2014 (7) TMI 1027 - AT - Central Excise

Availment of wrongful credit - Goods not received but credit availed - Credit reversed befor issuance of SCN - Levy of penalty - Whether the appellants have availed the Cenvat credit on the basis of the Cenvatable invoices issued by M/s HSAL, without actually receiving the inputs - Held that - The investigations conducted at the end of the manufacturer, transporter as also the appellant resulted in emergence of evidence clearly pointing out to the fact of wrong availment of credit. 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 at Jodhpur and Ahmedabad. 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. Further the appellant s authorised representative has clearly accepted the fact that no inputs were received by them and they had taken the credit on the basis only the Cenvatable invoices. Similarly the fact of payment of the Cenvat credit by reversing the entries in the Cenvat account before the issuance of the Show Cause Notice is not sufficient to accept the appellant s contention that no penalty should be imposed upon them. In cases of fraud, mere deposit of the duty before the issuance of the Show Cause Notice is not sufficient for non-invocation of the penal provision. - Decided against assessee.

Summary

Issues:
- Availment of Cenvat credit without receiving goods
- Investigation findings against the appellant
- Challenge on limitation and penalty imposition

Analysis:
1. Availment of Cenvat credit without receiving goods:
The case involved the appellant, engaged in manufacturing motor vehicle parts, availing Cenvat credit based on invoices issued by another manufacturer, M/s HSAL, without actually receiving the goods. Investigations revealed a scheme where products were cleared clandestinely to various manufacturers, including the appellant, with Cenvatable invoices issued to pass on wrongful credit. Statements from various individuals confirmed the diversion of goods and the wrongful credit availed by the appellant. The appellant's authorized representative admitted to availing credit without physical receipt of goods, leading to the conclusion that the appellant indeed took credit based on Cenvatable invoices without actual receipt of inputs.

2. Investigation findings against the appellant:
Further investigations at the transporter and manufacturer's end, along with statements from various individuals involved in the transportation chain, corroborated the fact that goods were not transported to the appellant's premises. The appellant's reliance on previous tribunal decisions was deemed inapplicable as the evidence in this case clearly pointed towards the appellant's wrongful availment of credit. The statements of the manufacturer, transporters, and the appellant's representative all aligned in confirming the non-receipt of goods by the appellant, strengthening the case against them.

3. Challenge on limitation and penalty imposition:
The appellant challenged the imposition of penalty and the limitation period for raising the demand. The tribunal rejected these challenges, citing the fraudulent nature of the credit availed and the discovery of the fraud only through exhaustive investigations. The tribunal upheld the longer limitation period invoked by the Revenue, considering the fraudulent nature of the appellant's actions. Merely reversing entries in the Cenvat account before the issuance of the Show Cause Notice was deemed insufficient to avoid penalty imposition in cases of fraud. The tribunal found no merit in the appellant's contentions regarding limitation and penalty imposition, ultimately rejecting the appeals.

In conclusion, the tribunal upheld the findings based on detailed investigations, confirming the appellant's wrongful availment of Cenvat credit without receiving goods. The challenges on limitation and penalty imposition were dismissed, emphasizing the fraudulent nature of the appellant's actions and the evidence supporting the Revenue's case. The appeals were rejected, and the judgment was pronounced on 21.4.2014.