2015 (12) TMI 1048 - AT - Central Excise

Denial of CENVAT Credit - Goods damaged due to flood - Imposition of penalty - Held that - During de-novo Adjudication, the Appellants stated before the Adjudicating authority that they do not have any new or other documents except the documents submitted at the time of earlier Adjudication. Thus, the Appellants had not produced any documents in terms of Tribunal s order before the Adjudicating authority in denovo Adjudication - Appellants had not informed the Department about the loss of invoices during the flood. This fact was detected during the audit conducted by the Central Excise officers. Hence, I find force in the findings of the Adjudicating authority. In the facts and circumstances of the case, the extended period of limitation would be invoked. - it is a proprietary-ship firm and therefore, imposition of penalty on the Proprietor cannot be sustained. It is also noticed that the Appellant No.3 is an Authorised Signatory and therefore, no penalty should be imposed upon him. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Denial of CENVAT Credit due to loss of original invoices during a flood.
2. Dispute on the limitation period for issuing Show Cause Notice.
3. Allegation of suppression of facts by the Appellants.
4. Imposition of penalties on the Proprietor and Authorised Signatory.

Analysis:

Issue 1: Denial of CENVAT Credit
The Appellant's factory suffered damage due to a flood, leading to the loss of original invoices. The Adjudicating authority denied CENVAT Credit of a significant amount along with penalties. The Appellants argued that they possessed the original invoices at the time of availing the credit and should be allowed to use photocopies for verification purposes. The Tribunal's remand order emphasized the need to verify the documents lost in the flood. However, during the denovo Adjudication, the Appellants failed to produce any new documents as directed by the Tribunal, leading to the rejection of their appeal on merit.

Issue 2: Limitation Period
The Appellants contended that the Show Cause Notice issued was time-barred as it was not served within one year from the date of the audit. The Revenue argued that the extended period of limitation should apply due to the Appellants' failure to inform about the lost invoices during the flood. The Adjudicating authority invoked the extended period of limitation based on the alleged suppression of facts by the Appellants.

Issue 3: Allegation of Suppression of Facts
The Revenue contended that the Appellants suppressed the loss of original invoices, indicating an intent to evade duty payment. The Adjudicating authority found that the Appellants did not inform the Department about the lost invoices during the flood, as detected during an audit. This non-disclosure was considered willful, justifying the invocation of the extended limitation period.

Issue 4: Penalties Imposed
The judgment highlighted that being a proprietary firm, imposing penalties on the Proprietor might not be justified. Similarly, the Authorised Signatory should not be penalized. Consequently, the appeal filed by the Appellant firm was rejected, while the appeals of the Proprietor and the Authorised Signatory were allowed.

In conclusion, the judgment addressed various aspects related to the denial of CENVAT Credit, the limitation period for issuing notices, allegations of suppression of facts, and the imposition of penalties, providing a detailed analysis of each issue based on the arguments presented by both parties and the Tribunal's directions.