2008 (9) TMI 223 - AT - Central Excise

Non receipt of inputs verification indicated that there was no actual transport of the goods and the transactions were mere paper transactions to facilitate fraudulent availment of inadmissible Credit movement of goods from stockyard of TISCO benign fake and fictitious onus to prove receipt of inputs and use thereof in mfg. of final goods not discharged by assessee credit is inadmissible since mis-statement and suppression is proved larger period is invocable for demand

Issues Involved:
1. Disallowance of Cenvat/Modvat credit.
2. Alleged fictitious transportation of goods.
3. Statements and admissions by involved parties.
4. Examination of relevant invoices.
5. Onus of proof regarding actual receipt of goods.
6. Applicability of the extended period of limitation.
7. Imposition of penalty.

Issue-wise Detailed Analysis:

1. Disallowance of Cenvat/Modvat Credit:
The Deputy Commissioner disallowed Cenvat/Modvat credit of Rs. 55,062/- under Rule 11AH of the Central Excise Rules, 1944, read with Section 11A of the Central Excise Act, directing its reversal with interest under Section 11AB of the Act. A penalty of equal amount was imposed under Section 11AC of the Act read with Rule 57AH and Rule 173Q of the 1944 Rules.

2. Alleged Fictitious Transportation of Goods:
The preventive staff of the Central Excise Department found that the vehicles allegedly used for transporting goods were light motor vehicles such as scooters, mopeds, motor cycles, combines, jeeps, tractors, and cars, which could not carry large quantities of iron and steel. Verification from various Central Excise formations and registering authorities confirmed that many vehicle numbers were either non-existent or incapable of transporting the goods in question.

3. Statements and Admissions by Involved Parties:
Statements were recorded from various individuals, including the Authorized Signatory and Stock-yard incharge of TISCO, Mandigobindgarh, and the Director of M/s. Adhunik Steels Limited. They admitted discrepancies in vehicle numbers and the responsibility of M/s. Adhunik Steels Limited in managing the stock-yard. The Director of M/s. Neepaj Steels (India) admitted that the same premises and godown were shared with M/s. Adhunik Steels Limited and that vehicles were hired from the open market without fixed transporters.

4. Examination of Relevant Invoices:
Invoices issued by TISCO, Mandigobindgarh, and M/s. Neepaj Steels (India) were scrutinized. The vehicles mentioned in these invoices, PB 23 6412 (a tractor) and PUV 1796 (a scooter), were found to be incapable of transporting the goods. The Tribunal concluded that the alleged transportation was fictitious, and therefore, the appellant could not have received the goods and was not entitled to take Cenvat credit.

5. Onus of Proof Regarding Actual Receipt of Goods:
The Tribunal held that once the Department established that the vehicles in question were incapable of transporting the goods, the onus shifted to the appellant to prove actual receipt of the goods. The appellant failed to discharge this onus, and there was no evidence to suggest actual receipt and use of the goods in manufacturing.

6. Applicability of the Extended Period of Limitation:
The Tribunal found that the entire transaction was vitiated by fraud, misstatement, and suppression of facts with intent to evade payment of duty. Therefore, the extended period of limitation was rightly applied.

7. Imposition of Penalty:
The Tribunal upheld the imposition of penalty, considering the systematic manner in which the fraud was committed. However, taking a lenient view, the penalty was reduced to Rs. 10,000/-.

Conclusion:
The appeal was dismissed, subject to the modification in penalty. The Tribunal emphasized that there must be actual receipt of goods to entitle the manufacturer to take Cenvat credit, and the fictitious transportation of goods invalidated the appellant's claim for such credit.

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