2014 (5) TMI 833 - AT - Central Excise

Irregular CENVAT Credit - Applicant availed irregular credit of CENVAT on various inputs which they never received physically in their factory premises and utilized the said irregular credit for payment of duty on the finished goods clerared by them - Held that - out of total purported clearances of 123 consignments involving Rs.16,43,12,296/, 16 consignments involving Rs.9,80,55,155 (nearly 60%) were purportedly transported to Chattisgarh, Raipur and Orissa. On enquiry with the Check Post authorities, no such consignments crossed the said Checkgate and the stamp put on impugned challans were found fake and not signed by any officer of the Commercial Tax Department. Further M/s.Essel Transport purportedly transported 14 consignments valued at Rs.7,50,26,665/- (approx.) to consignees in Chattisgarh and Orissa, but on enquiry M/s.Essel Transport was found to be a bogus firm. From the facts and circumstances of the case narrated above that the issue involved relates of appreciation of evidences produced by both sides which can be taken up at the time of disposal of their appeals. However, at this juncture , keeping in view the above facts, prima facie, we are of the opinion that the Applicants have not been able to make a case for full waiver of pre-deposit of duty and penalty. In these circumstances keeping in view the interest of Revenue and principle of law settled by Hon ble Supreme Court and High Courts in disposal of the Stay Applications, we feel it appropriate to direct the Applicant to deposit 25% of the duty confirmed against them within 8(eight) weeks - Conditional stay granted.

Summary

Issues:
1. Dismissal of Miscellaneous Application and Appeals for non-compliance with Section 35F of the Central Excise Act, 1944.
2. Allegation of irregular credit of CENVAT and non-receipt of inputs by the Applicant.
3. Financial hardship plea and lack of evidence presented by the Applicant.
4. Analysis of evidences by the adjudicating Commissioner regarding the use of inputs and manufacturing activities.
5. Decision on the waiver of pre-deposit of duty and penalty.

Analysis:

1. The Tribunal initially directed the Applicant to pre-deposit 25% of Central Excise duty within a specified timeframe. However, due to an ex parte order, the Applicant filed a Miscellaneous Application citing non-receipt of any notice. The High Court later set aside the Tribunal's orders, leading to a fresh consideration of the Stay Petition.

2. The case involved allegations that the Applicant availed irregular credit of CENVAT without physically receiving various inputs in their factory premises. The adjudicating Commissioner confirmed a substantial demand along with interest and penalties against the Applicant and its Proprietor.

3. The Applicant claimed to have faced financial crisis and explained their manufacturing activities conducted in a rented factory premises. However, the lack of concrete evidence supporting their financial hardship plea weakened their argument.

4. The adjudicating Commissioner extensively analyzed the evidence, concluding that the inputs were not received or used in manufacturing the finished goods. Various discrepancies were noted, including inadequate infrastructure for production and inconsistencies in supplier and customer statements.

5. Considering the facts presented, the Tribunal found that the Applicant failed to justify a full waiver of pre-deposit. As per established legal principles and to safeguard the Revenue's interest, the Tribunal directed the Applicant to deposit 25% of the confirmed duty within a specified timeframe, with the balance dues waiver upon compliance, and the recovery stayed during the appeal process. The Stay Petition was disposed of based on these terms.