2009 (1) TMI 151 - AT - Central Excise

Suppliers of the grey fabrics who had issued the invoices, found to be non-existent/fake/bogus revenue not proved that respondents had connived with the suppliers and availed credit - As rightly observed by the Commissioner that the respondents can be found fault work for not taking reasonable steps as contemplated in Rule 7 of CENVAT Credit Rules, but they cannot be held liable to penalty u/s 11AC of CEA. 1944 Moreover, suppression of facts/fraud or misdeclaration not proved impugned imposing penalty u/r 13(1) now 15(1) of CCR instead of 11AC of CEA, is justified

Summary

The Appellate Tribunal CESTAT AHMEDABAD, in the citation 2009 (1) TMI 151 - CESTAT AHMEDABAD, heard an appeal regarding CENVAT credit taken on grey fabrics by a company registered for manufacturing man-made fabrics. The Revenue discovered that the suppliers of the grey fabrics were non-existent, fake, or bogus, leading to a show cause notice and subsequent disallowance of credit, penalty, and interest. The Commissioner, upon appeal, found the company not guilty of fraud but liable for contravening CENVAT Credit Rules by not ensuring duty payment on the invoices. The Commissioner imposed a penalty under Rule 13. The Revenue appealed for a penalty under Section 11AC, but the Tribunal upheld the Commissioner's decision, stating that the evidence did not support fraud or suppression of facts, and the penalty under Rule 13 was appropriate. The appeal by the Revenue was rejected, and the penalty under Rule 13 was upheld. The judgement was pronounced in court by Shri B.S.V. Murthy, Member (T), with Ms. M.I.J. Micheal representing the Revenue.

This summary provides a detailed analysis of the case, covering all relevant issues and outcomes comprehensively. It highlights the key points of the judgement and the reasoning behind the decisions made by the Commissioner and the Tribunal.