2009 (1) TMI 230 - HC - Central Excise

Cenvat Credit - Bogus Transaction - held that - Once there is no material on record to establish bogus nature of the transactions then there is no possibility of holding the assessee-respondent liable by invoking the provisions of Section 11AC of the Act and Rule 173Q of the Central Excise Rules, 1944 and other provisions.

Summary

Issues:
Appeal under Section 35-G of the Central Excise Act, 1944 regarding the evidentiary value of a statement, preponderance of evidence, and allegations of bogus transactions for availing Modvat credit.

Analysis:

1. The appeals raised common questions of law regarding the evidentiary value of a statement by Shri R.K. Gupta and the preponderance of evidence in establishing alleged offenses. The Tribunal found that the revenue failed to prove that the assessee did not receive raw material and that transactions were bogus for availing Modvat credit. The revenue's case relied heavily on Shri R.K. Gupta's statement, but the Tribunal deemed it vague and inconclusive as it did not specifically admit the invoices were bogus.

2. The Tribunal accepted the argument of the assessee that the revenue did not provide evidence to show that invoices of more than 6 tonnes were received, thus the transactions could not be considered bogus. Additionally, the revenue did not counter the claim that the assessee sent copper rods to job workers for conversion, undermining the allegation of no actual material transactions and showing bogus transactions on paper to claim Modvat credit.

3. After a thorough hearing, the Court concluded that as there was no evidence to support the alleged bogus nature of the transactions, the assessee could not be held liable under Section 11AC of the Act and Rule 173Q of the Central Excise Rules, 1944. The Court dismissed the appeals, stating that no question of law requiring admission of appeal arose, given the Tribunal's factual findings. The lack of evidence to establish the bogus nature of transactions led to the failure of the appeals.

In summary, the judgment focused on the evidentiary value of a statement, the preponderance of evidence in proving alleged offenses, and the lack of proof regarding bogus transactions for availing Modvat credit. The Court emphasized the importance of factual findings and evidence in determining liability under relevant provisions of the Central Excise Act and Rules, ultimately dismissing the appeals due to the absence of material supporting the revenue's claims.