2014 (7) TMI 1021 - AT - Central Excise

Cenvat Credit - non receipt of inputs with invoice - fraudulent credit - revenue entertained a view that said manufacturing unit was only issuing cenvatable invoices to various manufacturers without actually sending the corresponding goods - Held that - The manufacturer s statement is not a general statement laying down in some cases the credit has been based on without the corresponding supply of goods. It is a specific statement laying down that only Cenvatable invoices were issued in the name of the appellant whereas the inputs were diverted to other manufacturer. The matter does not rest at this point only. Revenue has conducted further investigations from the transporters as also from the owners of the truck mentioned in the invoices. The said investigations also resulted in establishing the fact that the trucks in question were never used for transportation of the goods from M/s HSAL to the appellant s factory premises. All the representatives of the transporter as also the owners of the truck have clarified such position. There is no justification for allowing the Cenvat credit - demand confirmed - appellants to pay the entire dues along with 25% of penalties within a period of 30 days from the date of receipt of order. - Decided against the assessee.

Summary

Issues involved:
1. Denial of Cenvat credit to M/s. Sarila Steel Rolling Mills and penalty imposition on the manufacturing unit and a partner.
2. Allegations of wrongful availment of credit based on invoices issued by M/s. Haryana Steel and Alloys Ltd. Sonipat.
3. Investigation revealing diversion of inputs and issuance of cenvatable invoices without actual goods supply.

Detailed Analysis:
1. The judgment addresses the denial of Cenvat credit amounting to Rs. 6,23,661 to M/s. Sarila Steel Rolling Mills, Hisar, and the imposition of an identical penalty on the manufacturing unit and a partner based on the same impugned order. The issue arose from investigations revealing discrepancies in availing Cenvat credit on duty paid inputs received from M/s. Haryana Steel and Alloys Ltd. Sonipat.
2. The investigations conducted at M/s. HSAL indicated that the manufacturing unit issued cenvatable invoices without supplying the corresponding goods. The Settlement Commissioner directed M/s. HSAL to deposit a substantial Cenvat credit duty liability, leading to suspicions of wrongful credit availment by M/s. Sarila Steel Rolling Mills.
3. Statements from various individuals, including executives of transport companies involved in the alleged diversion of goods, supported the claim that the inputs were not received by M/s. Sarila Steel Rolling Mills as per the invoices. The investigations highlighted discrepancies in transportation records and statements, indicating a scheme to issue cenvatable invoices without actual supply of goods.

4. The appellant argued against the denial of credit, emphasizing the lack of evidence beyond statements from M/s. HSAL's executive and transport company representatives. They contended that statutory records reflected the input entries, and there was no proof of diversion by M/s. HSAL or alternative procurement by the appellant. The appellant also raised concerns about the limitation period and the settlement by M/s. HSAL before the Settlement Commission.
5. In contrast, the Revenue presented evidence from statements and investigations, asserting that the manufacturer and transporters confirmed non-supply of goods to M/s. Sarila Steel Rolling Mills, discrediting the appellant's claims. The Tribunal referenced a previous case involving similar allegations, emphasizing the importance of corroborative evidence and statements in determining wrongful credit availment.
6. The Tribunal's decision aligned with the Revenue's position, emphasizing the lack of rebuttal to the evidence indicating the wrongful availment of credit based on cenvatable invoices. The judgment also addressed the applicability of previous case laws cited by the appellant, emphasizing the distinctions in evidentiary support and circumstances.
7. Ultimately, the Tribunal upheld the denial of Cenvat credit, imposed a reduced penalty on M/s. Sarila Steel Rolling Mills, and set aside the penalty on the partner due to insufficient findings on their role in the wrongful credit availment. The judgment provided clarity on the Settlement Commission's role and extended a penalty payment option to the appellant, concluding the appeals in favor of the appellant in the specified terms.