2014 (8) TMI 217 - AT - Central Excise

Denial of CENVAT Credit - credit has been denied on the ground that capital goods on which the credit has been taken were neither found to be received in the factory nor reflected in the IT returns in Form 3CD and the balance sheet - Held that - On a perusal of the said register and the entries made therein, it is seen that the entries are in the same handwriting using the same ink and all of them appear to be of the same age, that is made more or less at the same time. Since the entries pertain to the period 2005 to 2009, all the entries cannot be uniform and having the same colour of ink, having the same brightness. We further notice that even though there are columns for physical verification and by whom , no such verification appears to have been done during the whole period which appears quite strange. Therefore, it prima facie appears that the document now produced before us is a manipulated/cooked up one and, therefore, cannot be accepted as a reliable evidence. As the appellant has not come out with a clean hand, in the absence of any evidence of having received and installed the capital goods in the factory, the appellant has not made out any case for grant of stay - assessee directed to deposit the entire duty demand confirmed along with interest thereon - balance amount stayed.

Summary

Issues:
1. Confirmation of duty demand along with interest and penalty.
2. Denial of credit on capital goods not found in the factory.
3. Reliability of assets register as evidence.
4. Grant of stay on duty demand.

Analysis:

1. The appeal challenged an order confirming duty demand, interest, and penalty imposed by the Commissioner of Central Excise (Appeals) in Mumbai. The lower appellate authority upheld the duty demand of Rs. 20,94,889 along with interest and an equivalent penalty due to the appellant availing ineligible credit on capital goods not found in the factory, as per the IT returns and balance sheet.

2. The absence of the capital goods on which credit was availed was discovered during an audit in 2008 and a premises search in 2012 under a panchnama. The capital goods were not found installed in the premises during the search, leading to the denial of credit.

3. The appellant claimed that the goods had been removed before the panchnama proceedings, questioning their reliance. The Tribunal requested the appellant to produce the assets register for verification. Upon examination, doubts arose regarding the genuineness of the document. The original asset register was produced later, but inconsistencies were noted, indicating potential manipulation and casting doubt on its reliability as evidence.

4. Considering the lack of evidence showing receipt and installation of the capital goods in the factory, the Tribunal found the appellant not meeting the requirements for a grant of stay. Consequently, the Tribunal directed the appellant to deposit the entire confirmed duty demand with interest within eight weeks. Compliance would result in the waiver of the balance of dues and a stay on recovery during the appeal's pendency.