2014 (3) TMI 785 - AT - Central Excise

Duty demand - Availment of CENVAT Credit - there was no duty paying documents in the name of the registered dealers in respect of the inputs supplied to the appellants - Held that - As there is no duty paying documents with the registered dealers showing payment of duty on the inputs which was supplied to the appellants and the appellants availed credit on the strength of invoices issued by the dealers, I find that the appellants failed to show the inputs received by the appellants and have suffered duty, therefore, the demand is rightly made. The impugned order confirming the demand is upheld - However, penalty reduced - Decided partly in favour of assessee.

Issues:
1. Appeal against demand confirmed under Rule 57-I of the Central Excise Rules, 1944.
2. Disallowance of credit and imposition of penalty under Rule 57-I(4) read with Rule 173Q of the Central Excise Rules, 1944.
3. Availment of credit in respect of inputs purchased from registered dealers without duty paying documents.
4. Contention of lack of connivance with the dealer to take undue credit.
5. Validity of invoices issued by registered dealers showing payment of duty.
6. Upholding of demand and reduction of penalty amount.

The appellants filed an appeal against the impugned order confirming a demand of Rs. 73,267 under Rule 57-I of the Central Excise Rules, 1944, along with the imposition of an equal penalty under Rule 57-I(4) read with Rule 173Q of the same rules. The appellants had availed credit for inputs purchased from registered dealers, but it was discovered that there were no duty paying documents in the name of the registered dealers for the inputs supplied to them. The appellants argued that they had relied on invoices issued by the registered dealers, who were registered with the Revenue, and denied any connivance with the dealer to wrongfully claim credit. On the other hand, the Revenue contended that the invoices issued by the registered dealers, showing payment of duty, were not valid duty paying documents as there was no evidence of duty payment. The Tribunal found that since there were no duty paying documents with the registered dealers for the inputs supplied to the appellants, and the appellants had availed credit based on these invoices, they failed to demonstrate receipt of inputs and payment of duty. Consequently, the demand was upheld. However, considering the lack of evidence of connivance with the dealer, the penalty was reduced to Rs. 25,000. The impugned order confirming the demand was upheld, and the appeal was disposed of accordingly.

In conclusion, the judgment addressed the issues related to the confirmation of demand under the Central Excise Rules, 1944, the disallowance of credit, and the imposition of penalty. It analyzed the validity of invoices from registered dealers, the lack of duty paying documents, and the appellants' failure to prove receipt of inputs and payment of duty. The decision highlighted the importance of proper documentation and compliance with excise rules while emphasizing the consequences of availing credit without supporting documents. The reduction of the penalty amount based on the absence of evidence regarding connivance with the dealer showcased a balanced approach in the Tribunal's decision-making process.

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