2018 (2) TMI 1493 - AT - Central Excise

CENVAT credit - credit availed without receipt of material - appellant claims that the entire case is based on third party documents - Held that - the case is booked on the basis of statements of the transporter, first stage dealer and auction bidder. None of these statements have been retracted. All these statements contain admission that the transactions between the appellant and GAA were fictitious and paper transactions and no goods were indeed received under these transactions. In any case the data suggests in these the goods were sold by GAA to the appellant at much below the purchase price. No dealer can do the same on a regular basis i.e. to buy goods at a higher price and sell it cheaper. The appellant has claimed that in respect of goods directly purchased from IIL and UGSL, there is no evidence. It is apparent that the goods directly purchased by the appellant from IIL and UGSL also moved to Gujarat instead of the appellant s premises. In these circumstances, there is a clear evidence that the goods shown to be purchased by the appellant have indeed not reached the appellant s premises and the appellant was a part of the conspiracy to buy invoices in order to avail illegal cenvat credit. Confiscation - Redemption Fine - Held that - it is clear that no goods were seized and thus the question of confiscation does not arise - redemption fine also not justified. Appeal allowed in part.

Summary

Issues involved:
Confirmation of demand of reversal of cenvat credit, demand of interest, imposition of penalty, and imposition of redemption fine.

Analysis:
1. Confirmation of demand of reversal of cenvat credit, interest, and penalty:
The appellant argued that they availed credit on goods supplied by first stage dealers, claiming to be bona fide recipients without evidence of non-receipt. However, statements from transporter, dealers, and bidders revealed fictitious transactions and diversion of goods to Gujarat. The appellant failed to provide evidence of receipt or utilization of goods. The tribunal noted discrepancies in the invoices and RTO reports, indicating goods purchased directly from manufacturers also diverted. The appellant's involvement in the conspiracy to avail illegal cenvat credit was established, leading to confirmation of demand and penalty imposition.

2. Imposition of redemption fine:
The appellant contested the imposition of redemption fine, citing no seizure of goods. The tribunal differentiated the case from precedent and set aside the redemption fine, as no goods were seized and released against bond, aligning with the Supreme Court's decision in a similar context.

3. Penalty imposition on the appellant:
The appellant claimed innocence as a victim of conspiracy, seeking exemption from penalty. However, the tribunal found the appellant complicit in the intricate web of transactions aimed at falsely claiming credit without receiving goods. Consequently, the penalty imposition was upheld due to the appellant's active participation in the fraudulent scheme.

In conclusion, the tribunal partially allowed the appeal by setting aside the redemption fine but upheld the penalty imposition, emphasizing the appellant's involvement in the fraudulent activities. The judgment was pronounced on 19.1.2018 by Mr. Raju, Member (Technical) at the Appellate Tribunal CESTAT MUMBAI.