2017 (11) TMI 11 - AT - Central Excise

Clandestine removal - inputs like CRGO steel - the revenue authorities were of the view that there was a excess consumption of raw materials like CRGO sheets, copper etc. and the same was intentionally done so, as to avail unintended cenvat credit on the inputs - whether the said VEL and VTSL are required to reverse the cenvat credit, allegedly having consumed inputs in excess and unrecorded and held to have been removed clandestinely or otherwise? Held that - The provisions of Cenvat Credit Rules, 2004 more specifically rule 3 clearly indicates that cenvat credit of the duty paid on inputs and input services can be availed by appellant immediately and utilised for discharge of duty on the finished products. Various procedures are laid down in the said Cenvat Credit Rules. In our considered view, if it is not the case of Revenue that appellant has only received the documents and availed credit but did not receive the inputs, nor there are any findings that documents of receipt of inputs are ferged etc. in the absence of any such evidence it has to be held that quantum of inputs as per duty paying documents are received. There is nothing on record to show that the said Power Corporations will reject the transformers in which, if the weight transformer exceeds the wieght in technical specification. It is also surprising that in this case Revenue authorities have conspicuously refrained from recording any statement of the responsible Officers of APEPDCL and APCPDCL, which may have brought on record that excess input usage was not in their knowledge for drawing an inference against the appellant. In our view, there being absence of evidence toindicate that consumption of material was with intent to remove the same or divert the same, we have to hold that Order-in-Original fails and falls miserably. Penalties on the individuals - Held that - since we have held that the entire demand falls on merits itself, the Revenue appeals also stands rejected. Penalty on VEL & VTSL - Held that - the appellant has not been able to prove with concrete evidence to come to a conclusion as to the said capital goods were in fact installed in their own unit or otherwise. In the absence of any such evidence, we hold that the demand of ₹ 7,01,044/- is correct, alongwith interest and penalty imposed is also correct. Non confiscation of raw materials and semi finished goods which were found unaccounted - Held that - the adjudicating authority has come to a conclusion that non accountal was not due to any mens rea for clandestine removal of goods. To come to such a conclusion adjudicating authority has correctly relied upon the factual matrix of the case considering that there were no antecedents - appeal of Revenue rejected. Appeal allowed in part.

Issues Involved:
1. Confirmation of demands raised along with interest and imposition of penalties on Victory Electricals Ltd (VEL) and Victory Transformers & Switchgears Ltd (VTSL).
2. Non-imposition of penalties on various individuals by the adjudicating authority.
3. Non-confiscation of raw materials, semi-finished goods, and finished goods seized during the investigation.
4. Demand of service tax on Goods Transport Agency (GTA) services.
5. Demand of cenvat credit availed on capital goods removed to other units.

Issue-wise Detailed Analysis:

1. Confirmation of Demands and Imposition of Penalties:
The appeals by VEL and VTSL contested the confirmation of demands and penalties imposed by the adjudicating authority. The authority concluded that VEL and VTSL could not justify the excess procurement and utilization of inputs, resulting in unintended cenvat credit. The operative portion demanded ?1,02,11,970/- under Rule 14 of CENVAT Credit Rules, 2004, with equal penalties under Rule 15(2). Additionally, ?7,01,044/- was demanded for credit on capital goods removed to other units, with corresponding penalties. The adjudicating authority also confirmed a demand of ?6,19,791/- for service tax on GTA services but did not impose penalties under Section 78 due to bona fide reasons.

2. Non-imposition of Penalties on Individuals:
The Revenue appealed against the non-imposition of penalties on various individuals. The adjudicating authority had dropped penal proceedings against these individuals, despite the investigation revealing their roles in duty evasion. The tribunal upheld the adjudicating authority's decision, rejecting the Revenue's appeal.

3. Non-confiscation of Raw Materials and Goods:
The Revenue also appealed against the non-confiscation of raw materials, semi-finished goods, and finished goods seized during the investigation. The adjudicating authority had concluded that non-accountal was not due to any mens rea for clandestine removal. The tribunal concurred with this view, noting the absence of evidence indicating intent to remove goods clandestinely, and rejected the Revenue's appeal.

4. Demand of Service Tax on GTA Services:
The tribunal found the demand of service tax on GTA services appropriate. VEL was required to discharge the service tax liability if not done already. The tribunal confirmed the demand of ?1,92,143/- for service tax on GTA services, rejecting the appellant's contention on limitation grounds.

5. Demand of Cenvat Credit on Capital Goods:
The tribunal upheld the demand of ?7,01,044/- on VTSL for cenvat credit availed on capital goods not installed in the unit where the credit was availed. The appellant failed to provide concrete evidence proving the installation of these capital goods in their unit. Consequently, the demand, along with interest and penalties, was deemed correct.

Conclusion:
The tribunal allowed the appeals of VEL and VTSL, setting aside the demands and penalties related to the excess consumption of inputs. However, it upheld the demands related to service tax on GTA services and cenvat credit on capital goods. The Revenue's appeals for penalties on individuals and confiscation of goods were rejected. The tribunal's decision was pronounced in the open court on 24-10-2017.

← Previous Next →