2012 (6) TMI 749 - AT - Central Excise

Denial of CENVAT Credit - Loss of documents - Equivalent penalty - Held that - original documents were lost in transit by the truck driver who was transporting the goods and the truck driver, on noticing the loss, filed a FIR with the Police Station and documentary evidence are available to this effect. When the original documents are lost, the only recourse that was available to the appellant was to get a copy of the same from the supplier and take credit on the basis thereon. The appellant requested the Assistant Commissioner to grant permission for taking credit. However, the jurisdictional authorities rejected the request of the appellant. This is a case of pure and simple harassment to the assessee. If the Assistant Commissioner wanted verification of the duty payment, he could have taken up the matter with the jurisdictional authorities at the supplier s end inasmuch as the details of the invoices are available. Instead of doing that, the appellant was served with a show cause notice leading to avoidable adjudication. Powers of adjudication are given to quasi judicial authorities to sub-serve justice and not to deny them. In the instant case justice has been completely denied to the appellant. Further, the demand was also barred by time inasmuch as the notice has been issued beyond the normal period. The lower appellate authority, without even understanding the basic facts of the case directed the appellant to pre-deposit the entire amount which was not deposited and which resulted in dismissal of the appeal - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing the appeal
2. Loss of duty-paid inputs during transportation
3. Denial of CENVAT credit and imposition of penalty
4. Dismissal of appeal for non-compliance with pre-deposit requirement
5. Reversal of CENVAT credit subsequent to the impugned order

Analysis:

Issue 1: Delay in filing the appeal
The appellant filed a COD application citing a delay of over 5 months in filing the appeal due to awaiting a letter from the jurisdictional Superintendent regarding duty liability. The Tribunal, after considering the reason provided by the appellant as genuine, condoned the delay in filing the appeal.

Issue 2: Loss of duty-paid inputs during transportation
The appellant, M/s. Varsha Forgings Ltd., faced a situation where duty-paid inputs were lost during transportation, leading to the loss of all documents, including duty paying documents. Despite informing the department and providing necessary documents like FIR, affidavit, and copies of invoices, permission to take credit was not granted. The Assistant Commissioner rejected the request, issued a show cause notice demanding reversal of CENVAT credit, interest, and penalty, which was confirmed in the adjudication order.

Issue 3: Denial of CENVAT credit and imposition of penalty
The appellant's request for credit was denied, leading to the imposition of a penalty under Rule 15. The Commissioner (Appeals) directed the appellant to make a pre-deposit of the duty demanded, which was not complied with, resulting in the dismissal of the appeal for non-compliance with Section 35F of the Central Excise Act, 1944.

Issue 4: Dismissal of appeal for non-compliance with pre-deposit requirement
The lower appellate authority dismissed the appeal due to the appellant's failure to pre-deposit the required amount, despite the circumstances of the lost documents during transportation and the subsequent reversal of CENVAT credit by the appellant.

Issue 5: Reversal of CENVAT credit subsequent to the impugned order
Following the impugned order, the appellant reversed the CENVAT credit involved in the matter, which was a step taken after the denial of credit and imposition of penalties.

The Tribunal, after a thorough review of the case, found that the appellant had valid reasons for taking credit based on the photocopies of the invoices due to the loss of original documents during transportation. The Tribunal criticized the authorities for denying justice to the appellant, highlighting the lack of verification efforts and the unjust imposition of penalties. Consequently, the Tribunal set aside the entire order, allowing the appeal with consequential relief in favor of the appellant.