2008 (7) TMI 89 - HC - Central Excise

Allegation that assessee fradulently availed Modvat credit without physically receiving the goods - RT-12 returns have been assessed finally by the Range Officer which contains all the documents including the invoices under dispute on the basis of which the Credit has been availed and utilised and that payments for the purchase of the inputs have been made through cheque/demand draft no question of law much less substantial arises from the order of the Tribunal - revenue appeal dismissed

Summary

Issues:
Fraudulent availing of Modvat credit without physically receiving goods, disallowance of Modvat credit by Adjudicating Authority, appeal before Commissioner (Appeals) allowing the appeal, further appeal by revenue before Tribunal, dismissal of appeal by Tribunal, appeal by revenue before High Court challenging Tribunal's order.

Analysis:

1. The case involved the fraudulent availing of Modvat credit by the respondent without physically receiving goods, leading to a disallowance of credit by the Adjudicating Authority. The authority imposed a penalty on the assessee and the Registered Dealer. The respondent appealed before the Commissioner (Appeals), who allowed the appeal on the ground that the Modvat credit denial was based on inadequate evidence regarding the transportation of goods.

2. The revenue, feeling aggrieved, filed an appeal before the Tribunal challenging the Commissioner (Appeals) order. The Tribunal, in its impugned order, dismissed the revenue's appeal, stating that the evidence presented by the respondent regarding payment for inputs and their use in manufacturing final products was satisfactory. The Tribunal highlighted that the credit was availed in 1996, whereas the investigation was conducted in 2000, and the respondent regularly filed necessary returns and documents, supporting the credit availed.

3. The revenue, still dissatisfied, filed an appeal before the High Court under Section 35G of the Central Excises and Salt Act, 1944, raising a substantial question of law. The High Court examined the contentions raised by the revenue but found no merit in them. The Court noted that the Tribunal had correctly established that the inputs were received and used in manufacturing goods cleared with duty payment. Additionally, the Department failed to prove the receipt and use of alternative raw materials. The Court upheld the findings of the Commissioner (Appeals) and the Tribunal regarding the assessment of RT-12 returns and the payment for inputs through proper channels.

4. Ultimately, the High Court dismissed the revenue's appeal, emphasizing that no substantial question of law arose from the Tribunal's order as it primarily contained factual findings in favor of the respondent. The Court found no grounds to overturn the Tribunal's decision, thereby affirming the findings of fact and upholding the dismissal of the appeal.