2016 (3) TMI 397 - AT - Central Excise

Clandestine removal - goods not actually manufactured and cleared - Held that - Bogus invoices have no meaning in the face of full payment of duty, as such invoices will help unscrupulous entities to show higher expenditure and to derive financial benefits in tax matters etc. It is not clear how, even if accepted, such assertion is going to change the findings in the impugned order. The duty which is sought to be demanded and confirmed by the Original Authority has already been remitted by the main respondent to the Government. Now again such demand was justified on the ground that equivalent amount of impugned goods were manufactured and cleared clandestinely. For this, no attempt even has been made to adduce evidence. After careful consideration of the grounds of appeal agitated in the present case and the detailed finding in the impugned order dated 07/3/2008, find that there is no basis to interfere with the findings in the impugned order - Decided against revenue

Summary

Issues:
1. Alleged evasion of Central Excise duty by manufacturing and clearing goods without actual sale and movement.
2. Discrepancies in the investigation findings regarding the clearance and transportation of goods.
3. Eligibility of Cenvat credit for the recipient of the goods.

Analysis:

Issue 1: Alleged evasion of Central Excise duty
The case revolves around M/s Chakra Rolling Mills Pvt. Ltd., accused of issuing invoices without actual sale and movement of finished goods. The Revenue alleged that the company clandestinely manufactured and cleared goods without paying duty, leading to a demand of Rs. 42,07,447. The Original Authority confirmed the demand, but the Commissioner (Appeals) later set aside the order, stating lack of evidence for unaccounted manufacture or clearance.

Issue 2: Discrepancies in investigation findings
The Revenue contended that detailed investigations and anomalies in electricity consumption supported their claim of bogus transactions. However, the main respondent argued that they had discharged duty for the indicated quantities, maintaining statutory accounts. The Commissioner (Appeals) found the Revenue's allegations baseless and misconceived, emphasizing the lack of evidence for clandestine activities.

Issue 3: Eligibility of Cenvat credit
Regarding appeal E/2730/2010, the Revenue challenged the Commissioner (Appeals) finding that the recipient of the goods was eligible for Cenvat credit. The respondent, M/s Ind Synergy Ltd., had initially been denied credit, but upon appeal, the credit was allowed. The Commissioner (Appeals) upheld this decision, stating that once the case against the main respondent was unsustainable, there was no impediment for the recipient to avail of the credit.

In the final judgment, after examining the appeal records and the contradictory nature of the allegations, the Tribunal dismissed all three appeals filed by the Revenue. The Tribunal found no basis to interfere with the Commissioner (Appeals) findings and upheld the decisions regarding the evasion of duty and the eligibility of Cenvat credit. The Cross Objection was also disposed of, bringing closure to the legal proceedings.