2019 (6) TMI 1512 - AT - Central Excise

Irregular availment of CENVAT Credit - allegation that no service has been rendered by the SPPL - denial of credit mainly based on the assessment orders passed by the Income Tax Department on SPPL and the statement of Sri Gupta Director of SPPL which provided the subject sales promotion service - HELD THAT - It is found that no independent investigation has been carried out by the department to produce any evidence whatsoever to show that the appellant has not received any service. The statement of Sri Gupta on which the department has placed heavy reliance to deny CENVAT credit has not even been relied in the SCN and hence cannot be entered into evidence as required under Section 9D of the Central Excise Act and therefore no credence can be given to the said statement to decide the case against the appellant - It is a settled legal position that onus to prove the allegations is on the department with corroborative evidence which has not been done in the present case. Moreover from the records it is amply clear that the statements made by Sri Gupta of SPPL specifically pertained to the invoices issued by them to one M/s. Akhsay Steel which in any case cannot deprive the appellant assessee herein of their legal entitlement of CENVAT credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against Order-in-Appeal dated 18.01.2018 confirming duty demand, penalty, and interest.
2. Alleged irregular credit availed by appellant in collusion with another company.
3. Discrepancies in the investigation and reliance on Income Tax assessment order.
4. Imposition of penalties under Rule 26(2) of the Excise Rules.

Analysis:
1. The appeal before the Appellate Tribunal concerned the confirmation of duty demand, penalty, and interest against M/s.Suraj Logistics Pvt.Ltd. and its Director, Sri Prakash Khemani. The original adjudication dropped proceedings, but the Ld.Commissioner(Appeals) confirmed the duty demand for the period 2011-12 and 2012-13.

2. The case revolved around the alleged irregular credit of ?79,93,222/- availed by the appellant in collusion with M/s.Suryamukhi Projects Pvt.Ltd. (SPPL). The Revenue claimed that no services were rendered by SPPL, leading to the improper credit. The Ld.Addl.Commissioner dropped the proceedings, citing the appellant's right to determine the commission rate and valid credit based on proper invoices.

3. Discrepancies arose regarding the investigation and reliance on the Income Tax assessment order. The Ld.Commissioner(Appeals) admitted shortcomings in not relying on certain documents and giving more weight to the Income Tax order. However, the Tribunal emphasized the need for specific findings before denying credit, especially when all documents were in order. Lack of independent evidence and reliance on the statement of SPPL's Director were key points of contention.

4. Penalties under Rule 26(2) of the Excise Rules were imposed on the appellant, Director, and SPPL. The appellant's advocates argued against the case built on the statement of SPPL's Director, emphasizing the lack of relevance without corroborative evidence. They contested the time bar, penalties, and the extension of proceedings from SPPL to the appellant.

In conclusion, the Tribunal upheld the original order, setting aside the appellate order. The demand, interest, and penalties imposed were annulled, granting relief to the appellants based on the lack of substantial evidence and proper investigation. The decision highlighted the necessity of independent findings and the insufficiency of relying solely on Income Tax assessment orders without corroborative evidence.