2) TMI 454 - AT - Central Excise

Availement of CENVAT credit - Availment on basis of the invoices issued by the dealer - Discrepancies in the invoices and challans - Clandestine removal of goods - Held that - credit stands denied on the ground that there were no corresponding invoices to the challans under which the inputs were cleared. The assessee has not produced any evidence to the contrary. Accordingly, I do not find any merit in the above plea of the assessee. Similarly, the respondents have admitted before the Commissioner (Appeals) that the scrap was generated during the manufacturing process which has been cleared by them without payment of duty - Decided in favour of Revenue.

Summary

Issues:
1. Availment of CENVAT credit on inputs with discrepancies in invoices and challans.
2. Confirmation of demand for scrap without payment of duty.
3. Penalty imposition on the appellant.

Availment of CENVAT Credit on Inputs:
The case involved the appellant, a manufacturer of material handling machinery, availing MODVAT and CENVAT credit for inputs received. The Revenue alleged wrongful availment of credit due to discrepancies in invoices and challans issued by registered dealers. The Revenue initiated proceedings resulting in the denial of CENVAT credit and imposition of penalties. The Commissioner (Appeals) overturned the denial, citing explanations by the appellant for minor variations in documents. The Commissioner held that as long as the inputs were received, credit could not be denied based on discrepancies. However, the appellant was not allowed credit for inputs without corresponding invoices. The Tribunal upheld the Commissioner's decision on the availment of CENVAT credit, emphasizing the importance of duty-paid inputs being received and used in manufacturing.

Confirmation of Demand for Scrap:
Regarding the confirmation of demand for scrap sales without duty payment, the Commissioner reduced the demand considering an advance received by the appellant. The Tribunal found no issue with this aspect of the Commissioner's order. However, as the demand was related to clandestine removal, a penalty of 100% was imposed, in line with legal precedents. The penalty was increased from Rs.10,000 to Rs.69,317, with a provision for reduction to 25% if the appellant complied with payment requirements within 30 days.

Penalty Imposition:
The Tribunal addressed the penalty imposition on the appellant, emphasizing the 100% penalty for clandestine removal of scrap as per legal precedents. The penalty was increased to Rs.69,317 from the initial Rs.10,000. The Tribunal provided an option for penalty reduction to 25% if the confirmed duty, interest, and 25% of the penalty were paid within 30 days. The Tribunal upheld the penalty enhancement based on the nature of the offense and legal guidelines.

In conclusion, the Tribunal upheld the Commissioner's decision on the availment of CENVAT credit, reduced the demand for scrap sales with penalty imposition, and enhanced the penalty for clandestine removal. The appellant's cross objections were rejected, and both appeals were disposed of accordingly.