2016 (9) TMI 733 - AT - Central Excise

Cenvat Credit - bogus and fictitious invoices - allegation of non-receipt of imported goods into the factory premises - retraction of statement - import of scrap for manufacturing of M.S.Ingots & Cast iron rough castings - Held that - Two different adjudicating authorities, one at the original stage and the second in de-novo proceedings ordered by the Tribunal, have concurred with the facts and allegations in the show cause notice and have inter-alia confirmed recovery of the Cenvat credit found thereto to have been taken irregularly. In the second round of litigation, the Tribunal had remanded the matter back to the Commissioner (Appeals) for the reason that authority had not recorded any reasons for his conclusion that the impugned order is upheld and the appeal is dismissed. In the impugned order resulting out of such de-novo proceedings, it is seen that the Commissioner (Appeals), out of the nineteen paras of his order, devotes a mere three paras to analyze and arrive at the conclusion reached, which in itself throws doubt on whether he has sufficiently applied his mind in the matter. It is further seen that the raison detre for setting aside of the order of original authority is the finding of the Commissioner (Appeals) that he is inclined to agree with the appellants with regard to the various apparent discrepancies pointed out by the latter. I do not thus find any independent application of mind by the Commissioner (Appeals). He has not weighed or analyzed the correctness of the contentions of the assessee, but only discovered an inclination to agree with them. Inclinations to agree with the submissions of the assessee cannot take the place of reasoned adjudication of issues that the Commissioner (Appeals), in the capacity of a quasi judicial authority is mandated to do. On the other hand, I find that the Department, in the grounds of appeal filed by them, have ably countered and demolished the presumptions which the Commissioner (Appeals) relied upon while setting aside the adjudication order of the original authority. In the cases of this nature involving illicit availment of Cenvat credit through false documents, the department is against heavy odds to unearth every stone of meticulously executed deception and innovative modus operandi. - Order of Commissioner (Appeals) cannot sustain - Demand confirmed - Decided in favor of revenue.

Summary

Issues:
Irregular availing of Cenvat credit on imported scrap, fabrication of documents, recovery of irregular credit, imposition of penalty, multiple rounds of litigation, discrepancies in findings, setting aside of original order, department's appeal, restoration of Order-in-Original.

Analysis:
The case involved the respondent/assessee engaged in manufacturing M.S. Ingots & Cast iron rough castings under specific chapters of the Central Excise Tariff Act, availing Cenvat Credit facility, and utilizing duty paid on inputs for final product duty payment. Allegations arose regarding irregular Cenvat credit availing on Bills of Entry without receiving imported scrap, leading to a show cause notice proposing recovery of irregular credit, interest, and penalty. Adjudication confirmed the proposals, imposing penalties, upheld on appeal by Commissioner (Appeals), and later remanded by the Tribunal for de-novo proceedings. Subsequent rounds of appeals, remands, and orders followed, with discrepancies noted in findings and inadequacies leading to setting aside of the Order-in-Original in the second de-novo proceedings.

The main grounds of appeal by the department focused on evidentiary discrepancies, including fictitious documents, non-signing of cash vouchers by recipients, and lack of substantiated evidence supporting the assessees' contentions. The department argued against the acceptance of various submissions, emphasizing fraudulent activities uncovered during investigations and the significance of evidence collected by customs officials under the Customs Act. The department contended that statements of involved parties, despite retractions, provided substantial evidence of fabricated documents and illicit credit availing, justifying the demand confirmation and invoking relevant provisions under the Central Excise Act.

During the hearing, the department reiterated the grounds of appeal, emphasizing the proven nefarious intentions and actions of the assessees as per investigations. The Tribunal noted the concurrence of two adjudicating authorities on irregular credit recovery, the need for reasoned adjudication by the Commissioner (Appeals), and the department's effective counterarguments against presumptions relied upon. Ultimately, the Tribunal found the Order-in-Original from de-novo proceedings to be appropriately followed, setting aside the Commissioner (Appeals) order and restoring the original order. The department's appeal was allowed, concluding the third round of litigation before the Tribunal.