2015 (10) TMI 36 - AT - Central Excise

Clandestine manufacture and clearance of goods - Corroborative evidence in the form of excess / unaccounted raw materials found in the factory premises of the main appellant - Imposition of penalty - Held that - Appellant was not working during the relevant periods when the credit on the basis of certain invoices was taken. Appellants case that there is a contraction in the statements is not relevant to know whether such invoices were accompanied by the inputs to the factory premises of the main appellant or only the documents were received for taking Cenvat Credit. Under both the situations, Cenvat Credit taken by the appellant was not admissible. There is no evidence brought by the appellant on record that any inputs were cleared to other job workers for doing certain processes. Lower authorities have, therefore, correctly upheld that Cenvat Credit of ₹ 3,35,142/- is not admissible to the main appellant. The argument taken by the appellant that no further investigation was carried out by the revenue is not correct because the statement dt. 23.09.2009 of Shri Hariom Barisal, General Manager of the main appellant is after the OIA passed by the Commissioner (Appeals) with respect to the proceedings on confiscation of excess goods found in appellants factory premises and even after the order dt. 21.07.2009 passed by this bench. It i,& also observed from paragraph no.22.3.3 of the 010 dt. 28.03.2011 that another statement dt. 23.03.2009 of Shri K.S. Dahiya, Works Manager of the main appellant has also being recorded during which he has admitted the contents of the Panchnama and the earlier statement. In view of the above observations, penalties imposed upon the main appellant and Shri K.S. Dahiya, Works Manager of the main appellant, are justified. Therefore, appeals filed by the appellants with respect to Cenvat Credit and imposition of penalties relating to improper utilization of Cenvat Credit are justified. - Decided against assessee.

Summary

Issues: Alleged wrongful availment of Cenvat Credit and clandestine clearance of goods

Issue 1: Alleged wrongful availment of Cenvat Credit

The case involved the appellants availing Cenvat Credit on Zinc Ingots without actually receiving them in their factory. The Officers of Central Excise found discrepancies during a preventive check, leading to the issuance of a show cause notice. The adjudicating authority confirmed a demand for ineligible Cenvat Credit and imposed penalties on the Works Manager and the main appellant. The first appellate authority upheld the decision, which was challenged in the present appeals.

The appellant's advocate argued that the case was solely based on a retracted confessional statement and lacked substantial evidence. However, the revenue contended that the Cenvat Credit was inadmissible as the factory was not operational during the relevant period. The tribunal observed that the appellant failed to provide evidence to support the admissibility of the Cenvat Credit, leading to the rejection of the appeal concerning the wrongful availment of Cenvat Credit.

Issue 2: Alleged clandestine clearance of goods

The case also involved the clandestine clearance of GI Wires without duty payment. The evidence relied on was a register maintained at the factory gate, without additional corroborative evidence of excess raw materials or inquiries with the buyers. The appellant's advocate cited a judgment emphasizing the need for concrete evidence in such cases. The tribunal agreed that mere presumptions could not replace evidence and, therefore, allowed the appeal related to the duty demand for clandestine removals.

Penalties Imposed

Regarding the penalties imposed on the appellants, the advocate argued against them based on previous decisions where penalties were set aside due to lack of malicious intent. However, the tribunal noted statements from the Works Manager and General Manager admitting to the discrepancies. The tribunal found the penalties justified based on the evidence and upheld them, rejecting the appeals against the penalties.

In conclusion, the tribunal disposed of the appeals based on the observations related to the wrongful availment of Cenvat Credit and the imposition of penalties. The decision highlighted the importance of concrete evidence in cases of alleged wrongful availment and clandestine activities, ultimately leading to the rejection of certain appeals and upholding the penalties imposed.